Eolas Technologies Inc. v. Microsoft Corp.

United States Court of Appeals for the Federal Circuit

06-1238

EOLAS TECHNOLOGIES, INCORPORATED
and REGENTS OF THE UNIVERSITY OF CALIFORNIA,

Plaintiffs-Appellees,

v.

MICROSOFT CORPORATION,

Defendant-Appellant.

Martin R. Lueck, Robins, Kaplan, Miller & Ciresi L.L.P., of Minneapolis, Minneapolis,
for plaintiffs-appellees. With him on the brief were Jan M. Conlin, Richard M. Martinez,
and Munir R. Meghjee.

David T. Pritikin, Sidley, Austin, Brown & Wood LLP, of Chicago, Illinois, for
defendant-appellant. With him on the brief were Constantine L. Trela, Jr., Richard A.
Cederoth, and Robert N. Hochman of Chicago, Illinois, and Carter G. Phillips, of
Washington, DC. Of counsel on the brief were M. Michael Hartmann, Brett A. Hesterberg,
and Steven P. Petersen, Leydig, Voit & Mayer, Ltd., of Chicago, Illinois.

Appealed from: United States District Court for the Northern District of Illinois

Judge James B. Zagel
 United States Court of Appeals for the Federal Circuit
06-1238

EOLAS TECHNOLOGIES INCORPORATED
and REGENTS OF THE UNIVERSITY OF CALIFORNIA,

Plaintiffs-Appellees,

v.

MICROSOFT CORPORATION,

Defendant-Appellant.

___________________________

DECIDED: July 31, 2006
___________________________

Before RADER, Circuit Judge, PLAGER, Senior Circuit Judge, and PROST, Circuit
Judge.

RADER, Circuit Judge.

On remand from an earlier decision of this court, Eolas Techs. Inc. v. Microsoft

Corp., 399 F.3d 1325 (Fed. Cir. 2005) (Eolas I), the United States District Court for the

Northern District of Illinois denied Microsoft Corporation’s (Microsoft’s) motion seeking

to have the case reassigned to a different judge. Eolas Techs. Inc. v. Microsoft Corp.,

No. 99 C 0626 (N.D. Ill. Oct. 26, 2005) (opinion and order denying motion to reassign)

(Denial Order). Microsoft petitioned this court for permission to appeal the district

court’s denial. This court granted that petition. Eolas Techs. Inc. v. Microsoft Corp.,

Misc. No. 811, slip op. (Fed. Cir. Jan. 18, 2006). Because this court defers to the law of

the regional circuit on the issue of reassignment and Seventh Circuit Rule 36 requires
reassignment, this court reverses the district court’s denial of Microsoft’s motion to

reassign the case.

I.

In 1999, Eolas Technologies Incorporated and The Regents of the University of

California (collectively, Eolas) sued Microsoft, alleging that Microsoft’s Internet Explorer

infringed claims of U.S. Patent No. 5,838,906 (the ’906 patent). After the district court

construed the claims, a jury found that Microsoft infringed claims 1 and 6 of the ’906

patent and actively induced others to infringe claim 1 of that patent. Eolas I, 399 F.3d at

1328. Invoking 35 U.S.C. § 271(f), the district court determined that the royalty awarded

to Eolas should reflect the foreign sales of Internet Explorer. Id. The district court

further ruled in Eolas’ favor on Microsoft’s defenses, granting judgment as a matter of

law (JMOL) against Microsoft’s invalidity defenses of anticipation and obviousness, and

against its inequitable conduct defense. Id. On appeal, this court affirmed the district

court’s claim construction and its damages analysis with respect to section 271(f). Id. at

1341.

At the same time, this court found that the district court erred in rejecting

Microsoft’s defenses. Therefore, this court vacated the JMOL and remanded for further

proceedings, including the resolution of genuine factual disputes. Id. at 1335. On

Microsoft’s inequitable conduct defense, this court vacated the district court’s decision

because it incorrectly excluded from its analysis a software product, which was

potentially prior art. Id. Thus, this court remanded for the district court to assess

inequitable conduct in light of that software product, and to, if necessary, “reconsider its

findings” regarding intent to deceive the United States Patent & Trademark Office. Id. at

06-1238 2
1336. This court’s decision in Eolas I did not mention reassignment to a different judge

on remand.

After the case returned to the district court, Microsoft sought reassignment to a

different judge. Microsoft did not assert any bias or misconduct on the part of the

original judge, but instead urged that reassignment should occur automatically by

operation of Local Rule 40.5, entitled “Remands, Procedures for Following Appeals.”

That rule, applicable in the Northern District of Illinois, states:

(a) General. This rule shall not apply to remands resulting
from appeals of summary judgments or interlocutory orders
unless the mandate or order remanding the case indicates
that it is to be reassigned to a judge other than the judge to
whom the case was previously assigned ("prior judge").
Whenever a mandate from the Court of Appeals for the
Federal Circuit or the Seventh Circuit is filed with the clerk
indicating that the case appealed is remanded for a new trial,
the case shall be assigned to the Executive Committee,
except
(1) if the mandate or accompanying opinion
indicates that the case is to be retried by the
prior judge, then the case shall remain on that
judge's calendar . . .
....
(c) Reassignment. When a stipulation is filed indicating that
the parties wish the case assigned to the prior judge, the
Executive Committee shall reassign the case to that judge.
When no such stipulation is filed, the Executive Committee
shall direct that the case be reassigned to a judge other than
the prior judge. A case reassigned pursuant to this rule shall
be treated for assignment purposes as a new case. The
judge receiving the case is not authorized to transfer a
similar case to the Executive Committee for reassignment to
the prior judge.
N.D. Ill. Local Rule 40.5 (LR 40.5). In the Denial Order, the district court explained that

LR 40.5 “has become a mostly dormant section” of the Local Rules. Denial Order at 2-

06-1238 3
3. According to the district court, that dormancy is a result of Circuit Rule 36 of The

United States Court of Appeals for the Seventh Circuit. That rule provides:

Whenever a case tried in a district court is remanded by this
court for a new trial, it shall be reassigned by the district
court for trial before a judge other than the judge who heard
the prior trial unless the remand order directs or all parties
request that the same judge retry the case. In appeals
which are not subject to this rule by its terms, this court may
nevertheless direct in its opinion or order that this rule shall
apply on remand.
7th Cir. R. 36. Thus, in the case of a remand from the Seventh Circuit, Circuit Rule 36

makes reassignment the default rule—hence the “dormant” status of LR 40.5. The

district court explained that application of LR 40.5 to cases on remand from the Federal

Circuit was “problematic” because the local rule does not mirror a Federal Circuit rule

like Circuit Rule 36. Denial Order at 3. The district court further concluded that “the

policy of the Federal Circuit is not at all like that of the Seventh Circuit.” Id. Thus, the

district court concluded that application of Circuit Rule 36 would be inconsistent with

“Federal Circuit policy.” Finally, the district court reasoned that even if LR 40.5 were

applied, reassignment would not be required because Eolas I indicated that the case

should remain with the same judge. According to the district court, when this court

directed that “the district court may reconsider its findings” on remand, Eolas I, 399 F.3d

at 1336, it signaled an intent to send the case back to the same judge because only the

same judge could “reconsider its findings.” Denial Order at 5. Microsoft appeals,

arguing that the Seventh Circuit’s Rule 36 should operate to reassign this case.

II.

The reassignment of a case to a new district court judge after remand is a

procedural question that is not unique to this court’s exclusive jurisdiction. Accordingly,

06-1238 4
regional circuit law governs reassignment questions. See, e.g., Juicy Whip, Inc. v.

Orange Bang, Inc., 382 F.3d 1367, 1370 (Fed. Cir. 2004) (citing Micro Chem., Inc. v.

Lextron, Inc., 318 F.3d 1119, 1122 (Fed. Cir. 2003)). This court bases its deference for

regional circuit law on a concern for “consistency of future trial management.” See

Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 857-58 (Fed. Cir. 1991)

(explaining that regional circuit law should apply to construction of the Federal Rules of

Civil Procedure or the local rules of the district court). In this case, trial management

came to a halt as the district court departed from the normal rules for remands in the

Seventh Circuit and sought instead a proper course for remands from this court. This

court intended to prevent this type of confusion with its rule of deference for procedural

matters without substantive bearing on this court’s exclusive jurisdiction. Thus, while it

examined both Juicy Whip and Micro Chem in its search for the correct law on judicial

reassignment, Denial Order at 4, the district court erred in its assessment of those

opinions. Both Juicy Whip and Micro Chem applied regional circuit law in deciding the

question of reassignment on remand. See Juicy Whip, 382 F.3d at 1373-74 (citing and

applying Ninth Circuit law); Micro Chem, 318 F.3d at 1126 (citing and applying Tenth

Circuit law); see also Int’l Rectifier Corp. v. IXYS Corp., 361 F.3d 1363, 1377 (Fed. Cir.

2004) (looking to regional circuit law when considering whether to remand to a different

judge). In short, as these cases show, the law of the Seventh Circuit controls the

reassignment question in this case.

The Seventh Circuit appears unique among the circuit courts of appeals because

it sets forth its law on judicial reassignment in the form of a rule. Thus, contrary to

Eolas’ arguments, Circuit Rule 36 is not merely an internal glossary for construing

06-1238 5
silence in Seventh Circuit opinions as a direction to reassign a case on remand.

Rather, the Seventh Circuit rule makes reassignment the norm, unless our sister circuit

alters the default rule with an express assignment back to the same judge. “The

purpose of Rule 36 is to avoid, on retrial after reversal, any bias or mindset the judge

may have developed during the first trial.” Cange v. Sotler and Co., 913 F.2d 1204 (7th

Cir. 1990) (emphases added). Because the operation of Rule 36 avoids “any bias or

mindset” that “may have developed,” the law of the Seventh Circuit differs from that of

other circuits. See, e.g., Procter & Gamble Co. v. Haugen, 427 F.3d 727, 744 (10th Cir.

2005) (“[W]e will remand with instructions for assignment of a different judge only when

there is proof of personal bias or under extreme circumstances.”) (internal quotes and

citation omitted); Glen Holly Entm’t v. Tektronix Inc., 343 F.3d 1000, 1017-18 (9th Cir.

2003) (explaining that reassignment considerations include “whether the district court

judge would have substantial difficulty in putting out of his or her mind previously

expressed views”); United States v. Microsoft Corp., 56 F.3d 1448, 1463 (D.C. Cir.

1995) (explaining that reassignment does not require a finding of actual bias or

prejudice, “but only that the facts might reasonably cause an objective observer to

question the judge's impartiality”) (internal quotes and citation omitted).

Contrary to Eolas’ arguments, Rule 36 applies to remands from this court as well

as from the Seventh Circuit itself. Nothing in the language of that rule prevents this

court from applying the same rule. Because it is a rule of the Seventh Circuit, the rule’s

language referring to a case “remanded by this court for a new trial” refers literally to a

case remanded by the Seventh Circuit. However, when this court follows the law of a

regional circuit, it acts, as best it can, as that regional circuit would when confronted with

06-1238 6
the same issue. When this court adopts the Seventh Circuit’s law on reassignment, it

follows Rule 36 in the same way the Seventh Circuit would. Thus, when applying Rule

36 in the place of the Seventh Circuit, the Federal Circuit becomes “this court” within the

language of the rule.

Application of Rule 36 does not rob this court of its independent duty to assess

reassignment in any particular case. Rather, Rule 36 itself leaves “this court” free to

permit the default rule to operate or to permit remand to the same judge or to require

reassignment when the default rule would not otherwise operate. See Cange, 913 F.2d

at 1298 (“[Rule 36] does not automatically apply where the judgment reversed has not

resulted from a trial, but we apply it in our discretion to avoid the operation of bias or

mindset which seems likely to have developed from consideration and decision of

motions to dismiss or motions for summary judgment and the like.”); Jannotta v.

Subway Sandwich Shops, Inc., 125 F.3d 503, 517 (7th Cir. 1997) (vacating and

remanding for a new trial with the instruction that “Rule 36 shall not apply on remand”).

Because Rule 36 applies on remand after the Eolas I decision, this court need

not examine the applicability of LR 40.5 to this case. Nonetheless, the district court

relied heavily on LR 40.5, therefore this court will briefly address that reasoning. In

Eolas I, this court noted that “the district court may reconsider its findings” on remand.

399 F.3d at 1336. That statement addressed “the district court,” not any particular judge

representing that court. In other words, this court did not use that language to signal a

decision to depart from Circuit Rule 36, or LR 40.5, to the extent the latter applies.

While courts often interchange loosely terms like “the judge” and “the court,” the district

court itself is not literally synonymous with the presiding district court judge. Thus, the

06-1238 7
same district court, here the District Court for the Northern District of Illinois, may

“reconsider” an issue even though a different judge supplied the initial consideration.

Any discussion of reassignment necessarily must distinguish between an individual

judge and the court itself. This court’s statement did not signal any departure from the

Seventh Circuit rule by referring only to “the district court.”

COSTS

Each party shall bear its own costs.

REVERSED

06-1238 8