Versata Software, Inc. v. Callidus Software, Inc.

Addressing for the first time the propriety of vacating an appellate opinion when the underlying appeal is rendered moot before issuance of that opinion, the U.S. Court of Appeals for the Federal Circuit determined that it not only was appropriate, but required for want of subject matter jurisdiction.  Versata Software, Inc. v. Callidus Software, Inc., Case No. 14-1468 (Fed. Cir., Feb. 27, 2015) (Chen, J.).

The district court had denied a stay of trial court proceedings pending the outcome of post-grant review of the asserted patents under the AIA Covered Business Method (CBM) review proceedings.  An interlocutory appeal of that denial was filed with the Federal Circuit under § 18 of the AIA and the Federal Circuit issued an opinion reversing and remanding the denial of stay of the patent infringement suit.  The Federal Circuit was not aware, however, that the afternoon before the opinion issued the parties had filed a joint request to dismiss the appeal.  The parties had also concurrently filed a joint unconditional stipulation of dismissal of the underlying complaint with the district court.

Because the conundrum before the Court was a procedural issue, as opposed to a patent issue, regional circuit law applied and the Federal Circuit looked to U.S. Court of Appeals for the Ninth Circuit law.  Under 9th Circuit law, there is a “significant difference between a request to dismiss a case or proceeding for mootness prior to the time an appellate court has rendered its decision on the merits and a request made after that time.”  Armster v. U.S. Dist. Court for Cent. Dist. Of Cal.  Despite being an issue of first impression, the panel explained that the answer was straightforward: “[B]ecause the parties’ joint stipulation was filed in the district court the day before the issuance of this court’s opinion . . .  the appeal was moot when our opinion issued.  There was no longer a controversy.”  Indeed, fundamental subject-matter jurisdiction requires that a case or controversy remain alive during all stages of a case, including appellate review.  To allow otherwise would be beyond the federal court’s constitutional authority.

The Federal Circuit thus vacated its opinion.

Practice Note:  Litigants should heed footnote 2 of the Federal Circuit’s opinion stressing the “importance of parties informing the court promptly and without delay when a matter has been settled or otherwise may have become moot.”  Here, the parties had apparently reached a settlement nearly a week prior to filing the joint stipulation.