The Federal Circuit is poised to overrule, or at least modify, 15 years of precedent and to alter the dynamics of patent litigation. The only question is how much.

On the morning of September 13, the Federal Circuit sat en banc to hear the plaintiff’s appeal in Lighting Ballast Control v. Philips, No. 2012-1014.

The primary issue Lighting Ballast is whether the Court should overrule Cyber Corp. v. FAS Technologies, Inc., a 1998 case in which the Federal Circuit held that claim construction is a purely legal issue and thus subject to full de novo review.

In other words, under Cyber Corp., when a party appeals a claim construction ruling, the Federal Circuit takes a fresh look at the issue, paying no deference to the District Court’s findings, even findings on factual questions relating to claim construction.

As a result, by the mid-2000’s, the Federal Circuit’s reversal rate of claim construction rulings was nearing 50 percent -- a state of affairs that meant less incentive to settle in the District Court. Why settle the case after an adverse Markman ruling when you have a 50/50 chance of getting it reversed on appeal? The Cybor Corp. rule also likely contributed to more expensive and protracted patent litigation, as a party suffering an adverse claim construction ruling would have to wait (potentially years) for the conclusion of trial to appeal it and seek a remand to the District Court for yet another trial.

At oral argument in Lighting Ballast, the Federal Circuit wrestled with the potential implications of a new, more deferential standard of review, including the impact on national uniformity in claim construction law, and the difficulty of distinguishing between factual findings (which may be entitled to deference) and legal conclusions (no deference). The Court also expressed concern about overruling another en banc decision without any intervening Supreme Court decision.

Nevertheless, some change is in the law is likely, as the Federal Circuit has of late been grantingde facto deference to District Court claim construction rulings, as evidenced by a much lower reversal rate in past several years. Moreover, both parties in Lighting Ballast, as well as the U.S. Patent and Trademark Office, have expressed their agreement that, contrary to the Court’s ruling in Cybor Corp., at least some aspect of claim construction warrants deference to the District Court’s findings.

Any change in the law will have immediate implications for practitioners, patent holders and litigants. Perhaps most notably, a level of deference to District Court claim construction rulings will increase the settlement leverage obtained by the prevailing party in a claim construction fight. A new deferential standard could also reduce the time and expense associated with patent litigation. Stay tuned.