CAFC Updates - January 2023

Update by Don McPhail

(1) Modern Font Applications LLC v. Alaska Airlines, Inc., No. 21-1838 (December 29, 2022) (Newman, Reyna, Cunningham*)

Modern Font Applications is a non-practicing entity that sued Alaska Airlines for patent infringement in the United States District Court for the District of Utah. During discovery, Alaska Airlines had designated certain source code files as “Confidential Information - Attorneys Eyes Only” pursuant to the Standard Protective Order entered in every case in that district. This designation precluded Modern Font’s in-house counsel, who was an experienced patent attorney and was actively involved in parallel litigation and settlement negotiations, from accessing those source code files. Modern Font sought to get the SPO revised to permit in-house counsel to access Alaska Airlines’ source code files, but the magistrate judge and district court held that Modern Font’s in-house counsel qualified as a “competitive decisionmaker” and so would not be permitted access. In making that decision, the magistrate judge concluded that Modern Font’s “entire business model” was centered on the licensing and litigation of patent rights, something with which in-house counsel was intimately involved. The district court affirmed that decision.

Modern Font then sought an interlocutory appeal of the district court’s order under the collateral order doctrine. This doctrine, which the Supreme Court has repeatedly emphasized should be limited in scope, permits review of not only judgement that terminate an action, but also collateral rulings that are deemed final. Such collateral rulings include decisions that “resolve important questions separate from the merits” and decisions that are “effectively unreviewable on appeal from the final judgment in the underlying action.”

In an opinion authored by Judge Cunningham, a split panel of the Federal Circuit determined that it lacked jurisdiction to hear Modern Font’s appeal at this time. The Court noted that, generally, pretrial discovery order are not “final” -- and so not reviewable at the interlocutory stage under the collateral order doctrine – because such orders are reviewable from a final judgement. The Court found unavailing Modern Font’s arguments that it would be irreparably prejudiced financially and tactically by having a key player excluded from the infringement side of the case. Although agreeing with Modern Font that such prejudice would be unlikely to serve as the basis for reversal of an adverse judgment, the Court held that an inability to secure reversal on final appeal was insufficient to satisfy the requirements of the collateral order doctrine. The Court also found that any financial hardship suffered by Modern Font was similarly insufficient to permit an interlocutory appeal.

Judge Newman dissented from the panel’s opinion that the Federal Circuit lacked jurisdiction, noting that the Federal Circuit could have exercised its discretion to hear Modern Font’s appeal and that the Federal Circuit, as well as other circuits, had regularly heard appeals of rulings on discovery matters in the past.