The U.S. Court of Appeals for the Federal Circuit vacated summary judgment as premature finding that the district court should have allowed plaintiff discovery of defendant’s source code.  Baron Services, Inc. v. Media Weather Innovations LLC, Case Nos. 12-1285, -1443 (Fed. Cir., May 7, 2013) (Prost, J.) (Reyna, J. dissenting).

Baron owns a U.S. patent which generally relates to systems and methods for weather reporting and forecasting.  In May 2011 Baron filed suit alleging infringement by MWI’s WeatherCall programs.  The court set a schedule with various deadlines but did not set a schedule for Markman proceedings or for exchanging invalidity or infringement contentions.  Baron served discovery seeking MWI’s source code; MWI sought and received a protective order preventing disclosure of the code.  In response to MWI’s discovery requests, Baron subsequently served a “Disclosure of Asserted Claims and Preliminary Infringement Contentions,” detailing how MWI’s products met the limitations of each asserted claim.  MWI sought summary judgment of non-infringement.  Baron responded and argued that summary judgment was premature pursuant to Rule 56(d), as the court had not construed the patent terms and Baron had not reviewed MWI’s source code.  Baron also filed a motion to compel production of MWI’s code.  The district court granted MWI’s motion for summary judgment of non-infringement.  In denying Baron’s Rule 56(d) motion, the court found that Baron never “asked for more time to complete discovery,” “failed to assert it could not prosecute this action without further discovery” and was simply arguing that “MWI is lying.”  The court also determined that claim construction was unnecessary because Baron had refused to define the terms through discovery and accordingly there were no terms in dispute.  Baron appealed.

The Federal Circuit vacated the grant of summary judgment finding “[t]he opportunity for the reasonable chance to disprove MWI’s position on non­­-infringement was relevant and essential to Baron’s opposition of MWI’s motion for summary judgment.”  The Court noted that MWI had diligently pursued the source code discovery and resorted to motion practice when the parties reached an impasse.  The Court held that the district court had abused its discretion by denying Baron’s Rule 56(d) motion.

In his dissent, Justice Reyna argued “[t]he majority takes the unusual course of vacating a summary judgment determination that is supported by the record evidence based on the premise that the district court failed to manage procedure and discovery in accordance with Baron’s case management expectations which the district court held to be unreasonable and obstructive.”   Justice Reyna posited that “[o]ur standard of review warrants deference to the district court’s characterization of the litigation dynamics.”  While some district courts have imposed local patent rules, the district court was under no obligation to incorporate Baron’s requests concerning theMarkman process in to its scheduling order and was not obligated to hold a Markman hearing before summary judgment.  The dissent noted that while the Federal Court has chastised district courts for failing to conduct a rigorous claim construction before trial, claim terms need not be construed before summary judgment.

Practice Note:  While Baron prevailed in this case, parties ought not to expect that they can force a district court to adopt a patent based case management schedule if the district does not require adherence to local patent rules.