Federal courts are courts of general jurisdiction so that they may hear virtually all manner of disputes and have wide discretion in issuing relief -- from injunctions to monetary awards. Litigation before the courts must be understood as reflecting the perhaps uniquely American belief that truth can be discovered through a disclosure of all of the facts. That disclosure, however, often renders court litigation the most costly forum for dispute resolution.

There are two separate and largely independent systems in which conflicts are litigated: federal and state courts. The rules and practice in each of these two court systems differ in several respects. Virtually all intellectual property disputes are litigated before the federal courts.

The highest court in the federal court system is the United States Supreme Court. Below the Supreme Court are thirteen circuit courts, twelve of which cover various territories in the United States and one of which (the "Court of Appeals for the Federal Circuit") has exclusive jurisdiction over patent and many intellectual property and trade appeals. Within each circuit court (except for the D.C. Circuit), there are several district courts, each of which covers a certain sub-territory, with some district courts further subdivided by territory into "divisions". Several district court judges sit within each district court. Finally, beneath the district judges are magistrate judges, whose duties include overseeing discovery on assignment from a district court judge, though, on consent, may hold a full trial on the merits.

Each level of these courts has its own set of rules. For example, at the district court level, there are the Federal Rules of Civil Procedure, the local rules for the particular district court in which the trial judge sits (sometimes consisting of general, civil, criminal, calendar and maritime rules) and oftentimes the judge's own individual set of rules or informal practice. (The local district court rules usually require the appointment of local counsel to receive service of papers; however, those same rules invariably permit other U.S. counsel to act as lead trial counsel.) The circuit courts issue their decisions by three-judge panels, except for motions dealing with procedural issues, which are often heard by one circuit judge, and appeals raising significant legal issues, which are heard by an en banc panel consisting of all the circuit judges who reconsider the decision of a three-judge panel.

Federal courts have automatic subject matter jurisdiction, i.e., the authority, to hear cases that relate to federal issues, including intellectual property conflicts. In patent and copyright disputes this subject matter jurisdiction is exclusive of state courts. Therefore, such cases must be heard by federal courts. While in trademark matters this jurisdiction is concurrent with state courts, in fact, nearly all such cases are heard by federal courts. Moreover, such subject matter jurisdiction may vest in federal courts, even though many activities have occurred outside the United States. The courts engage in a balancing of factors -- the effect on U.S. commerce, the citizenship of the defendant and the potential of a conflict with the foreign laws -- in deciding whether subject matter jurisdiction is proper under federal laws for each extraterritorial activity.

On the other hand, where there is no federal issue, as, for example, in most contract, products liability and trade secret litigation, subject matter jurisdiction will only vest in federal courts if there is a "diversity" of citizenship between parties ( i.e., citizens of different states or citizens of a state and citizens of a foreign "state") and the amount in controversy exceeds $75,000. Federal courts also do not possess automatic subject matter jurisdiction where the federal issues are tangential to what are essentially non-federal claims. For example, the interpretation of a patent license or the ownership of a trademark or copyright may not "arise under" the Patent, Trademark or Copyright Acts and, therefore, to be brought before a federal court, such disputes also require a showing of diversity of citizenship and that the controversy involves a dispute in excess of $75,000.

The "law" in the United States consists of legislative statutes, as interpreted by the courts, and judge-made common law. However, in those cases based on diversity jurisdiction, the particular state (or foreign) law to be applied is determined through the "conflicts of law" rule of the particular state in which the district court sits. Oftentimes state conflicts of law rules differ depending on the type of claim asserted, e.g., whether a tort or contract claim. A contractual choice of law provision will normally be enforced, provided, of course, there is a connection between the selected law and the claim asserted.

The principle of stare decisis requires that judges follow "precedent", i.e., prior decisional law by the controlling courts. Thus, each district judge is bound by the precedent in his or her own particular circuit and any precedent of the Supreme Court and normally will follow his or her own precedent. Since the Patent Act vests exclusive appellate jurisdiction in the Court of Appeals for the Federal Circuit, the district court in which a patent case is tried is largely irrelevant. On the other hand, since few trademark and copyright cases ever reach the Supreme Court and since often circuit courts are split on how they interpret the federal trademark and copyright statutes, the district court in which such a case is heard may be crucial to the outcome of the litigation. For example, in the trademark field, the Second Circuit is well known for permitting co-existing uses based on equitable considerations.

A lawsuit is commenced by the filing of a Complaint in a United States District Court. Upon receipt of the Complaint, the Clerk of the Court issues a Summons. It is the responsibility of the plaintiff to effectuate service of the Complaint and an original Summons upon the defendant. Service must be made within 120 days of the filing of the Complaint, failing which the Complaint will be dismissed, without prejudice, as to the defendant not served. That time limitation does not apply, however, to service in a foreign country.

Assuming that the district court has subject matter jurisdiction to hear the dispute, the court must also have jurisdiction over the particular defendant ( in personam or personal jurisdiction) and also be the "appropriate" forum to hear the dispute, considering matters of convenience and fairness to the defendant ("venue"). If the defendant is not a resident within the state where the district court sits, then whether the court possesses in personam jurisdiction over the defendant is determined by the "long arm" statute of the state in which the district court sits. Moreover, regardless of the particular state jurisdictional statute, the federal Constitution requires, at a minimum, that "due process" be accorded to the defendant. The defendant must have certain "minimum contacts" with the state so that the exercise of jurisdiction would not offend "traditional notions of fair play and substantial justice."

Some states, such as New York, have very specific statutes for service of process on non-resident defendants. Typically, under these statutes, service outside of the state (and outside of the United States) is permitted either where the defendant "does business" within the state or where the defendant transacts business within the state (a lesser showing) and the claim asserted relates to the transaction of business. Typically, too, a tort, such as passing off committed within a state, gives rise to in personam jurisdiction over the defendant under state long-arm statutes. On the other hand, other states, such as California, have adopted extremely broad statutes whereby jurisdiction is proper so long as federal "due process" is satisfied. Finally, the Trademark and Patent Acts have special long-arm statutes whereby the District Court of the District of Columbia and/or other district courts may have personal jurisdiction over disputes which "affect" the trademark or patent filed by a foreign party.

Assuming that personal jurisdiction may be obtained over the defendant, then venue must also be proper in that court. Venue is defined by federal statutes. These rules are quite complex and technical. In cases not arising under federal laws but only diversity jurisdiction, venue is proper where all the defendants reside, and where a "substantial part of the events... giving rise to the claim occurred or where any defendant is subject to personal jurisdiction", if there is no other district in which the action may be brought. A corporation "resides" where it is incorporated, licensed to do business or does business. In trademark cases venue is proper where all the defendants "reside", where a "substantial part of the events... giving rise to the claim occurred", or where any defendant may be "found", if there is no other district in which the action may be brought. In claims for patent infringement, suit may be brought either where the defendant has committed acts of infringement and has a "regular and established place of business" or where the defendant resides. (A suit for declaration of non-infringement of a patent, however, must be brought where all the defendants reside or where a substantial part of the elements giving rise to the claim occurred.) A suit arising under the Copyright Act may be commenced in a district where "the defendant or his agent resides or may be found." Finally, under a special Federal venue statute an "alien" (foreign) party may be sued in any district court.

The Summons and Complaint may be served in a variety of ways, depending upon the type of the defendant, i.e., whether a natural person or a corporation, and where the defendant is located. An individual is normally served by personal delivery (or by leaving the papers at the individual's "place of abode" with a person of suitable age and discretion), while a corporation is normally served through personal delivery to its officers or agents. Since many state laws under which U.S. corporations are formed require the designation of a local agent for service of process, service can usually be easily accomplished by service on that named agent.

There are alternative provisions regarding the manner of service upon a defendant located outside the United States. These alternatives include personal service or mailing by the Clerk of the Court which requires a signed receipt (unless prohibited by the law of the foreign country) or service in the manner prescribed by the foreign country's laws or as directed by the foreign authority in response to a letter rogatory (provided such service is reasonably calculated to give notice) or by any other means of service as directed by the Court and not prohibited by international agreement. Plainly, if the plaintiff later intends to seek enforcement of a United States judgment in the defendant's home country, then service should be made in a manner which accords with the laws of the foreign country.

The Complaint consists of a "short and plain statement" setting forth, first, the court's subject matter and personal jurisdiction and, second, the factual basis of the claim for which the plaintiff seeks relief. The pleading need only provide a general notice as to the claim asserted. Important exceptions to this "notice pleading" rule are allegations of fraud and mistake, which must be pleaded with particularly. Claims may be pleaded alternatively or hypothetically. In other words, the pleadings need not be consistent. Third, the Complaint must also set forth the type of relief sought.

The Complaint, after "inquiry reasonable under the circumstances", must not be presented for improper purpose, such as harassment; must be warranted by existing law or by nonfrivolous argument for extension, modification or reversal of existing law; and must have evidentiary support. If a party, or its counsel, violates that obligation, then the court may impose sanctions on the party or its counsel in order to deter the repetition of such conduct. Such sanctions may include possible payment of a penalty into court or of the other side's reasonable expenses incurred as a result of the violation, including attorney's fees.

Following service of the Complaint, the defendant must serve within twenty days an Answer to the Complaint, unless the defendant chooses to file a "Rule 12" motion which stays the time to file the Answer. If no Answer or Rule 12 motion is served, on request, the Clerk enters a default and, depending on the relief sought, the Clerk or the Court will enter a default judgment in favor of the plaintiff. Proof of the amount of damages must, however, be submitted even when the defendant has defaulted.

A Rule 12 motion is a dispositive motion seeking dismissal of a Complaint on its face, or of one or more of the claims asserted in the Complaint. Such motions include arguments that the Complaint fails to state a legally cognizable claim for relief, that personal jurisdiction is lacking over the defendant, that venue is not proper in the particular court, that the court lacks subject matter jurisdiction over the dispute, that service of process was not properly effectuated and that an "indispensable" party was not joined to the lawsuit. Since certain of these Rule 12 motions, such as motions to dismiss for lack of jurisdiction or improper venue, typically involve complex factual issues, it is not uncommon to have discovery taken on, but limited to, the factual allegations asserted in support of the motion. The court may then decide the issue on the basis of the discovery evidence, conduct an evidentiary hearing, i.e., hear oral testimony from witnesses, or (less likely) defer decision on the motion until the time of the full trial.

Other early motions include motions to dismiss on the ground that the particular court is not a convenient one ( forum non conveniens ) or that the action is barred by the statute of limitations. Unlike a Rule 12 motion, which automatically stays the defendant's time to answer the Complaint (or the particular claim against which the motion is directed), a defendant must seek additional time to answer if these other motions are filed. A motion to dismiss on the ground of forum non conveniens is not uncommon where one of the parties is a foreign resident. While a plaintiff's choice of forum is not to be lightly disturbed, courts have discretion to dismiss a case where an adequate, alternative forum may hear the case. In deciding whether to dismiss on the ground of forum non conveniens the court has wide discretion and looks to both "private" and "public" interest factors. Given the factual complexity of such motions, extensive discovery on this one issue is not atypical.

The enforcement of a foreign judgment may also be raised by motion. United States courts will generally recognize and enforce foreign judgments, provided that the foreign court had both subject matter and in personam jurisdiction; that there was a full and fair opportunity to litigate the issue (regardless of whether a defaulting party took advantage of that opportunity); and that the judgment is final. The foreign judgment must also not otherwise be contrary to public policy. It is unclear whether a foreign judgment will be enforced if the foreign jurisdiction does not recognize and enforce judgments rendered in the United States ("reciprocity").

The Answer to the Complaint consists of admissions, direct denials and denials in the form of allegations that the defendant lacks sufficient information to form a belief as to the truth or falsity of the particular allegations in the Complaint. The Answer must allege, by way of "affirmative defense", any defense which raises matters beyond the scope of the Complaint. For example, a claim of laches (unreasonable delay in filing suit) would be considered an "affirmative defense". In addition, the Answer must include any counterclaim which arises out of "the transaction or occurrence that is the subject matter" of the Complaint ("compulsory counterclaims"). For example, a claim that the trademark registration pleaded by the plaintiff is invalid on the ground of fraud in its procurement must be pleaded as a counterclaim or such a defense will thereafter be deemed waived. Moreover, the defendant may also allege any other Counterclaim which the defendant has against the plaintiff, regardless of its subject matter, subject to the usual rules of jurisdiction and venue, and a cross-claim against another named defendant which arises out of the "transaction or occurrence that is the subject matter" of the Complaint or "relating to any property that is the subject matter" of the Complaint. The defendant may also serve a Third-Party Complaint against a person not already party to the lawsuit, with that Third-Party Complaint governed by the same rules as the Complaint ( e.g., personal jurisdiction must exist over the third-party defendant).

The last "basic" pleading consists of a Reply, which the plaintiff files in response to any Counterclaim alleged in the Answer. The same rules of pleading and motion practice apply to the Reply as are applied to the Complaint and Answer.

Both the plaintiff and the defendant are entitled, as a matter of federal constitutional law, to elect a trial by jury in intellectual property cases, provided, for example, some type of relief in addition to equitable relief, i.e., an injunction, is sought. The court, not a jury, however, must try certain issues in intellectual property cases, such as the interpretation of claims to a patent. The request for a jury trial must be made within 10 days after the last pleading is served. Failure to serve a timely request results in a waiver of that constitutional right, though the court has discretion to cure that waiver. Once a request for a jury trial has been made, it may not be withdrawn without the consent of the other parties.

Given the costs and risks of litigation, most cases are either settled or decided in advance of trial. For example, the parties may enter into a private agreement settling their dispute, and the case is dismissed by stipulation either with or without prejudice. Alternatively, the parties may consent to the entry of a final judgment, which is a type of contract enforceable by contempt sanctions. (In civil contempt proceedings, which are intended to coerce compliance and/or compensate one of the litigants, the contemnor must usually, at a minimum, pay the moving party's attorney's fees plus damages; in criminal contempt, which vindicates the court's authority, the contemnor may be fined and/or imprisoned.)

As described above, a case may be dismissed prior to trial by any of several Rule 12 motions which test the legal sufficiency of the pleadings and whether the particular court has or should exercise its authority to hear the case. A case may also be decided on its merits, however, prior to trial by a motion for summary judgment. Upon review of the respective parties' proofs in the form of affidavits, documents, depositions, and other discovery, the court may find that there is no genuine issue of material fact on one or more issues and, therefore, enter judgment on such issues. While a decision on a motion for summary judgment may not decide contested factual issues and thereby substitute for a trial of those issues, judges have been increasingly sympathetic to such motions.

Interlocutory relief is typically sought in intellectual property cases. Decisions on such motions will normally decide the final outcome of a case, since this will be the court's first opportunity to consider the merits of the case. The most common remedies sought include a seizure order without notice (" ex parte "), an ex parte temporary restraining order ("TRO"), a TRO with notice and a preliminary injunction. A recall order, wherein merchandise in the hands of distributors must be returned for impoundment during the pendency of the case, is another form of possible relief. In seeking interlocutory relief, the moving party files affidavits setting forth the factual basis for its need for immediate relief in addition to a legal memorandum. Where an ex parte seizure order or TRO is sought, a special showing must be made as to why the defendant will frustrate the court's order if prior notice is given. Courts are extremely reluctant to issue ex parte orders, with the exception of cases involving counterfeit goods, where ex parte orders have become typical. A TRO remains in effect for only 10 days, and, therefore, prior to the expiration of a TRO, a hearing is held on why the court should not issue a preliminary injunction, which remains in effect until the full trial on the merits.

A TRO and a preliminary injunction require the same showing. Generally the moving party must establish a likelihood of success on the merits and that it shall suffer "irreparable harm" if the court does not maintain the status quo by the issuance of an immediate injunction. Other criteria may include a balancing of the respective hardships upon the parties and the public interest. Courts may direct that an evidentiary hearing be held where factual issues are in dispute. At such a hearing the court will hear testimony from witnesses, review documentary evidence presented and consider any discovery taken. Courts normally do not require rigid adherence to the Federal Rules of Evidence at a preliminary injunction hearing given the expedited nature of the hearing. Moreover, in intellectual property cases, the required showing of "irreparable harm" often follows automatically if the movant establishes a likelihood of success on the merits. In other words, the unauthorized use of an infringing trademark or the violation of a copyright or of a patent are viewed as per se constituting irreparable harm, though that presumption may be rebutted where, for example, a party has delayed in seeking relief. If the preliminary injunction is granted, then security (in an amount set by the court) must be filed with the court in order to compensate the enjoined party in the event the injunction is later vacated for any reason. Subject to the requirements of "due process," the court also has discretion to expedite the lawsuit by consolidating the hearing on the preliminary injunction with the full trial on the merits.

Discovery in litigation may be extremely broad (some would say intrusive), since it is intended to provide all parties with ample opportunity in advance of trial to collect all relevant evidence and, in essence, to learn the other side's case and thereby avoid any possible surprise at the time of trial. The parties normally exchange initially certain discovery information, including the names of witnesses knowledgeable about the case, and documents that are relevant. Further, discovery is normally taken concurrently, and without priority accorded to any one party, subject, of course, to the court's supervisory rule of preventing discovery abuses. Discovery continues in accordance with a pretrial order, which is normally entered by the court at a first pre-trial conference, or in accordance with the applicable local rule, which may require that discovery be completed within a certain period of time from the commencement of the suit. Some district courts are particularly known for imposing an extremely short discovery schedule.

The principal types of discovery are requests for admission, written interrogatories, document requests, and depositions upon oral questions. Discovery must be reasonable and tailored to the particular needs of the case ( i.e., the amount in controversy) and must not be interposed for improper purpose ( i.e., needlessly increasing the costs of litigation). Failure to follow these rules without "substantial justification" will result in the imposition of sanctions, including payment of a party's reasonable expenses incurred as a result of the violation. Discovery may seek any information or evidence "relevant to the claim or defense of any party" or on showing of "good cause," "relevant to the subject matter involved in the pending action" or any evidence which is "reasonably calculated to lead to the discovery of admissible evidence." All parties have a continuing obligation to supplement a discovery response with respect to the identity and location of witnesses and to amend a prior response if the response was incorrect or is no longer correct so that failure to amend becomes a "knowing concealment." Discovery may not be had, however, of privileged materials, such as attorney-client information, attorney work product material or trade secret information.

The attorney-client privilege has been defined to cover the following:

Attorney-client information is absolutely barred from discovery. The prosecution of a trademark or patent application and communications with a patent agent may or may not fall within the scope of the privilege.

The attorney work product doctrine covers materials prepared in anticipation of litigation by an attorney and is intended to prevent disclosure of an attorney's legal theory about a case, though not the underlying facts. In contrast to the attorney-client privilege, attorney work product material is not absolutely barred from discovery. Information and materials subject to the attorney work product privilege may be obtained if "substantial need" and "undue hardship" in obtaining the "substantial equivalent of the materials by other means" can be proven, though the court must then ordinarily protect against disclosure of the attorney's legal theories. The sharing of information between counsel for different parties having a common goal, such as manufacturer and distributor, probably does not constitute a waiver. Special rules apply to "expert witnesses" consulted or retained by counsel for trial.

"Trade secret" information is likewise not absolutely privileged. Even if the information is commercially sensitive and its disclosure is likely to be harmful, the information may still be ordered disclosed under certain terms and conditions, depending on its relevance and necessity to the adverse party. Oftentimes trade secret information is disclosed through the entry of a protective order which allows the attorneys and the experts, but not the parties, to view the "trade secret" material. Disclosure in violation of a protective order is punishable by contempt.

Disputes over discovery, such as the scope and timing of the discovery devices, are resolved by the court on motion, with sanctions imposed on the losing party, unless that party was "substantially justified" in resisting discovery. The parties must first certify, however, their efforts in seeking to resolve in good faith discovery disputes without the court's intervention. Moreover, if a party fails to provide information, despite a court order, or totally fails to respond to discovery requests, then the court may bar the introduction of evidence at trial on the issue, hold the party in contempt (where an order had been entered) or enter judgment adverse to that party.

Requests for admission seek concessions from the other side as regards factual issues not genuinely in dispute. A failure to deny a request constitutes an admission. On the other hand, sanctions may be imposed on a party who fails to admit in good faith a requested concession.

Written interrogatories consist of questions to which answers, under oath, as well as legal objections, must be served within 30 days after service. Normally a party is limited to posing only 25 interrogatories. Failure to assert properly and on a timely basis a legal objection, such an attorney-client privilege, may result in a waiver of that objection. Interrogatories are normally of value only to obtain certain types of information, since answers to interrogatories are typically drafted by counsel. Moreover, courts have increasingly narrowed the scope of interrogatories which may be posed, with, for example, some local court rules permitting only interrogatories seeking information concerning the identity of witnesses. Where an answer to an interrogatory may be derived from business records and the burden of deriving that information would be substantially the same for both parties, the answer to the interrogatory may simply identify the records and offer the adverse party a reasonable opportunity to inspect those records.

Document requests and depositions are the most useful forms of discovery. A document request seeks the right to inspect and copy documents identified with "reasonable particularity" with the production of the documents made at a reasonable time, place and manner. The party receiving the request has 30 days to serve a written reply, including objections, and must either produce the documents as they are kept "in the regular course of business" or label them in order to correspond to the particular discovery requests.

Each party is ordinarily limited to ten depositions, with each deposition no more than seven hours. A party's notice of deposition either names, or must provide a general description sufficient to identify, the witness whose testimony is sought. A party may also describe the information sought, and the corporation may then designate the witness to testify on the corporation's behalf. A deposition consists of an attorney posing questions to the witness who is placed under oath and whose testimony is recorded in some manner, such as "by sound, sound and visual, or stenographic means." All objections to questions posed are preserved automatically until the time of trial, except, for example, for objections as to the form of the question which could have been obviated had the objection been raised at the time of the deposition. An instruction to a witness not to answer may generally only be given in the case of privileged information. There is no requirement as to where a deposition must be taken. Generally, however, a plaintiff may be expected to give testimony in the district where the case is pending, since the plaintiff chose that forum. On the other hand, the defendant may often resist discovery other than where the defendant resides or is employed.

Discovery may also be had of persons not party to the litigation. Thus, a party can compel both production of documents and deposition testimony from such a witness through a subpoena, which is signed by an attorney as an "officer of the court", and then personally served on the witness. The non-party witness may move to quash or modify the subpoena or condition the production of documents on the advancement of costs for doing so.

Discovery from foreign parties presents a unique problem, since the types and scope of discovery had in

U.S. litigation is virtually unknown outside of the United States. U.S. Courts take the view that the Federal Rules of Civil Procedure are applicable to foreign parties, separate and apart from the Hague Convention, provided personal jurisdiction exists over those parties.

Following the close of discovery, a pretrial order is entered which governs the documents and testimony which may be introduced at trial. The extensive discovery is intended to ensure that all information which is likely to be introduced as evidence at trial has already been disclosed and exchanged between the litigants. The parties will submit their respective proposed findings of fact and conclusions of law in the case of a non-jury trial or proposed jury instructions where the trial will be heard by a jury.

The trial is governed by the Federal Rules of Evidence, which limit the types of evidence that may be heard. The most important limitation on evidence is the "hearsay" rule which prohibits the introduction of "out-of-court statements" when used to prove the truth of the statements themselves. For example, a witness' testimony at trial that a chemist, Mr. X, had told the witness that he, Mr. X, had sought to duplicate the taste of chocolate fudge in creating a drink, is hearsay if introduced to prove that Mr. X had sought to duplicate the taste of chocolate fudge. This "hearsay" rule is premised on the theory that a party is entitled to cross-examine all evidence. In this example, an adverse party is entitled to cross-examine the chemist, Mr. X, on what, if anything, he sought to duplicate. There are, however, statements not considered "hearsay", such as prior admissions by a party or by a party's agent within the scope of the agent's employ. In addition, there are numerous exceptions to the hearsay rule, such as business records, public records, excited utterances, learned treaties and documents affecting an interest in property. These materials are considered by their inherent nature sufficiently trustworthy as to be admissible, notwithstanding that they are not "cross-examined". Moreover, separate and apart from the "hearsay" rule, all documents must be authenticated by oral testimony, unless the document falls within certain documents considered "self-authenticating," such as United States documents under seal, certified copies of public records, or copies of foreign public documents attested to by a person authorized to make the attestation together with a "final certification".

At the trial, evidence consists of oral testimony, documents and discovery (often read into the record). With regard to discovery used at trial, certain depositions can be introduced at trial for any purpose by the adverse party. Moreover, the deposition of any other witness may be introduced by any party for any purpose under certain other circumstances, e.g., the witness is dead. Plainly, however, such testimony may well be accorded less weight than the testimony of a person appearing and testifying at the trial itself. Finally, the court has wide discretion on how to decide issues of foreign law, including the hearing of expert testimony.

A decision is, in due course, rendered which must set forth specific findings of fact and conclusions of law. A separate "judgment" document is then entered. Normally the prevailing party recovers only its statutory costs in the litigation ( i.e., transcript fees). However, a pretrial Offer of Judgment may reverse that normal rule, and the Trademark, Copyright, and Patent Acts, may grant to the prevailing party the recovery of its reasonable attorneys' fees.

Generally, an appeal may be taken only from a final decision of the trial court, certain specified interlocutory orders, such as the grant or the denial of a request for a preliminary injunction, interlocutory rulings where there is a controlling issue of law and a decision would materially advance the case and certain orders which are by their very nature "final", such as proceedings in furtherance of foreign litigation. The record on appeal normally consists of only those proceedings had before the trial court, i.e., no additional evidence is introduced. The factual findings of the lower court must be affirmed by the circuit court, unless the circuit court believes that these findings are "clearly erroneous", not that the circuit court would have found otherwise on the same facts. On the other hand, the circuit court reviews de novo the trial court's holdings on issues of law. Thus, whether an issue is one of fact or law has significant consequences and, not surprisingly, courts are sometimes divided on whether an issue is one of fact or of law. For example, the circuit courts are divided on whether "likelihood of confusion" in a trademark infringement case is a finding of fact or law. Finally, even assuming the district court's findings of fact are not "clearly erroneous" and that its holdings are not contrary to the law, the trial court, in some circumstances, has "discretion" on whether to grant certain types of relief, such as preliminary injunctions. These "findings" of the trial court may be reversed by the circuit court only for an "abuse of discretion".

There are generally two ways in which a case comes before the United States Supreme Court: by an appeal and by means of a writ of certiorari. Appeals from federal circuit courts of appeals are limited to those cases where a circuit court has held a state statute unconstitutional or otherwise invalid under federal law. In view of these limitations, appeals to the Supreme Court are comparatively rare. Most cases heard by the Supreme Court come before the court on a writ of certiorari from a federal appeals court or the highest court of a state which can hear the case. Review of the decisions of federal and state courts under the certiorari procedure is discretionary and in only a very few of the cases when petitions for certiorari presented to the court does the court actually review the decision below. A case will only be accepted for review by the Supreme Court if four of its nine members vote in favor of allowing the case to be argued before the court; otherwise the petition is denied and the decision of the lower court stands.

The Supreme Court's review is limited to overseeing whether the circuit has applied the correct legal principles in reviewing the district court's findings. The Supreme Court does not engage in fact finding. In the intellectual and industrial property area, the Supreme Court acts to enunciate the broad principles of law which must then be filled in by the lower courts.