Federal Circuit Appellate Jurisdiction over Antitrust Claims

Ferring B.V. v. Meijer, Inc., on petition for a writ of certiorari to the Supreme Court (2010)

In a controversial decision, the Court of Appeals for the Second Circuit held that a customer (rather than a competitor) has standing to bring a Walker Process monopolization claim based on the enforcement of patent that had been procured through fraud on the USPTO. In re DDAVP Direct Purchaser Antitrust Litigation, 585 F.3d 677 (2nd Cir. 2009). Although the Court of Appeals for the Federal Circuit holds exclusive jurisdiction over all appeals of final judgments in cases that are based “in whole or in part” on US patent law issues, the Second Circuit held that it had jurisdiction in this case because the antitrust claim stated in the complaint could have potentially been sustained without determining a question of patent law (even though the patent fraud issue was clearly the most important claim). The jurisdiction issue seemingly turned on the fact that the plaintiff’s complaint included only one “count” of monopolization that could be proven by several different theories.

Ferring has now filed a petition for Supreme Court review focusing on the issue of appellate jurisdiction.

The question presented is whether the Second Circuit’s new jurisdictional standard conflicts with this Court’s decision in Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988), and with decisions of the Federal Circuit and Seventh Circuit, holding that the Federal Circuit has exclusive jurisdiction in any patent-based case in which patent issues must be resolved in order for plaintiffs to achieve the overall success of their claim and obtain all the damages (or other relief) they seek.

In Christianson, the Supreme Court held that the Federal Circuit holds exclusive jurisdiction over patent cases when the “well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.”

Comment: This case has a strong chance of being granted certiorari. Of course, patentees would generally prefer to have their cases heard by the Federal Circuit. Several trade organizations, including IPO, BIO, and PhRMA, are expected to file briefs in support of the petition.

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10 thoughts on “Federal Circuit Appellate Jurisdiction over Antitrust Claims

  1. OED believes it is necessary for each reference to be read.

    cite please (unless the OED has a legal basis for this – don’t expect much)

  2. The question becomes at what point do the caps for writing and/or prosecuting patent applications become so low as the require a separate line item for handling 37 CFR 1.56 responsibilities in order for a patentee to avoid the charge of fraudulent procurement. For example, if a patent application is written for $8,000.00 and then there are 300 references to cite, is it reasonable to conclude that the $8,000.00 is includes the IDS? Or should in-house counsel, just to be safe, separate a second line item for 37 CFR 1.56 obligations to show it is billed separately? Consider this: OED believes it is necessary for each reference to be read.

  3. I think the Supremes may take the case because the Feds have appeared to added a requirement of proof to a Walker Process claim not found in Walker Process: to wit, that the patent be invalid in addition to having been fraudulently procured. Now, if this requirement of proof is in fact correct, then a mere holding of uneforceability by the Federal Circuit can never by itself support a Walker Process claim in a companion circuit, as the “validity” issue would (also?) have to be resolved by the companion circuit in order to sustain the claim.

    The exact wording of Walker Process is interesting on this point:

    “Walker’s counterclaim alleged that Food Machinery obtained the patent by knowingly and willfully misrepresenting facts to the Patent Office. Proof of this assertion would be sufficient to strip Food Machinery of its exemption from the antitrust laws.5 By the same token, Food Machinery’s good faith would furnish a complete defense. This includes an honest mistake as to the effect of prior installation upon patentability—so-called ‘technical fraud.’” Walker Process at Section III

    link to openjurist.org

    In this case, the Feds have already held that the patent owner obtained the patent by knowingly and willfully misrepresenting facts to the PTO. No patent issues remain to be resolved to adjudicate the Walker Process claim if the patent does not have to be found to be invalid as a necessary element of proof.

    Interesting case. A lot of food for thought.

  4. TJ — You make a good point. There are some circuits (such as the seventh circuit) that could be considered pro-patent and anti-antitrust. However, in these class-actions lawsuits, the antitrust-defendant patentee typically does not get to choose the venue. Thus, the question really is whether the patentee would prefer the 2nd or 3rd Circuit over the Federal Circuit.

  5. Just a couple of points: the second circuit cites Christianson for the “alternative” grounds theory. The petition’s main point must be that the 2nd Cir. will necessarily pass on the “fraud” issue, and that this should be decided by the Feds.

    The fraud at issue here is, theoretically, beyond that sufficient to prove IE. But in this case, I think not — as the patent has already been found unenforceable by the Feds due to deliberate misrepresentation of material facts — the non disclosure that four out of five affiants in Section 132 affidavits were paid associates or employees of the patent owner. I think this should be enough to prevail on Walker Process fraud.

    So in reality, there is no major patent law question to be decided in this case. It has ALREADY been decided by the Federal Circuit.

  6. “why do you think that patentees would generally prefer to have their cases heard by the Federal Circuit?”

    I can’t speak for Prof. Crouch, obviously, but I would think some of the benefits of Federal Circuit jurisdiction are 1) a single legal standard, at least ideally and 2) a single set of judges and procedures with which to be familiar, giving repeat players an advantage.

    Also, there may be a concern that giving the regional circuits jurisdiction would lead to forum shopping for anti-patent circuits akin to the ‘bad old days’ before the establishment of the Federal Circuit.

    And as you say, there may be regional circuits that are even more pro-antitrust defendant, but antitrust plaintiffs would tend not to file in those circuits. Patentees may feel that the Federal Circuit is more pro-defendant than the average regional circuit, as weighted by potential caseload. Thus, on balance the Federal Circuit would be better for patentees.

  7. The cert petition makes the following argument, but does not present it as a question to be addressed. How come? {Also, is this relevant to the pending appeal of the District Court decision in favor of the ACLU against gene-related claims?]:
    “BY ASSERTING JURISDICTION HERE, THE
    SECOND CIRCUIT WAS ABLE TO ADDRESS AN IMPORTANT
    QUESTION OF PATENT LAW AND POLICY: WHETHER CUSTOMERS WHO LACK STANDING TO CHALLENGE PATENTS DIRECTLY UNDER PATENT LAW CAN CIRCUMVENT THIS PROHIBITION BY ATTACKING THE SAME PATENTS UNDER ANTITRUST LAW.”

  8. Dennis, why do you think that patentees would generally prefer to have their cases heard by the Federal Circuit? Overall, that court is rather hostile to antitrust claims; but I can definitely think of some circuits that have an even more pro-defendant reputation (e.g. the Seventh).

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