By Dennis Crouch
Xitronix Corp. v. KLA-Tencor Corp. (Fed. Cir. 2018)
When Xitronix sued KLA-Tencor, it raised only one cause of action – “a Walker Process monopolization claim under § 2 of the Sherman Act and §§ 4 and 6 of the Clayton Act based on the alleged fraudulent prosecution of a patent.” See Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965). The basic allegation was that KLA fraudulently obtained its U.S. Patent No. 8,817,260 with claims identical-to or broader than claims of KLA’s previously invalidated U.S. Patent No. 7,362,441.
The district court rejected the case on summary judgment based upon a lack of evidence of fraud – reasoning that the PTO probably has power to override the court. The district observed wrote:
[T]he Court suspects the examiner was in fact aware of the Court’s [invalidity] holding but chose to ignore it. It would not be the first time the PTO, an administrative agency, overrode a final judgment of an Article III court, and it will likely not be the last. (Order).
The Patent Office can now come to a different conclusion than district court[s], the circuit court, [the] Supreme Court, for that matter, and until the Supreme Court or the Congress suggests that, there’s no stability in patent law. . . . It’s an egotistical war between the patent office and the circuit court for sure. But they’re not bound by a jury verdict. They’re not bound by a judge’s judgment. They made that clear, expressly in writing.
On appeal, the Federal Circuit did not address the merits of the holding – but rather ruled that Walker Process monopolization claims do not arise under the U.S. Patent Laws. As a result, the Federal Circuit has no appellate jurisdiction over the case and it was ordered transferred to the 5th Circuit.
Xitronix then requested en banc rehearing on the issue – arguing that the questions here strike to the core of patent law doctrine and procedure. That request has now been denied.
Writing in dissent, Judge Newman explains that the decision here is fundamental “to the judicial structure of patent adjudication, and the future of a nationally consistent United States patent law.”
I write in concern for the conflicts and uncertainties created by this unprecedented change in jurisdiction of the Federal Circuit and of the regional courts of appeal. With the panel’s unsupported ruling that the Supreme Court now places patent appeals within the exclusive jurisdiction of the regional circuits when the pleading alleges that the patent issue may lead to a non-patent law violation, we should consider this change en banc.
In its 2013 decision in Gunn v. Minton, 568 U.S. 251 (2013), the Supreme Court ruled that a state-law attorney malpractice case did not trigger federal court patent jurisdiction. Newman distinguishes that case on several grounds: (1) that case involved a “long dead patent” and so the outcome would not change any other patent litigation cases; (2) Gunn involved a State interest in adjudging the state cause of action – while here there are only federal interests at stake. According to Judge Newman, the underlying dispute is about “the validity and enforceability of the patent” – questions that should be heard by the Federal Circuit.
The case is now pending in the 5th Circuit Court of Appeals with the Following Two Questions:
- After an unappealed federal district court judgment declared claims in a parent patent invalid, can a patent-holder maintain a continuation patent before the PTO with claims “word for word” identical to, or broadened over, claims that had been invalidated by a jury verdict and a federal court judgment without committing fraud?
- Did the summary judgment record present a factual basis from which a jury could find that KLA-Tencor made affirmative misrepresentations and material omissions in its prosecution of the ’260 patent but for which the ’260 patent would not have issued?