En Banc Denied: Walker Process Claims Stay out of the Federal Circuit

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:

  1. 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?
  2. 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?

51 thoughts on “En Banc Denied: Walker Process Claims Stay out of the Federal Circuit

  1. 9

    I am personally delighted to see more and more “patent-related” cases being heard by courts outside the Federal Circuit. Although “core” patent cases (which directly involve claims of infringement or invalidity), having patent-related antitrust, malpractice, etc., cases heard elsewhere could give patent law a well-needed shot in the arm of diverse viewpoints.

    Case in point, Microsoft Corp v. Motorola, an astonishingly well-written 2015 Ninth Circuit decision on patent damages and royalty rates. Cases like that give you a glimpse of what the world might be light if patent cases as a whole weren’t subject to the groupthink tank that is the CAFC.

    1. 9.1

      Been there. Done that. (not nearly as rosy as you want to paint the picture – can you say “forum shopping” along with “fractured and diverse views NOT being coalesced”

  2. 8

    Fascinating. Finally the patent owner is getting equal treatment under the law. Before we thought that a patent claim had to endure infinite challenges but had a single life. Now it has infinite challenges and infinite lives. Yay for public franchise rights and limbo zombie patents.

    1. 8.1

      Newman:

      The panel states: “The underlying
      patent issue in this case, while important to the
      parties and necessary for resolution of the claims, does
      not present a substantial issue of patent law,” and that
      “[s]omething more is required to raise a substantial issue
      of patent law sufficient to invoke our jurisdiction.” Transfer
      Order, 882 F.3d at 1078. We are not told what that
      “[s]omething more” might be.

      Hmmm, it appears that the panel has been cribbing from the Supremes…

      (passing thought: the reference to Madsted by Newman at page 8 is interesting…)

  3. 7

    As to question number 1 being presented to the 5th Cir. above, if they decide to consider it would they not be likely to seek input from the PTO and/or send the case back down for fact finding on that question?

  4. 6

    This recent opinion seems at least to be in conflict with the dissent’s characterization:

    “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”

    “Patent appeals” is Judge Newman’s characterization, which is probably either mistaken, misleading, or a rhetorical point that shouldn’t be taken too literally. Unless I’ve missed something, there are no issues of patent infringement or invalidity. There’s only an antitrust claim for which the theory is based on conduct at the patent office.

  5. 5

    The panel’s order transferring the case to the Fifth Circuit is here. The reasoning seems solid. link to cafc.uscourts.gov

    Judge Newman’s dissent seems wrong to me, but good for her at least for flagging that the panel’s transfer order is a big deal. link to cafc.uscourts.gov

    Somewhat interestingly, Judge Lourie dissents from denial of rehearing en banc without filing or joining an opinion. It’s just speculation, but one possibility may be that he thinks the panel may have been right to transfer the case, but agrees with Judge Newman to the extent that if it follows from Gunn v. Minton that Walker Process fraud claims are for the regional circuits then the en banc court should be the one to say so.

  6. 4

    I must be missing something here. The PTO can not declare that an invalidated patent is valid. Likewise, it can not declare that a child of that same invalidated patent — whose claims are broader than the invalidated parent patent — is valid. The PTO can certainly grant an unenforceable patent or an invalid patent (happens all the time).

    What appears to have happened here is that there was a fraud upon the patent office committed by KLA. There is an answer for that. The answer is severe sanctions on all the attorneys involved. An appropriate sanction, for example, would be lifetime elimination of the company and its officers and all of the attorneys from participation in the patent system. Does that sound harsh? It should. Because without that kind of penalty, people will just continue to play these games.

    Of course, that sort of harshness would create a wee problem for companies who are prosecuting patents directed to, e.g., methods of using information and logic to determine when to put a car’s brakes on or toot the horn.

    1. 4.1

      The PTO can not declare that an invalidated patent is valid. Likewise, it can not declare that a child of that same invalidated patent — whose claims are broader than the invalidated parent patent — is valid.

      Under Oil States, why not?

      (question is not as snarky as it may at first appear)

      1. 4.1.1

        Oil States doesn’t control this question. Blonder Tongue etc would need to be overturned.

        Put another way, Oil States didn’t create new fundamental underlying patent policy considerations out of whole cloth. On the contrary, the decision adhered to the same considerations and fundamental understandings of the system that have been driving it since pretty much forever.

        Gentle reminder: the public interest is paramount. Something there is that doesn’t love a monopoly, be it a patent right or any other type.

        1. 4.1.1.1

          I think that you have not thought out ALL the implications of “Oil States” by answering so quickly.

          Oil States provides that the forum of the Office may be separate – and may override – the forum of an Article III court.

          And actually, Oil States DID create new fundamental underlying patent policy considerations out of whole cloth.

          Your “since pretty much forever” is the opposite. And that opposite MAY cut both ways (upon the discretion of the Office).

          That’s why the question is not as snarky as it may at first appear. Of course, you may have to actually think about these things and their ramifications BEYOND your usual tendencies of “if it is bad for patent holders, it must be a good thing.”

          As to Blonder Tongue etc… – I would love to see how you think that any ramifications of Oil States does not somehow flow through that or any other case… (unless you think that you can flip-flop and only take one side of the coin when it harms a patent holder and negate the other side of the coin, if (by chance) a patent holder is benefited… Not that I would be surprised that your feelings would run thusly, but your case name dropping simply does not suffice. Seeing SOME (any?) actual reasoning or critical thinking from you would be a welcome change of pace.

          1. 4.1.1.1.1

            Oil States provides that the forum of the Office may be separate – and may override – the forum of an Article III court.

            Article III courts are also incapable of declaring that a patent is “valid”.

            And findings of invalidity by the PTO are always appealable to an Article III court.

            So you really have no idea what you’re talking about and you never did. And that’s because you and your cohorts still don’t understand that “patent rights” are what Congress says they are and no more than that. Seriously, give it up already. This was a lost cause even before it started.

            1. 4.1.1.1.1.1

              You raise a good point in that an Article III court will not declare a patent to be “valid.”

              Instead, they engage in the double negative of “not found invalid.”

              But you kind of skip WHY the Article III court does it this way.

              But more to the point, THAT has nothing to do with what Oil States provides that a non-article III forum may – or may not – do.

              And to that end, your additional comment of “And findings of invalidity by the PTO are always appealable to an Article III court.” is a non-sequitur.

              Whether or not that is a possibility is just not at issue here.

              As to your last paragraph, your ramblings belie your dipping into your usual meme of Accuse Others. What Oil States has done is just NOT what Congress says they are: 35 USC 261.

          2. 4.1.1.1.2

            I would love to see how you think that any ramifications of Oil States does not somehow flow through that or any other case

            Oh, the “ramifications” of Oil States will continue to flow through everything related to the patent system just as they always have. But those “ramifications” will do nothing to weaken the policy considerations that drove Blonder Tongue. On the contrary.

            You’ll never understand any of this. Not sure why I bother except to make an example out of you and teach the newbies.

            1. 4.1.1.1.2.1

              the contrary.

              You’ll never understand any of this. Not sure why I bother

              That’s just it: you have NOT bothered. That is rather the point of my post here: I want to SEE you bother with SOME minimal amount of critical thinking and explication.

              ALL that you have done is throw out a case name, and “think” that you have done something wonderful or insightful.

              You have not.

              and teach the newbies

              The lesson that you are teaching is NOT the lesson that you think that you are teaching.

              As usual.

            2. 4.1.1.1.2.2

              I’m not sure if I’m following this, but it sounds like you’re going back and forth on a basic point.

              Despite loose language in some court opinions, patent claims are never held “valid” in the court or the PTAB. The tribunal merely rules that the patent challenger hasn’t met its burden of proof of invalidity in that case. The patent may be invalid for other reasons or based on other evidence, and others remain free to make those arguments. See, e.g., Shelcore v. Durham, 745 F.2d 621, 627 (Fed. Cir. 1984). If a patent claim is invalid, though, it’s dead for all purposes and the patent holder can’t go suing on it in other cases. That’s basically Blonder-Tongue. Invalidity is something of a one-way ratchet and the patentee has to win every case to hang onto a patent claim.

              If that’s all the back-and-forth is about, then it should be clear that Oil States doesn’t affect the idea that courts and agencies can’t take a claim that has been ruled invalid in another proceeding and rule that it’s “valid.”

              If I’m missing the real disagreement, then nevermind.

              1. 4.1.1.1.2.2.1

                ..unless the Office declares otherwise (and given Oil States, the Office is free to do what it wants with the Public Rights aspect of being the Franchisor).

                Blonder Tongue was before Oil States and reflects the then condition that patents were private personal property as opposed to being public right/franchise rights.

                Your “doesn’t affect the idea” mandates that there be no fundamental change.

                There was a fundamental change.

                The implications of that fundamental change have yet to ripple through the system.

                Mind you, this is NOT the only ripple. Prior to the Oil States case, I pointed out on a number of occasions other ripples that would come if the basic nature of a private personal property right was changed by way of a Public Rights doctrine.

                1. ..unless the Office declares otherwise (and given Oil States, the Office is free to do what it wants with the Public Rights aspect of being the Franchisor).

                  On what basis would or could the Office declare otherwise?

                  Patents are created by statute and issued by the PTO. Theoretically, I suppose Congress could amend title 35 tomorrow and possibly create some mechanism for reviving patents that have been invalidated in court. But they haven’t done that, and I’m not aware of anything in Oil States suggesting that the current system allows this sort of thing.

                  I take Oil States’ reference to “franchise” to mean only that patents are granted subject to conditions, including the availability of post-grant proceedings where the PTO can reconsider its decision to grant the patent. I don’t see how you get from “franchise” to courts and agencies resurrecting patent claims that have been invalidated in other proceedings.

                2. The “allowance” in Oil States is the premise that patents are a Public Right item and that the Office has power to do what it wants.

                  This is a fundamental change of what a patent is.

                  That fundamental change has ramifications.

                  I am not saying that the Office WILL do as such, but your searching and reliance on cases that treat patents under the old and fundamentally different understanding ARE susceptible to no longer applying as you have grown accustomed to them applying.

                  The path does not hinge on “franchise” as much as it does HOW that “franchise” notion was carried through: Public Rights.

                  Public Rights and private personal rights are simply not the same things.

  7. 3

    It is no surprise that antitrust suits are going to normally be decided in regional circuits, and Walker Process AT suits are almost never successful anyway. But if the patent owner here really did obtain in a second and later patent “claims identical-to or broader than claims” of its prior patent held “invalid” [or was it actually just held unenforceable for IC?], then why doesn’t the PTO Director challenge by reexamination or IPR this second patent on at least “obviousness-type double patenting” grounds, rather than leave this judges verbal attack on the PTO unrebutted?

    1. 3.1

      Not even to mention what kind of PTO Office of Enrollment and Discipline actions these allegations could engender IF indeed a second patent application with the same claims was actually prosecuted w/o full disclosure of a prior patent and a copending litigation outcome on the same claims.

      1. 3.1.1

        I have to wonder if the facts support either of these (typically slanted against a patent holder) views of Paul’s:

        1) w/o full disclosure of a prior patent and a copending litigation outcome on the same claims.
        – (and what if there was full disclosure…?)

        2) why doesn’t the PTO Director challenge by reexamination or IPR this second patent on at least “obviousness-type double patenting” grounds
        – (how does double-patenting come into play if there is no (longer) any first patent…?)

        1. 3.1.1.1

          1) w/o full disclosure of a prior patent and a copending litigation outcome on the same claims.
          – (and what if there was full disclosure…?)

          Then it would be much more difficult to prove fraud.

          – (how does double-patenting come into play if there is no (longer) any first patent…?)

          The problem with double-patenting is not just “two patents on the same thing.” The extension of term beyond the term of the first patent (thereby denying the public it’s right to practice the full scope of what should be in the public domain) is a big driver of the doctrine.

          1. 3.1.1.1.1

            Your “big driver” is not there if there is no “first patent” there…

            (you missed the point of the comment)

    2. 3.2

      “why doesn’t the PTO Director challenge by reexamination or IPR this second patent on at least “obviousness-type double patenting” grounds”

      Now that would be entertaining. The Director files a petition for IPR and then decides whether his petition meets the criterion for instituting a trial. Upon review, he decides there’s a reasonable likelihood of success and institutes trial (surprise!). Then has the Solicitor’s office depose the patentee’s witnesses and file his reply to patentee’s response. Then serves on the PTAB panel and packs another panel if the first gets it wrong. Or else dissents and appeals that decision to the Federal Circuit.

      Unfortunately, the IPR statute does not allow challenges on judge-made grounds — only those that could be raised under section 102 or 103.

    3. 3.3

      “why doesn’t the PTO Director challenge by reexamination or IPR this second patent on at least “obviousness-type double patenting” grounds, rather than leave this judges verbal attack on the PTO unrebutted?”

      The later patent has a terminal disclaimer.

      1. 3.3.1

        To complete the thought, the later patent has a terminal disclaimer with respect to the earlier patent held invalid, so any obviousness-type double patenting on that basis is obviated and not subject to reexamination. Also, the Federal Circuit’s orders do not mention that the patent owner, after paying the issue fee, filed a statutory disclaimer for the broadest claims in the later patent.

        1. 3.3.1.1

          Thanks, and it is beginning to look like I was wrong about the PTO itself being able to do anything about this mess. But note that if some claims of the second patent were truly identical to those in the first, as alleged, that would be statutory double patenting, not cureable by a disclaimer.

          1. 3.3.1.1.1

            I’m really busy right now and cannot do your research for you at this time. But a statutory disclaimer could absolutely cure statutory double patenting.

            1. 3.3.1.1.1.1

              Sorry, I thought we were talking about the usual terminal disclaimers, not a [total] statutory disclaimer.

          2. 3.3.1.1.2

            I think “identical” is somewhere between an exageration and misleading as there are only word-for-word copies of dependent claims.

            1. 3.3.1.1.2.1

              Yeah, ok, I looked at the claims in both patents and it’s nowhere close to “identical” claims and statutory double patenting. That suggests that the district court judge may have been misled by one party about “the invention,” as opposed to what was actually claimed.

  8. 2

    [T]he Court suspects the examiner was in fact aware of the Court’s [invalidity] holding but chose to ignore it.

    Does anyone know the basis for this statement?

    1. 2.2

      Even if the examiner was aware of a federal district court holding of invalidity, he has no basis to take the district court decision into consideration during his examination of a continuation unless said decision contains an applicant’s admission that is relevant to the examination of the continuation.

      Examiners follow the MPEP. They don’t pay much attention to Article III court decisions except for those CAFC and SCOTUS cases cite in the MPEP.

      1. 2.2.1

        While examiners MAY follow the MPEP, the MPEP is often wrong on the law, and the examiners MUST hew to the law as opposed to the MPEP.

        THIS is part of the job we have when we interact with examiners who insist on not following the law and instead, woodenly merely quote some MPEP boilerplate.

        I seem to recall that you have become a patent agent only within the last year. As such, you may be still too green to realize the limitations of the MPEP (I do recall that the registration exam likes to treat the MPEP as gospel, and that in studying for the exam, you are not likely to question any one portion’s veracity). Rest assured, in real life practice, not only is questioning veracity helpful, it is on occasion required.

        1. 2.2.1.1

          To second Anon’s observation, the MPEP’s treatment of In re Keller, 642 F. 2d 413, is an example of this.

            1. 2.2.1.1.1.1

              oddly, a critique on an internationalist’s (incorrect) views of the US Sovereign’s choices as to what PHOSITA means is being blocked on another thread.

              Even when scrubbed for possible George Carlin like words…

              Maybe some day such narratives will be “tolerated.”

        2. 2.2.1.2

          While I only recently became a registered patent agent, I have been involved in application examinations since the early 80. I was teamed with 1 or 2 excellent patent lawyers first at Bell Labs, then at Clearpoint, and then at the family trust. We have tried to explain decisions misdescribed in the MPEP, but it almost never works. Patent examiners mostly aren’t lawyers. We have had more success at BPAI/MPEP.

          1. 2.2.1.2.1

            I would posit that applicants who knowingly chose to alllow incorrect MPEP to override proper law (whether or not Examiners are attorneys is completely besides the point as to what they must do) is like getting rid of the wolf at the back door by throwing it a steak.

              1. 2.2.1.2.1.1.1

                I put a comment from Fenwick & West LLP in the image aboe. This firm’s experience seems somewhat like mine. The issue may be the luck of the examiner draw.

                As I remember, Clearpoint obtained its Hair Salon Patent without much difficulty.

                Because independent claim 1 uses means+function format, the claims are extremely narrow, and Ed Porter is a very good patent attorney.

                1. Clearpoint sometimes patented technology in order to defend against against future complaints of infringement. Wang killed Clearpoint with a bogus infringement complaint because Judge Mazzone, who — as I remember — had a relative that was a senior manager at Wang, entered an injunction against Clearpoint to stop Clearpoint from selling its most profitable product.

                  In a decision written by Judge Haldane Mayer, the CAFC lifted the injunction and pointed out that Mazzone incorrectly applied the Doctrine of Equivalents and that Wang had no substantial likelihood of prevailing on its complaint of infringement.

                  [To be honest, when I reviewed Clearpoint’s books, I found that the CFO siphoned off almost all Clearpoint’s free cash through a complex series of transactions.]

                2. Clearpoint sometimes patented technology in order to defend against against future complaints of infringement. Wang killed Clearpoint with a bogus infringement complaint because Judge Mazzone, who — as I remember — had a relative that was a senior manager at Wang, entered an injunction against Clearpoint to stop Clearpoint from selling its most profitable product.

                  In a decision written by Judge Haldane Mayer, the CAFC lifted the injunction and pointed out that Mazzone incorrectly applied the Doctrine of Equivalents and that Wang had no substantial likelihood of prevailing on its complaint of infringement.

                  [To be honest, when I reviewed Clearpoint’s books, I found that the CFO siphoned off almost all Clearpoint’s free cash through a complex series of transactions.]

      2. 2.2.2

        You don’t get more of an “admission” than the patent owner not even appealing a D.C. [now final] invalidity decision, but was it unenforceability here instead of invalidity, and different claims? Also, did the D.C. decision on the original patent include a “but for” finding of undisclosed prior art materiality ignored by the examiner of the second application?

          1. 2.2.2.1.1

            It seems different for an appeal to be made and for the appellant not to respond to a specific holding of several holdings in the decision. In such a case, silence seems like consent, but not appealing at all might have a completely different reason.

        1. 2.2.2.2

          You don’t get more of an “admission”

          Fixed:

          You don’t get an “admission.”

          That you want this otherwise, Paul, is merely a reflection of your innate bias.

  9. 1

    Any idea(s)/comments on how this case reconciles with:

    Alexsam, Inc. v. WildCard Systems, Inc., No. 15-CIV61736, 2015 WL 13688558 (S.D. Fla. Nov. 20, 2015). (See Notice of Removal ¶ 15). In Alexsam, the basis for removal was 28 U.S.C. section 1454, see id. at *7. The defendant in Alexsam removed the state-law claims after filing a patent non-infringement counterclaim. This recent opinion seems at least to be in conflict with the dissent’s characterization:

    “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”

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