Walker-Process Antitrust Case is Back Before the Federal Circuit

by Dennis Crouch

The Court of Appeals for the Federal Circuit (CAFC) has exclusive appellate jurisdiction over any “appeal from a final decision of a district court of the United States . . . in any civil action arising under . . . any Act of Congress relating to patents.”  28 U.S.C. § 1295(a)(1).  “Arising under” jurisdiction clearly include patent cases, but it also includes a “special and small category” of cases that don’t directly arise under the Patent Act, but involve patents decisions at such a deep level that it should be deemed a patent case.   In drawing these lines, a clear data point came in Gunn v. Minton, 133 S. Ct. 1059 (2013).  In that case, the Supreme Court was faced with a patent attorney malpractice case that would require determination of various fundamental patent law issues.  In its decision, the court nevertheless ruled that it did not arise under the patent laws because the patent issues were not “substantial.” In particular, the court wrote that “[a]lthough such  cases may necessarily raise disputed questions of patent law, those cases are by their nature unlikely to have the sort of significance for the federal system necessary to establish jurisdiction.”

The pending appeal between Xitronix and KLA involves a single cause of that stems from Xitronix allegation 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.  Although the issue here requires development of a core patent law issue (patent office procedure), the actual cause of action is monopolization in violation of the Sherman and Clayton Acts (Walker Process monopolization).

The district court dismissed the case on summary judgment — finding no evidence of fraud.  Rather than fraud by the applicant, the district court suggested that the fault lies with a power-hungry PTO:

[T]he Court suspects the examiner was in fact aware of the Court’s [prior 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 consider the merits of the district court decision but rather found that it lacked jurisdiction — holding that the case did not “arise under” the U.S. patent laws. Xitronix Corp. v. KLA-Tencor Corp., 882 F.3d 1075 (Fed. Cir. 2018), en banc rehearing denied at Xitronix Corp. v. KLA-Tencor Corp., 892 F.3d 1194 (Fed. Cir. 2018) (over dissent by Judge Newman).  Lacking its own special appellate jurisdiction, the Federal Circuit transferred the case to the appropriate regional circuit court of appeals – the the United States Court of Appeals for the Fifth Circuit.

The Federal Circuit’s determination was a precedential change based upon the Gunn decision.  Prior to this decision, Walker Process monopolization claims have been seen as triggering jurisdiction of the Federal Circuit (if patent law questions are at issue).  The Fifth Circuit’s last time such a case was 1975. Becton, Dickinson, & Co. v. Sherwood Med. Indus., Inc., 516 F.2d 514 (5th Cir. 1975);

In its recent decision, the Fifth Circuit has also refused jurisdiction — finding it “implausible that we are the proper court to decide this appeal.” The “implausible” statement is important here because a transferee circuit must accept the transfer if it is at least “plausible.”

An important aspect of the decision here is an analysis of Gunn. In Gunn, the Supreme Court focused on protecting our system of Federalism and substantial independence of state law.  However in Xitronix, the debate is not about whether the case should be heard by a state or federal court — rather, the debate is about which federal appellate court will hear the case.  The 5th Circuit opinion went on to largely follow Judge Newman’s dissenting analysis — finding that the patent issues to be decided in the case are clearly substantial and that there are no substantial non-patent issues to divert the case.

Christiansen v. Colt involved the same double-transfer with the Federal Circuit eventually deciding despite its lack of statutory jurisdiction. The court explained at the time:

We have again concluded that this court has not been granted jurisdiction over an appeal from this type of summary judgment in an antitrust case, and that this court acted in the interest of justice when it transferred this appeal to the regional circuit court. However, now that the transferee court has transferred the case back to this court, new considerations arise.

The “interest of justice” provision in 28 U.S.C. § 1631 was intended to require a balancing of a transfer to a court having jurisdiction against dismissal for lack of jurisdiction in the transferring court. Nonetheless, the present special circumstances equally implicate the need to act in the interest of justice. Our action here is, accordingly, strictly limited to these circumstances, in which we balance the institutional costs of deciding the case on the merits against the needs of the parties.

Because the Seventh Circuit and this court have each determined that the other has jurisdiction, it would at first appear that certification to the Supreme Court would be warranted, pursuant to, pursuant to 28 U.S.C. § 1254(3).

[Note – Section 1253(3) has been shifted to 1254(2), but allows for certification]. I expect that this case will likely follow a parallel path unless members of the court shift their views based upon the Fifth Circuit decision.

26 thoughts on “Walker-Process Antitrust Case is Back Before the Federal Circuit

  1. 7

    LAW360 reports that the Fed Circ has blinked and will take the case.

  2. 6

    What’s being missed is the PTO policy not to treat the DC judgment of invalidity as controlling until “after all appeals.” The fact the judgment against the parent was not appealed is nowhere to be found in the prosecution history. In other words, the fundamental fraud here is fraud-by-omission. The DC judgment invoked typical court-to-court estoppel practice. Trivial error.

  3. 5

    Another set of off-topic remarks:

    (1) Cert. denied in Power Integrations. V. Fairchild Semiconductor (whole market value rule) and HTC Corp V. 3G Licensing (venue for patent cases against foreign defendants).

    (2) Interesting per curiam decision today in Fresno County Schools v. Rizo. The point of contention is whether a circuit judge’s vote counts for decisions that are reported after the circuit judge’s death. In other words, imagine a scenario where the appeals panel votes, a decision is drafted and finalized, and then in the time after the decision is finalized but before it is reported, a judge in the majority dies, such that the living judges on the panel no longer constitute a majority.

    The Court held that judgments have effect as of the date of their issuance. Therefore, if a judge the in majority dies before the judgment’s issuance, then that judge’s vote cannot count toward the totals that make a “majority.” Good to know for future reference.

  4. 4

    Please forgive an off-topic digression. I notice that the Comments on the 2019 Subject Matter Eligibility Guidance do not yet have even a single set of comments from a profession IP organization, a government agency, an academic or research organization, a law firm, or a corporation or other business entity. All the comments (there are 119 shown on the USPTO webpage as of the time of this writing) are from individuals. Most of them appear identical in content, so they were presumably created via the EFF’s autofill comments page.

    Perhaps there will be a flood of comments from other sources nearer to the 8 Mar 2019 deadline. At least at the moment, however, those who think the new Guidelines to be a step in the right direction are being out hustled.

    1. 4.1

      I don’t see yours there Greg…

    2. 4.2

      They’re not a step in the right direction, obviously, unless you think PTO fraud is something to be encouraged.

      1. 4.2.1

        As opposed to the judicial “legislating from the bench” fraud…?

        (you know, your Ends justifies the Means position)

    3. 4.3

      I think it’s very routine for comments to come in at the last minute. If you look at the Berkheimer guidance comments, only one forth of all comments from IP orgs, Firms, and Corporations were submitted more than a week before the deadline.

      And for some reason, the commenting period for Dear Leader Iancu’s “practical application” test is half as long as the commenting period for the Berkheimer guidance.

  5. 3

    Recall what else SCOTUS said in Christiansen — namely, that the first transfer should be given preclusive effect under the law of the case doctrine. So if the Federal Circuit is faithful to Christiansen, they’ll transfer this case to the Fifth Circuit *again* and ask the Fifth Circuit to honor the transfer (even if the Fifth Circuit disagrees with it) under the law of the case doctrine.

    That’s my first-blush analysis, anyway, based on my memory of Christiansen and Professor Crouch’s synopsis of this new case.

    1. 3.2

      Joshua,

      Preclusive effect unless… no?

      Is that not why the write-up here stresses the 5th circuit’s choice or words regarding “implausible”…?

      Even “law of the case” must remain plausible law, eh?

  6. 2

    [T]he Court suspects the examiner was in fact aware of the Court’s [prior 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).

    What are the facts surrounding this? I seriously doubt this is the case.

    1. 2.1

      Why, Random?

      The two items are in the dame family, with the later patent having been filed prior to the court result on the parent, and issuing after the parent item had the court notice put in its File Wrapper.

      How would the examiner NOT be in fact aware of the Court’s [prior invalidity] holding? Willful ignorance?

      (I do grant that two different examiners are involved between the parent and later child…)

      1. 2.1.1

        Easy to understand. An examiner is not required or expected to look at a parent case when examining a child application. Each application is expected to be complete and stand on its own merits. Examiners have issued 112 rejections (indefiniteness) on claim language in a child application when that exact same examiner allowed the exact same language in the parent. This can create all kinds of fun difficulties with claim construction and prosecution history estoppel if the patent ever ends up in court.

        1. 2.1.1.1

          DSV,

          I think that you are not quite correct. While you are partially correct in that each application stands on its own merits, the plain fact is that the goings on in an parent are eminently of note in the child (in quite a number of ways). Further, the minute you try to make a rejection in a child that (all things being equal) that was overcome in a parent is the minute you get spanked by your SPE after a quick call from me.

          While a later examiner COULD be “lazy” and not take note of (BOTH) what happened (past tense) and what happens (present tense) in a parent – remember, the point here is that the notice in the File Wrapper of the parent happened during prosecution of the later child (actually grandchild) – that does NOT mean that such is permissible.

          It is a fact that examiners ARE to take note of applications that DO have parents – that this is a fact is so for more than one reason.

        2. 2.1.1.2

          “Examiners have issued 112 rejections (indefiniteness) on claim language in a child application when that exact same examiner allowed the exact same language in the parent.”

          That’s actually supposed to require a TC Director signature. MPEP 1003(5). But it’s obscure enough that a lot of examiners are unaware.

          1. 2.1.1.2.1

            Thanks Apotu – as usual from you, a solid post.

            I like the 1003(9) item – while the link is to an examiner’s answer (appeal), the “shorthand” listing at 9 is amusing all on its own, as “interpretation” as listed would obviously correlate to a judicial branch type of interpretation, which would further comingle, conflate and confuse just how Common Law law may be used in a statutory law setting.

    2. 2.2

      The examiner issued an obvious-type double patenting rejection based on the parent patent in the child application.

      Based on the ODP rejection, the examiner clearly did not see the child application’s claims as “identical or broader” than the parent patent’s claims. I guess the judge could be thinking the ODP rejection was a ‘cover’ for the examiner’s deliberate defiance of the court, but that’s approaching tinfoil-hat conspiracy thinking.

      1. 2.2.1

        Based on the ODP rejection, the examiner clearly did not see the child application’s claims as “identical or broader” than the parent patent’s claims.

        Huh? How do you figure?

        I agree that an ODP rejection means that the examiner did not consider the child claims to be identical to the parent claims. There is nothing, however, about an ODP rejection that is inconsistent with the idea that the examiner considered the child claims to be broader than the parent claims. Indeed, ODP is the usual rejection one gets in a child application when one makes a narrowing amendment in a parent app to get to allowance on a narrow set of claims, and then files a CON (child) to go after the (broader) original claims from the parent.

        1. 2.2.1.1

          “ODP is the usual rejection one gets in a child application when one makes a narrowing amendment in a parent app to get to allowance on a narrow set of claims, and then files a CON (child) to go after the (broader) original claims from the parent.”

          Really? In most cases, shouldn’t that just be a non-statutory double patenting rejection based on an anticipation analysis?

          I realize this assumes that the broader claim overlaps with the narrower claim.

          Say a parent patent claims “AB*”, where B* is a type of B. A child application’s claim to “AB” should get an NS-(A)DP rejection based on the parent claim to “AB*”.

          If the examiner issues an ODP rejection of the claim to AB, it tells us the examiner doesn’t realize that B is disclosed by B*.

          Of course a broader child claim might not overlap with a parent claim (e.g. parent: ABCDEFGH, child: AX), in which case an ODP rejection would not send the same message regarding the examiner’s thought process.

          But if they don’t overlap in this particular court case, why would the judge be getting bent out of shape over the allowance of the child claim?

          1. 2.2.1.1.1

            It’s sort of a colloquialism that “obviousness-type double patenting” or “ODP” covers situations where the subject claim is obvious over the conflicting claim in further view of a secondary reference, as well as where it’s anticipated by a conflicting claim.

            The specific subsection about an “anticipation analysis” for these rejections (MPEP 804(II)(B)(1)) wasn’t added until MPEP E9r7 in 2015. The vast majority of examiners have been here since before then, and there aren’t separate form paragraphs for it.

            1. 2.2.1.1.1.1

              “It’s sort of a colloquialism that “obviousness-type double patenting” or “ODP” covers situations where the subject claim is obvious over the conflicting claim in further view of a secondary reference, as well as where it’s anticipated by a conflicting claim.”

              I was not aware of this. Thanks.

              And you are 100% correct. The office action states “obviousness-type” just 2 lines above saying some of the parent claims anticipated some of the child claims. So it really was anticipation type double patenting rejection.

            2. 2.2.1.1.1.2

              It’s sort of a colloquialism that…

              Thanks. That sums it up nicely, I think.

              There might well be some value in maintaining the sort of linguistic precision necessary to support a distinction between obviousness type double-patenting and anticipation type double-patenting as Ben proposes. In my experience, however, “ODP” is treated as functionally equivalent to “non-statutory double-patenting.” In other words, the term “ODP” can (in common parlance among the profession) refer to any sort of double-patenting other than statutory double-patenting.

          2. 2.2.1.1.2

            The judge is getting bent out of shape because he thinks the Office has thumbed its nose at the judicial branch and plainly KNEW of the “obvious” clash, and yet dismissed the court’s view out of hand.

            As noted above, this MAY have been done in ignorance (either purposeful ignorance or otherwise), or may have been done deliberately, but assuredly, the treatment of the child SHOULD have reflected upon the (even ongoing!) treatment of the parent.

            Random – your fellow examiner – had questioned that point.

  7. 1

    There is another issue here. What is being complained of here is apparently the ex parte and otherwise unchallenged allowance of application claims [not an invalidity decision] by a single regular examiner. Contrary to the D.C. Judge’s misdirected editorial here, an individual PTO examiner does NOT have the statutory authority for in rem inter partes claim invalidity decisions, like a three APJ Board of Appeals in an IPR, which could effectively overrule a D.C. jury holding only of invalidity-unproven in rare cases where the IPR is later than the trial. Furthermore, does not the Fed. Cir. have supervisory responsibility for the PTO, which the 5th Cir. does not?

    1. 1.1

      Further to the weirdness of the D.C. judge’s comments, there is the Sup. Ct. decision in Blonder-Tongue v. Univ. of Ill. (1971). Nobody, not even another D.C. judge, can validly revive the validity of a patent claim that has been found invalid in a final merits determination.

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture