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.