Cert Petition: Patent Appeals & Jurisdictional Hot Potato

A second cert petition has been filed in Xitronix and KLA-Tencor’s fight—as well as the Fifth and Federal Circuit’s fight—over the Federal Circuit’s exclusive jurisdiction in patent appeals. (I mentioned this petition in a recent weekly roundup.) The appeal has ping-ponged from the Federal Circuit to the Fifth Circuit and then back to the Federal Circuit. And it presents an interesting issue about what it means for an appeal to arise under the patent laws.

The Walker Process Claim

The suit began in the Western District of Texas. Xitronix brought a what’s called a Walker Process antitrust claim, alleging that KLA-Tencor violated the Sherman Act by fraudulently obtaining a patent. After the district court dismissed the claim, Xitronix appealed to the Federal Circuit. That’s when the jurisdictional shenanigans began.

These Aren’t Patent Appeals: The Federal Circuit Transfers the Case

Under 28 U.S.C. § 1295(a)(1), the Federal Circuit has exclusive jurisdiction over appeals in patent appeals—i.e., actions that arise under the patent laws. But the Federal Circuit held that Xitronix’s suit did not arise under those laws. According to the court, the suit arose under the antitrust laws. Granted, the antitrust claim involved an issue that touched on a patent—whether the patent was obtained via fraud. And prior Federal Circuit decisions had heard appeals on Walker Process claims. But the Federal Circuit thought that the Supreme Court’s decision in Gunn v. Minton—which held that a legal malpractice claim did not arise under the patent laws even though it was based on alleged errors in litigating a patent suit—compelled the conclusion that the court lacked jurisdiction. Rehearing en banc was denied over a published dissent, and the Federal Circuit accordingly sent the case to the proper regional court of appeals: the Fifth Circuit.

Yes They Are: The Fifth Circuit Sends the Appeal Back

But the Fifth Circuit sent the case back to the Federal Circuit. Under Christianson v. Colt Industries Operating Corp., an appellate court must accept a “plausible” transfer decision, thereby cutting off any jurisdictional ping-pong. While the Fifth Circuit panel expressed respect for their colleagues on the Federal Circuit, it concluded that the Federal Circuit’s transfer decision was not a plausible one. According to the Fifth Circuit, patent law was an essential part of Xitronix’s Walker Process claim and thus within the Federal Circuit’s exclusive jurisdiction. The Fifth Circuit also thought that the Federal Circuit has misread its own decisions

Xitronix filed a petition for cert from this transfer order, which has been fully briefed and is scheduled for consideration at the Supreme Court’s conference on October 1, 2019.

The Federal Circuit Accepts the Transfer Back but Continues to Think It Lacks Jurisdiction

Back before the Federal Circuit, that court concluded that the Fifth Circuit’s transfer decision was a plausible one. The Federal Circuit did not agree with the Fifth Circuit’s analysis—the Federal Circuit thought that the Fifth Circuit had misread Supreme Court and Federal Circuit decisions, and it found the Fifth Circuit’s analysis of Gunn to be “untenable.” The Federal Circuit nevertheless thought the Fifth Circuit’s decision was “not implausible.” It accordingly accepted the transfer and affirmed the district court’s decision on the merits in a one-sentence order.

Xitronix filed a second cert petition, this one from the Federal Circuit’s merits decision. The response is due August 9, 2019.

Are These Patent Appeals?

I’m certainly no expert on predicting the Supreme Court’s cert decisions. But this seems like a good candidate for at least three reasons.

First, as Xitronix’s petition notes, this is perhaps the clearest example of a circuit split: two courts of appeals disagreeing over which has jurisdiction in a particular case.

Second, the state of the law must be maddening for practitioners. What are parties in future Walker Process suits to do? File in the regional circuit (which the Federal Circuit thinks is proper) but risk the regional circuit sending the case to the Federal Circuit (like the Fifth Circuit did)? Or should they file first in the Federal Circuit (which the Fifth Circuit thought was proper) and wait for the Federal Circuit to transfer the case to the regional circuit?

And third, this seems like an area where a clear rule—any clear rule—from the Supreme Court might be best. Xitronix and KLA-Tencor have litigated the appropriate forum for this appeal for years. The district court granted summary judgment in August 2016, and the Federal Cicuit finally accepted jurisdiction over the appeal in March 2019 (and decided the merits two months later). A clear rule on where litigants should appeal would avoid these unnecessary delays. In fact, it might matter more that there is a clear rule, regardless of what that rule is.

Links

• Docket for Xitronix Corp. v. KLA-Tencor Corp., No. 18-1770 (petition from the Fifth Circuit decision).
• Docket for Xitronix Corp. v. KLA-Tencor Corp., No. 19-58 (petition from the Federal Circuit decision).
• Initial Federal Circuit transfer decision: Xitronix Corp. v. KLA-Tencor Corp., 882 F.3d 1075 (Fed. Cir. 2018), available at Google Scholar and Westlaw.
• Federal Circuit denial of rehearing en banc (with dissent): Xitronix Corp. v. KLA-Tencor Corp., 892 F.3d 1194 (Fed. Cir. 2018), available at Google Scholar and Westlaw.
• Fifth Circuit transfer decision: Xitronix Corp. v. KLA-Tencor Corp., 916 F.3d 429 (5th Cir. 2019), available at Google Scholar and Westlaw.
• Federal Circuit decision accepting transfer: Xitronix Corp. v. KLA-Tencor Corp., 757 F. App’x 1008 (Fed. Cir. 2019), available at Google Scholar and Westlaw.