In a recent game of jurisdictional tennis, the Fifth Circuit returned a case involving a Walker Process claim, sending it back to the Federal Circuit. Xitronix Corp. v. KLA-Tencor Corp., No. 18-50114 (Feb. 15, 2019). In Xitronix, the plaintiff alleged that the defendant was enforcing a fraudulently obtained patent for anti-competitive behavior in a violation of Section 2 of the Sherman Act and Sections 4 & 6 of the Clayton Act.
The district court granted summary judgment in Xitronix, finding no misrepresentations or omissions to the patent office and thus rejecting the argument that the patent would not have issued but for the alleged misrepresentations or omissions. Thus, the alleged fraud on the patent office could not serve as the basis for a Walker Process claim.[1] The plaintiff then appealed to the Federal Circuit.
The Federal Circuit transferred the appeal to the Fifth Circuit, holding that it did not have jurisdiction to decide the Walker Process claim. In particular, the Federal Circuit held the U.S. Supreme Court’s Gunn v. Minton decision governed the analysis. The panel stated Gunn required a well-pleaded complaint to implicate federal patent law creating a cause of action. The panel found that because the complaint alleged an antitrust claim (despite alleging false representations to the USPTO), no allegation established that federal patent law created a cause of action. The panel also noted that the resolution of the antitrust claim did not necessarily depend on the resolution of a substantial issue of patent law. Thus, the Federal Circuit panel decided it did not have exclusive jurisdiction over the appeal and transferred the appeal to the Fifth Circuit. The Federal Circuit subsequently denied rehearing and rehearing en banc.
The Fifth Circuit likewise decided that it did not have jurisdiction over the Walker Process claim, finding it implausible that it had jurisdiction where the only claim on appeal was a Walker Process claim. Unlike the cases relied on by the Federal Circuit, the Fifth Circuit noted that the Xitronix case here substantially related to patent law issues because the alleged fraud was on the patent office. Moreover, the validity and enforceability of the patent implicated not only at the case at hand, but also the ability to assert the patent against other potential infringers.
Equally important, the Fifth Circuit noted the Xitronix case lacked the same implications to disrupt the federal-state balance approved by Congress. Unlike the cases cited by the Federal Circuit, which addressed claims of breach of a licensing agreement or attorney malpractice, this case implicated a choice between federal circuit courts. The Fifth Circuit stated that the choice between federal circuit courts “is irrelevant to the congressionally-approved balance of state and federal judiciaries” and is distinguishable from the cases cited by the Federal Circuit.
Given the Federal Circuit has already denied rehearing and rehearing en banc, the issue of jurisdiction over Walker Process claims seems to be on trajectory toward the United States Supreme Court. Until then, it appears the jurisdictional ball for Walker Process appeals is not in anyone’s court. For practitioners, until the jurisdictional inquiry for Walker Process appeals is sorted out, other claims on appeal may guide which circuit has jurisdiction over the appeal.
[1] A Walker Process claim involves (1) a false representation or deliberate omission of a fact material to patentability, (2) made with the intent to deceive the patent examiner, (3) on which the examiner justifiably relied in granting the patent, (4) but for which misrepresentation or deliberate omission the patent would not have been granted (“but-for” materiality), and (5) the “necessary additional elements” of an underlying antitrust violation. Xitronix Corp. v. KLA-Tencor Corp., CAUSE NO.: A-14-CA-01113-SS, at *9 (W.D. Tex. Aug. 26, 2016). To establish the antitrust portion of a Walker Process allegation, a plaintiff must show that the defendant held monopoly power in the relevant market and willfully acquired or maintained that power by anticompetitive means. Xitronix Corp. v. KLA-Tencor Corp., No. 18-50114, at *4 n.2 (5th Cir. Feb. 15, 2019) (citing Delano Farms Co. v. Calif. Table Grape Comm’n, 655 F.3d 1337, 1351 (Fed. Cir. 2011).