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This is your client’s million-dollar patent infringement case. This is the U.S. Court of Appeals for the Federal Circuit, the exclusive venue for patent appeals. And this is you, the learned counsel, tripping over your own two feet at the entrance to the court. Imagine that having waited a year or more after filing a notice of appeal from your district court case, and possibly having presented an oral argument before the Federal Circuit, you receive this ruling from the court: The Federal Circuit lacks jurisdiction, and the appeal is dismissed. The conversation in which you explain this embarrassing result to your client or to the management of your company will likely not be pleasant. Surprisingly, the above scenario has occurred at least nine times in the past five years, including three cases so far in 2005: Enzo Biochem Inc. v. Gen-Probe Inc., on July 13; Pause Technology LLC v. TiVo Inc., on March 14; and Silicon Image Inc. v. Genesis Microchip Inc., on Jan. 28. An exasperated Judge Richard Linn, writing for the court in Pause Technology, explained these frequent occurrences as follows: “Despite our repeated admonitions, this court again confronts an appeal with a jurisdictional defect. For whatever the reasons, parties too frequently are not reviewing the actions of the district courts for finality before lodging appeals. When such actions later are discovered to be not ripe for review, needless delay and inefficiency result, as reflected in the proceedings in this appeal.” Before something similar happens to you (and note that the attorneys in the three 2005 cases were not beginners), let’s review exactly why the Federal Circuit is dismissing appeals for lack of jurisdiction and how you can avoid this unhappy result. IS THERE ANYTHING LEFT? Before weighing the merits of an appeal, the Federal Circuit determines whether it has jurisdiction by looking at the finality of the lower-court case. Under the final-judgment rule, pursuant to 28 U.S.C. �1295(a)(1) (2000), parties may appeal only a “final decision of a district court.” The final-judgment rule exists to prevent the piecemeal litigation of issues that essentially constitute a single controversy and that, as separate appeals, would frustrate efficient judicial administration. So the Federal Circuit checks to make sure that no issues in the case are still pending before the lower court. When the Federal Circuit dismisses an appeal, the cause is often a counterclaim that was not resolved in the District Court. Sometimes, the unresolved counterclaim raises the issue of invalidity. Take Pause Technology, for example. Pause Technology filed suit against TiVo in September 2001, alleging that TiVo’s digital video recorder products infringed certain claims of Pause Technology’s reissue patent. TiVo raised affirmative defenses of invalidity and noninfringement and counterclaimed for a declaratory judgment on both grounds. In a February 2004 order, the District Court, noting that TiVo had moved for “summary judgment of non-infringement and invalidity with respect to versions 2.0 and above,” construed two claim limitations and allowed “TiVo’s motion for summary judgment of noninfringement.” The District Court then entered this one-page amended judgment: “Pursuant to this Court’s Memorandum and Order dated February 2, 2004, allowing TiVo’s Motion for Summary Judgment on noninfringement with respect to products 2.0 and above, it is ORDERED and ADJUDGED that judgment is hereby entered in favor of the defendant TiVo.” Spot the trouble? The Federal Circuit did, noting: “Although the district court’s docket sheet designated the case terminated on March 1, 2004, neither the docket sheet nor the record indicates the district court’s disposition of the invalidity counterclaim.” In arguing against dismissal of the appeal, Pause Technology contended that the invalidity counterclaim should be deemed impliedly dismissed. But the Federal Circuit rejected this argument, distinguishing between an invalidity defense and an invalidity counterclaim: “[E]ven if the district court could impliedly dispose of the invalidity defense in its ruling on infringement, the invalidity counterclaim is a separate claim that remains unresolved.” CAN FEES BE JUSTIFIED? Another common cause for dismissing a Federal Circuit appeal is an unresolved counterclaim for unenforceability. In Enzo Biochem, Enzo argued that the allegations in Gen-Probe’s counterclaim for unenforceability were moot because all claims of the patent were held invalid and, therefore, allegations of unenforceability due to inequitable conduct were relevant only to a claim for attorney fees. This argument was rejected by the Federal Circuit. Judge Alan Lourie, writing for the court, stated: “Enzo’s argument under Federal Rule of Civil Procedure 58(c) that a pending motion for attorney fees will not render an otherwise final judgment unappealable, is relevant only when all other claims have been adjudicated.” And that was not the case here. Lourie pointed out: “To be eligible for attorney fees on the basis of inequitable conduct, Gen-Probe still has to establish that Enzo actually engaged in such conduct, an issue that remains unresolved in the district court.” DID MONEY CHANGE HANDS? An unresolved counterclaim is not the only reason that the Federal Circuit will dismiss an appeal for lack of finality. In Special Devices Inc. v. OEA Inc. (2001), the problem that led to a dismissal was the District Court’s failure to make a determination on the amount of attorney fees owed. The District Court granted partial summary judgment in favor of Special Devices, holding that OEA’s patent was invalid under 35 U.S.C. �102(b) on the ground of the on-sale bar. The court then granted attorney fees to Special Devices, deeming the case exceptional due to OEA’s inequitable conduct and litigation misconduct (specifically, nonproduction of documents). However, because the court did not have before it any evidence regarding the amount of attorney fees to which Special Devices was entitled, it deferred quantifying the award. The court stated that, after receipt of relevant evidence and briefing, it would “then determine the compensatory amount of the award in light of the offender’s conduct.” The appeal to the Federal Circuit was filed before the District Court proceeded any further toward quantifying the fees award. So the Federal Circuit dismissed the appeal, concluding that a decision to award “unquantified attorney fees in an exceptional case under 35 U.S.C. �285″ does not qualify as final. The other dismissal for lack of finality this year — in Silicon Image — occurred because a settlement agreement between the parties had not actually been finalized by a payment to one of the parties, as required by the agreement itself. WHO SAYS SO? Frequently, the trouble begins in the District Court. The lower court will make an attempt to declare a case “closed” or “final,” and both parties may even agree that the District Court case is closed and ripe for appeal. But that is not enough: The Federal Circuit still makes an independent determination on whether the appeal is from a final decision within the meaning of 28 U.S.C. �1295(a)(1). For example, in Enzo Biochem, at an oral hearing in which the trial judge delivered his summary judgment invalidating Enzo’s patent, the judge concluded the hearing by asking the parties “if there is anything that I have missed in my rulings that I should rule upon.” Each of the parties’ counsel responded that the court had covered all the issues raised, and Enzo’s counsel indicated that it would appeal the decision. The judge then stated that he would “enter a summary order . . . that will enable you to proceed with dispatch in the Federal Court of Appeals on your rights if I have erred.” Subsequently, the clerk of the District Court entered judgment under Federal Rule of Civil Procedure 58, holding that all claims of the patent at issue were invalid and that “the case was closed.” On appeal, Enzo argued that the lower-court decision was final because Gen-Probe had not brought the pending counterclaim to the district judge’s attention when asked whether any issues were outstanding. Enzo further contended that the trial judge believed that the judgment was final, as evidenced by his statements during the summary judgment hearing and his unequivocal direction to the clerk to enter an order closing the case. Neither of these arguments swayed the Federal Circuit. Lourie wrote: “Although it is true that the district court here did make a clear statement that the case was at an end, it was mistaken, because an unadjudicated counterclaim remained. Gen-Probe’s brief to this court, supported by the record, and unrefuted by Enzo, makes that clear. While it is, to say the least, regrettable that a party with a remaining counterclaim that it wishes to pursue, as well as its opponent, leaves a trial judge with the impression that no claims remain in the case, we have no choice but to take cognizance of the nonfinality created by the unquestioned existence of that counterclaim.” Enzo’s appeal was dismissed. WHAT SHOULD YOU DO? Having an appeal dismissed by the Federal Circuit for lack of jurisdiction is not the end of the world. In many cases, you can go back to the trial judge, cross your t’s, dot your i’s, and return to the appeals court. Pause Technology did just that after its appeal was dismissed in March and has since received a decision on the merits from the Federal Circuit. But, in 20-20 hindsight, there were more efficient ways to accomplish that result. In order to preserve your client’s right to appeal, you should never leave the District Court without verifying that the court has issued a “final decision.” This verification typically should include a determination that all counterclaims and any other triable issues have been resolved. Do not rely on seemingly conclusive statements by the judge or the opposing party that the case is ripe for appeal. Take this basic step and you will avoid the embarrassment and costly delay of having your case summarily dismissed by the Federal Circuit. Well, for lack of jurisdiction, at least.
Barry S. Goldsmith is of counsel in the Tysons Corner, Va., office of Womble Carlyle Sandridge & Rice. His legal practice focuses on patent matters concerning a variety of electrical engineering disciplines, including computer hardware and software, integrated circuits, telecom systems, and medical devices.

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