Austin litigator Mike Truesdale seems to have an interesting appellate issue. Now if he could just find an appellate court willing to hear it.
The U.S. Court of Appeals for the Federal Circuit transferred his appeal in Xitronix v. KLA-Tencor to the Fifth Circuit in June, saying the Federal Circuit no longer has jurisdiction over monopolization claims that are based on alleged fraud on the U.S. Patent and Trademark Office.
On Feb. 15, the Fifth Circuit sent the case back to the Federal Circuit, saying it’s not even “plausible” that the Fifth Circuit would have appellate jurisdiction—the relatively low standard for accepting a case transferred from another circuit.
“We do not take this step lightly,” Judge Stephen Higginson wrote. “With due regard for our colleagues on a coordinate court, we nevertheless conclude that it is implausible for us to resolve this appeal.”
So, nearly two and a half years after first docketing their appeal, Xitronix and Truesdale are back at square one. And it looks as if the Federal Circuit is going to have to eat some jurisdictional crow and/or tee up the issue for the U.S. Supreme Court.
Xitronix Corp. and KLA-Tencor Corp. are competitors who’ve been waging a battle over semiconductor optical inspection technology for 10 years. Xitronix won a 2011 jury verdict invalidating all asserted claims of KLA’s 7,362,441 patent. Instead of appealing, KLA went back to the PTO and obtained a continuation of the ’441, U.S. Patent No. 8,817,260 .
Xitronix now complains that KLA, the dominant player in the market, wasn’t forthright with the PTO about the jury verdict, and is using an improperly obtained patent to shut the smaller Xitronix out of the market altogether.
U.S. District Judge Sam Sparks of the Western District of Texas granted summary judgment to KLA, saying the company provided all of the relevant materials to the patent examiner, and the examiner apparently ignored them. (“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,” Sparks wrote.)
Xitronix appealed to the Federal Circuit. The court has heard so-called Walker Process monopolization appeals in the past. But a panel led by Judge Kimberly Moore ruled that the Supreme Court narrowed the court’s jurisdiction in Gunn v. Minton, the 2013 decision that held that state, not federal, courts should hear legal malpractice actions that arise from patent cases.
As with Gunn, “the underlying patent issue in this case, while important to the parties and necessary for resolution of the claims, does not present a substantial issue of patent law,” Moore wrote. “Patent claims will not be invalidated or revived based on the result of this case.”
Judges Pauline Newman and Alan Lourie dissented from the denial of en banc review, but Moore’s decision stood and the case was transferred to the Fifth Circuit.
That would seem to have ended the jurisdictional matter. The Supreme Court cautioned 30 years ago that under law-of-the-case principles, the transferee circuit must accept the case “if the transferee court can find the transfer decision plausible.”
But, Higginson wrote Friday, “Under any reading of Gunn, we deem it implausible that we can decide this appeal.”
“The Supreme Court never said it was changing the Federal Circuit’s caseload,” he wrote. “It spoke only to the allocation of cases between the state and federal systems, not to the allocation of cases between the circuit courts.”
Plus, the Xitronix appeal could render KLA’s patent unenforceable against other parties, and declare the PTO proceeding tainted by illegality. “This alone distinguishes the present case from Gunn,” Higginson wrote.
Finally, “The district court’s acerbic statements about the PTO at summary judgment point to the complexity of relations between proceedings in federal court and before the PTO,” Higginson wrote. Those proceedings should be supervised by the Federal Circuit, he concluded.
It’s not clear what will happen next. Xitronix appears to have a tough row to hoe if it goes back to the Federal Circuit, given there’s already been an en banc call and Xitronix told the court then that Moore’s opinion “does not constitute error.”
When a similar game of “jurisdictional ping-pong” erupted between the Federal and Seventh circuits 30 years ago, the Federal Circuit ultimately decided the case “in the interest of justice.” The Supreme Court then ruled that the Federal Circuit was correct that it didn’t have jurisdiction—but wrong to have acted in the absence of that jurisdiction. That’s when it established the “plausibility” test that was supposed to smooth over these kinds of conflicts.
Truesdale did not respond to a request for comment.