In the latest round of appellate hot potato, the U.S. Court of Appeals for the Federal Circuit transferred to the U.S. Court of Appeals for the Fifth Circuit an appeal from a decision by the U.S. District Court for the Northern District of Texas regarding antitrust claims associated with enforcement of a patent found unenforceable due to inequitable conduct. See Chandler v. Phoenix Servs. LLC (Fed. Cir. 2021). The Chandler court, in finding that the Federal Circuit lacked jurisdiction over the antitrust claims (also known as Walker Process claims), explained that its jurisdiction was limited in relevant part to an appeal of a “civil action arising under … any Act of Congress relating to patents.” And although “Walker Process antitrust claims may relate to patents in the colloquial use of the term,” the “cause of action arises under the Sherman Act rather than under patent law[.]” After finding that it lacked jurisdiction, the Federal Circuit transferred the appeal to the Fifth Circuit.
This is not the first rodeo between the Federal and Fifth circuits concerning Walker Process claims. In 2018, a panel of the Federal Circuit issued a precedential opinion in Xitronix Corporation v. KLA-Tencor Corporation, holding that an appeal of a Walker Process cause of action belonged in the Fifth Circuit. Rather than accept jurisdiction, however, the Fifth Circuit returned the case to the Federal Circuit, reasoning that the Federal Circuit’s conclusion as to jurisdiction was “implausible.” On retransfer, the Federal Circuit accepted jurisdiction, in a nonprecedential opinion, because it was “not implausible” that it had jurisdiction because the patent at issue was “live” (the patent was not expired, invalid or found unenforceable), meaning that the resolution of any fraud issues relating to unenforceability could thus affect the enforceability of the patent. In Chandler, however, the patent had already been found to be unenforceable, and thus the “case w[ould] not alter the validity of the” asserted patent. Therefore, there was no “plausible” basis for jurisdiction. If the Fifth Circuit responds, it will be at least the second recent opinion from that court concerning intellectual property rights. See Robert Horowitz, “Good Faith De Minimis Use of a Mark May Defeat a Claim of Trademark Abandonment in the Fifth Circuit,” IP Intelligence, May 11, 2021.
Given the back and forth between the courts, parties should give serious thought as to where to file their Walker Process appeals.
