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Xitronix Corp. v. KLA-Tencor Corp.

United States Court of Appeals, Federal Circuit

June 15, 2018

XITRONIX CORPORATION, Plaintiff-Appellant
v.
KLA-TENCOR CORPORATION, DBA KLA-TENCOR, INC., A DELAWARE CORPORATION, Defendant-Appellee

          Appeal from the United States District Court for the Western District of Texas in No. 1:14-cv-01113-SS, Judge Sam Sparks.

         ON PETITION FOR PANEL REHEARING AND REHEARING EN BANC

          Michael S. Truesdale, Law Office of Michael S. Truesdale, PLLC, Austin, TX, filed a response to the petition for plaintiff-appellant.

          Aaron Gabriel Fountain, DLA Piper U.S. LLP, Austin, TX, filed a petition for panel rehearing and rehearing en banc for defendant-appellee. Also represented by Brian K. Erickson, John Guaragna.

          Before Prost, Chief Judge, Newman, Mayer [1] , Lourie, Dyk, Moore, O'Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges.

          Lourie, Circuit Judge, dissents from the denial of the petition for rehearing en banc without opinion.

          ORDER

          PER CURIAM.

         Appellee KLA-Tencor Corporation filed a petition for panel rehearing and rehearing en banc. A response to the petition was invited by the court and filed by appellant Xitronix Corporation. The petition for rehearing and response were first referred to the panel that heard the appeal, and thereafter, to the circuit judges who are in regular active service. A poll was requested, taken, and failed.

         Upon consideration thereof, It Is Ordered That:

         The petition for panel rehearing is denied.

         The petition for rehearing en banc is denied.

         The mandate of the court will issue on June 22, 2018.

          Newman, Circuit Judge, dissenting from denial of the petition for rehearing en banc.

         I write because of the importance of this decision to the judicial structure of patent adjudication, and the future of a nationally consistent United States patent law.

         In this case, the complaint states that the asserted violation of patent law may support violation of antitrust law-a Walker Process pleading based on charges of fraud or inequitable conduct in prosecution of the patent appli- cation in the Patent and Trademark Office.[1] The three-judge panel assigned to this appeal held that the Federal Circuit does not have jurisdiction, did not reach the merits, and transferred the appeal to the Fifth Circuit.[2]This jurisdictional ruling is contrary to the statute governing the Federal Circuit, and contrary to decades of precedent and experience. Nonetheless, the en banc court now declines to review this panel ruling.

         I write in concern for the conflicts and uncertainties created by this unprecedented change in jurisdiction of the Federal Circuit and of the regional courts of appeal. With the panel's unsupported ruling that the Supreme Court now places patent appeals within the exclusive jurisdiction of the regional circuits when the pleading alleges that the patent issue may lead to a non-patent law violation, we should consider this change en banc.

         The District Court's Decision was Limited to Patent Issues [3]

         The district court received a complaint for "Walker Process antitrust claims based on KLA's alleged fraudulent procurement of a patent." Dist. Ct. Dec. at *1. Xitronix alleged that the "entire prosecution" of the patent was tainted by fraud or inequitable conduct in the Patent and Trademark Office. J.A. 54 (¶111); J.A. 63 (¶145).

         The panel now rules that the appealed issues of fraud and inequitable conduct in obtaining the patent do "not present a substantial issue of patent law, " Transfer Order, 882 F.3d at 1078, and therefore that the jurisdiction of the Federal Circuit, 28 U.S.C. § 1295(a)(1), does not apply to this appeal. The panel states: "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, " and that "[s]omething more is required to raise a substantial issue of patent law sufficient to invoke our jurisdiction." Transfer Order, 882 F.3d at 1078. We are not told what that "[s]omething more" might be.

         Neither party had questioned our appellate jurisdiction. The panel raised the question sua sponte, and now holds that a Supreme Court decision on state court malpractice jurisdiction, Gunn v. Minton, 568 U.S. 251 (2013), removed Federal Circuit jurisdiction of Walker Process patent appeals.

         If the issues of inequitable conduct or fraud in procuring the patent are no longer deemed to be a substantial issue of patent law, the court should speak en banc. Here, the district court reviewed the patent prosecution, including the references and other information relevant to examination for patentability; reviewed the applicant's arguments, the examiner's responses, and the examiner's reasoning in allowing the claims; and reviewed information from the concurrent infringement litigation. Dist. Ct. Dec. at *5-8. The district court wrote a detailed opinion, concluding that fraud or inequitable conduct in patent prosecution had not been shown. Id. at *9. This is the ...


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