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Law.com
Skilled in the Art
Everything IP
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Scott Graham
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Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. You may disagree with my takes or say they're inaccurate, but I hope you'll at least find them “plausible.” According to the Fifth Circuit, a recent Federal Circuit decision can't meet even that basic threshold. And now the two circuits seem to be in a standoff over which one should hear an antitrust case based on alleged fraud on the PTO. I'll explain below. Plus I've got an update on the push for a new Section 101, and a FRAND verdict that came down for the patent holder this time. As always you can email me your feedback and follow me on Twitter.
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Judges Kimberly Moore and Stephen Higginson
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Another Ping-Pong Match Over Federal Circuit Jurisdiction
Texas litigator Mike Truesdale seems to have an interesting appellate issue. Now if he could just find an appellate court willing to hear it.
The Federal Circuit transferred his appeal in Xitronix v. KLA-Tencor to the Fifth Circuit in June, saying CAFC no longer has jurisdiction over Walker Process monopolization claims based on alleged fraud on the U.S. Patent & Trademark Office.
Last Friday, 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 2 ½ 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 Supreme Court.
Xitronix and KLA 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 its improperly obtained patent to shut the smaller Xitronix out of the market altogether.
U.S. District Judge Sam Sparks 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 Walker Process 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 which 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 happens next. Xitronix is going to have a tough row to hoe if the case 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 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.
I reached out for comment from Truesdale on Thursday and did not hear back.
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Senators Are Said to Promise a Section 101 Bill
The Senate Judiciary Subcommittee on Intellectual Property will hold a hearing Tuesday to examine U.S. IP Enforcement Coordinator's annual report to Congress.
So far as I know this will be the newly formed subcommittee's first public hearing. But chairman Thom Tillis and ranking member Chris Coons continue to work behind the scenes with a variety of stakeholders on a legislative proposal for amending Section 101 of the Patent Act.
Former Federal Circuit Chief Judge Paul Michel said the latest discussion, held Feb. 14, was cut somewhat short when Tillis and Coons were called to the Senate floor to vote on the bill that reopened the government. “They ran out quite dramatically,” Michel said.
But not before the two made clear their commitment to introducing a legislative fix for patent eligibility in 2019, according to Michel.
Michel would welcome such legislation. He's been an outspoken critic of the Supreme Court's patent eligibility jurisprudence. “It's been a problem, in my opinion, for almost a decade,” he said last week.
Patent-rich IBM is also sounding confident that change is in the air. “It’s very early stages, but there is some momentum around moving toward a legislative approach to add clarity,” Assistant General Counsel Mark Ringes told IP Watchdog's Gene Quinn in an interview published last month. “We’re hearing some positive messages from Congress, from Senator Coons and Tillis, especially.”
Michel knows it's a big leap from introducing legislation to actually getting it passed. He said that “Silicon Valley super-giant, super-rich companies” have made clear they'll fight any such move. But he argues for strengthening the value of patents now, before technologies like 5G, robotics and gene editing fully rev up. “The United States is drifting toward economic suicide by enfeebling the patent system,” Michel says.
You can hear his pitch in person if you're in Los Angeles next week. Michel will headline the annual Judges' Night Gala presented by LAIPLA, the Orange County Intellectual Property Law Association and the Judge Paul R. Michel Intellectual Property American Inn of Court. Michel will discuss IP with U.S. District Judge Philip Gutierrez and Berkeley Law professor Pamela Samuelson. Durie Tangri's Daralyn Durie will moderate the debate.
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Ericsson, McKool Defeat HTC's FRAND Claims
When I think about standard-essential patent litigation that has gone to trial—like Microsoft v. Motorola and TCL Communication v. Ericsson—the outcomes haven't been so hot for patent holders.
But Ericsson flipped the script last week, as a Texas jury rejected HTC's claims that the Swedish IP giant refused to license its 2G, 3G and 4G SEPs on fair, reasonable and non-discriminatory terms.
It's vindication for Ericsson's McKool Smith team, which had come out on the short end of the TCL trial (which it's appealing to the Federal Circuit). McKool also obtained a $110 million judgment for Ericsson against TCL last year over non-essential patents.
“The jury worked extremely hard and took its time to consider all of the evidence.” McKool partner Ted Stevenson, Ericsson's lead attorney, said in a written statement. “We are grateful for the jury’s effort.”
HTC had sued in the Western District of Washington—a forum that was hospitable to Microsoft in the Motorola case—in 2017. HTC accused Ericsson of “abusing its patent position and making unreasonable licensing demands that do not reflect market realities or any objective FRAND royalty valuation methodology.”
U.S. District Judge Marsha Pechman transferred the case to the Eastern District of Texas last year, finding that HTC had failed to establish specific personal jurisdiction over Ericsson in Washington.
On Feb. 15 a jury in U.S. District Judge Rodney Gilstrap's courtroom concluded that HTC failed to prove that Ericsson breached its obligations to license on FRAND terms. Jurors found that each party breached its duties to negotiate in good faith.
McKool's team included partners Nicholas Mathews, Sam Baxter, Blake Bailey, Kevin Burgess and Warren Lipschitz, and associates Christine Wooden, Erik Fountain, Kevin Hess, Jonathan Powers, Chelsea Priest, Marcus Rabinowitz, and Charles Fowler.
HTC was represented by Perkins Coie and Haltom & Doan.
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Hogan Lovells' Mammen Jumps to Womble Bond
Womble Bond Dickinson continues to add name brand IP attorneys on the West Coast. Chris Mammen is the latest to sign on, my ALM colleague Xiumei Dong reports.
Mammen has practiced for the last six years at Hogan Lovells and has held faculty positions at UC Hastings, Berkeley Law, Stanford Law School and Oxford University. He said Womble has been on his radar since its trans-Atlantic merger in 2017.
“They have been on an incredible growth trajectory over the past year and a half or so, focused heavy on IP,” Mammen said. “I am really excited to be joining that platform.”
Womble says it's added more than 20 experienced IP lawyers and patent agents throughout California since its acquisition of Blakely Sokoloff Taylor Zafman a year ago. “I am excited to work together with Chris to expand the practice,” said Mike Gencarella, managing partner of Womble’s California offices. “We are laying the foundation for further expansion, especially in IP litigation.”
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No Choreography, No Copyright for the Carlton, U.S. Says
I mentioned a couple of months ago that Fresh Prince actor Alfonso Ribeiro had sued Epic Games, alleging that an emote that Fortnite players can purchase to personalize their avatars infringes his copyright on the dance commonly known as “the Carlton.”
My ALM colleague Richard Binder reports that the U.S. Copyright Office has refused to register the dance on the grounds that it's a “simple dance routine” and not a “choreographic work.”
A Kirkland & Ellis team led by partner Dale Cendali has moved to dismiss a similar suit by Ribeiro against Take-Two Interactive Software, citing in part the Copyright Office's position. “This lawsuit suffers from a host of issues ranging from a lack of plausible ownership, to a lack of substantial similarity, to preemption by the Copyright Act,” Take-Two's motion states.
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Quite a Shame About Your Trademark Rights
A year ago Burger King was trolling the FCC over net neutrality. Now it's yanking the chain of an even more powerful entity: McDonald's.
McDonald's lost its European trademark rights in January after a fight with Supermac's, an Irish fast-food chain. Since then, the Washington Post reports, Burger King has been lording it over its larger rival, advertising the Whopper in Europe as “Like a Big Mac, but actually big” and “The burger Big Mac wished it was.”
“It's too much fun for us to stay away,” Iwo Zakowski, chief executive of Burger King's Swedish operation, is reported to have said.
I don't know who handles Burger King's international trademarks, but I hope whoever it is took a good look before launching this campaign.
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That's all from Skilled in the Art this week. I'll see you all again on Tuesday.
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