United States Court of Appeals
`for the Federal Circuit
`______________________
`
`XITRONIX CORPORATION,
`Plaintiff-Appellant
`
`v.
`
`KLA-TENCOR CORPORATION, DBA KLA-TENCOR,
`INC., A DELAWARE CORPORATION,
`Defendant-Appellee
`______________________
`
`2016-2746
`______________________
`
`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 US LLP, Aus-
`
`tin, TX, filed a petition for panel rehearing and rehearing
`en banc for defendant-appellee. Also represented by
`BRIAN K. ERICKSON, JOHN GUARAGNA.
`______________________
`
`
`

`

`
`2
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`Before PROST, Chief Judge, NEWMAN, MAYER1, LOURIE,
`DYK, MOORE, O’MALLEY, REYNA, WALLACH, TARANTO,
`CHEN, HUGHES, and STOLL, Circuit Judges.
`NEWMAN, Circuit Judge, dissents from the denial of the
`petition for rehearing en banc.
`LOURIE, Circuit Judge, dissents from the denial of the
`petition for rehearing en banc without opinion.
`PER CURIAM.
`
`O R D E R
`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.
`
`
`
`
`
`
` June 15, 2018
`
`
`
`
` Date
`
`
`
`
`
`
`
`
`
`
`1 Circuit Judge Mayer participated only in the deci-
`sion on the petition for panel rehearing.
`
`FOR THE COURT
`
` /s/ Peter R. Marksteiner
`Peter R. Marksteiner
`Clerk of Court
`
`

`

`
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`XITRONIX CORPORATION,
`Plaintiff-Appellant
`
`v.
`
`KLA-TENCOR CORPORATION, DBA KLA-TENCOR,
`INC., A DELAWARE CORPORATION,
`Defendant-Appellee
`______________________
`
`2016-2746
`______________________
`
`Appeal from the United States District Court for the
`Western District of Texas in No. 1:14-cv-01113-SS, Judge
`Sam Sparks.
`
`______________________
`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 vi-
`olation 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-
`
`

`

`
`
` 2
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`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 gov-
`erning 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.
`
`
`In Walker Process Equipment, Inc. v. Food Ma-
`1
`chinery & Chemical Corp., the Supreme Court held that
`the use of a patent obtained through intentional fraud on
`the USPTO to create or preserve a monopoly may expose
`the patent holder to antitrust liability. 382 U.S. 172,
`176–77 (1965). This court has summarized that: “In order
`to prevail on a Walker Process claim, the antitrust-
`plaintiff must show two things: first, that the antitrust-
`defendant obtained the patent by knowing and willful
`fraud on the patent office and maintained and enforced
`the patent with knowledge of the fraudulent procurement;
`and second, all the other elements necessary to establish
`a Sherman Act monopolization claim.” TransWeb, LLC v.
`3M Innovative Props. Co., 812 F.3d 1295, 1306 (Fed. Cir.
`2016).
`2 Xitronix Corp. v. KLA-Tencor Corp., 882 F.3d 1075
`(Fed. Cir. 2018) (“Transfer Order”).
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`3
`
`The District Court’s Decision was Limited to Patent
`Issues3
`The district court received a complaint for “Walker
`Process antitrust claims based on KLA’s alleged fraudu-
`lent 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 jurisdic-
`tion of the Federal Circuit, 28 U.S.C. § 1295(a)(1), does
`not apply to this appeal. The panel states: “The underly-
`ing 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.” Trans-
`fer Order, 882 F.3d at 1078. We are not told what that
`“[s]omething more” might be.
`Neither party had questioned our appellate jurisdic-
`tion. The panel raised the question sua sponte, and now
`holds that a Supreme Court decision on state court mal-
`practice 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 procur-
`ing the patent are no longer deemed to be a substantial
`
`
`3 2016 WL 7626575 (W.D. Tex. Aug. 26, 2016)
`(“Dist. Ct. Dec.”).
`
`

`

`
`
` 4
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`issue of patent law, the court should speak en banc. Here,
`the district court reviewed the patent prosecution, includ-
`ing 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 infor-
`mation 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 issue on appeal—the only issue. Xitronix argues on
`this appeal that the district court erred in its analysis and
`conclusion, and that the patent is invalid or permanently
`unenforceable.
`The panel holds that patent validity and enforceabil-
`ity are not substantial questions of patent law, and there-
`fore this case does not arise under the patent law. The
`panel removes the Federal Circuit from jurisdiction over
`appeals of Walker Process claims, and challenges Federal
`Circuit jurisdiction of all appeals where the complaint
`includes non-patent issues. This is a vast jurisdictional
`change for the regional circuits as well as the Federal
`Circuit.
`The Federal Circuit Jurisdictional Statute
`28 U.S.C. § 1295(a)(1). The United States Court
`of Appeals for the Federal Circuit shall have ex-
`clusive jurisdiction of an appeal from a final deci-
`sion of a district court . . . in any civil action
`arising under . . . any Act of Congress relating to
`patents or plant variety protection.
`The Supreme Court has summarized that for the purpose
`of “desirable uniformity [] Congress created the Court of
`Appeals for the Federal Circuit as an exclusive appellate
`court for patent cases, observing that increased uniformi-
`ty would ‘strengthen the United States patent system in
`such a way as to foster technological growth and industri-
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`5
`
`al innovation.” Markman v. Westview Instruments, Inc.,
`517 U.S. 370, 390 (1996) (quoting H.R. Rep. No. 97–312,
`pp. 20–23 (1981)).
`Precedent has construed the clause “civil action aris-
`ing under . . . any Act of Congress relating to patents,” for
`the creation of the Federal Circuit as a national court
`raised occasional questions of appellate jurisdiction, as
`the courts sought to implement the legislative purpose.
`Precedent considered specific circumstances as they arose:
`for example, when the district court action included issues
`in addition to patent issues and the patent issues were
`not appealed; when the patent issue arose only by coun-
`terclaim; when the patent issue arose in a contract dis-
`pute; when the patent issue arose in connection with
`various antitrust claims; when the patent issue arose in a
`state court action; when the patent issue was later re-
`moved from the complaint; when the patent issue arose in
`a malpractice action.
`Thus, we and the Supreme Court and the regional cir-
`cuits have considered the boundaries of “civil action
`arising under . . . any Act of Congress relating to patents,”
`across an array of diverse circumstances. Those bounda-
`ries produced helpful guidance in special or complex
`cases. However, the present case is simple, for the issue
`of fraud or inequitable conduct in prosecution of the
`patent application, the foundation of Walker Process
`jurisprudence, is cemented in its jurisdictional path to the
`Federal Circuit. If that path is to be changed, such
`change warrants en banc action.
`Supreme Court and Federal Circuit Precedent are
`Contravened by the Panel Decision
`The Supreme Court reviewed Federal Circuit jurisdic-
`tion early in our existence, in a case where the Seventh
`Circuit and the Federal Circuit each “adamantly disa-
`vowed jurisdiction” and insisted that the other was the
`correct appellate body. Christianson v. Colt Indus. Oper-
`
`

`

`
`
` 6
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`ating Corp., 486 U.S. 800, 803 (1988). In Christianson, a
`former employee of Colt asserted Clayton Act and Sher-
`man Act violations by Colt as well as tortious interference
`with business relationships; the employee requested
`damages and injunctive and equitable relief. An antitrust
`allegation related to patent validity. The district court
`decided for the former employee on both the antitrust and
`tortious interference claims, and Colt appealed to the
`Federal Circuit. We held that we did not have jurisdiction
`because the case did not arise under the patent law, and
`transferred the appeal to the Seventh Circuit.
`The Seventh Circuit stated that the Federal Circuit
`was “clearly wrong,” and transferred the appeal back to
`us. The Federal Circuit then decided the appeal “in the
`interests of justice,” while protesting that we lacked
`jurisdiction. Christianson, 486 U.S. at 806–07. The
`Supreme Court then stepped in, and held that the case
`did not arise under the patent law, and that the appeal
`belonged in the Seventh Circuit. The Court observed that
`the phrase “arising under” the patent law “mask[ed] a
`welter of issues regarding the interrelation of federal and
`state authority and the proper management of the federal
`judicial system.” Id. at 808 n.2 (quoting Franchise Tax
`Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal.,
`463 U.S. 1, 8 (1983)).
`The Court defined “arising under” patent law as re-
`quiring:
`a well-pleaded complaint [that] establishe[s] ei-
`ther that federal patent law create[s] the cause of
`action or that the plaintiff’s right to relief neces-
`sarily depends on resolution of a substantial ques-
`tion of federal patent law, in that patent law was
`a necessary element of one of the well-pleaded
`claims.
`Id. at 809. This standard has guided ensuing jurisdic-
`tional determinations.
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`7
`
`As applied to the case at bar, it is not disputed that
`patent law is a “necessary element” of the antitrust claim,
`for without determination that a patent was obtained by
`fraud or inequitable conduct, there can be no antitrust
`violation. While “a claim supported by alternative theo-
`ries in the complaint may not form the basis for § 1338(a)
`jurisdiction unless patent law is essential to each of those
`theories,” id. at 810, Xitronix alleged a theory of antitrust
`violation based solely on patent law. And, as Xitronix
`states, its purpose is to invalidate the patent or render it
`unenforceable. However, the panel rules that in Gunn v.
`Minton, 568 U.S. 251 (2013), the Supreme Court changed
`Federal Circuit jurisdiction such that only the regional
`circuits now have jurisdiction over Walker Process ap-
`peals.
`Gunn did not make the jurisdictional change ascribed
`to it. In Gunn the Court held that the appeal of a state
`law attorney malpractice case was properly in the state
`court, although the malpractice charge related to a patent
`issue. The Court observed that the patent had been
`invalidated ten years earlier, and described the patent
`aspect as “hypothetical” because whatever the attorney’s
`malfeasance, there could be no rights in this long-dead
`patent. Id. at 261 (“No matter how the state courts
`resolve that hypothetical ‘case within a case,’ it will not
`change the real-world result of the prior federal patent
`litigation. Minton’s patent will remain invalid.”).
`In this context of federal-state authority, Gunn dis-
`cussed the requirements for federal “arising under” juris-
`diction. The Court stated, “a case can ‘arise under’ federal
`law in two ways. Most directly, a case arises under
`federal law when federal law creates the cause of action
`asserted.” Id. at 257 (internal alteration omitted). Even
`where federal law does not create the cause of action,
`“federal jurisdiction over a state law claim will lie if a
`federal issue is: (1) necessarily raised, (2) actually disput-
`ed, (3) substantial, and (4) capable of resolution in federal
`
`

`

`
`
` 8
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`court without disrupting the federal-state balance ap-
`proved by Congress.” Id. at 258.
`Gunn explained that the substantiality inquiry looks
`“to the importance of the issue to the federal system as a
`whole,” id. at 260, and that when the claim “finds its
`origins in state rather than federal law,” it must be “ca-
`pable of resolution in federal court without disrupting the
`federal-state balance approved by Congress.” Id. at 258.
`The Court’s discussion of federal-state balance shows the
`ill fit between Gunn and the panel’s application of Gunn
`to remove the jurisdiction of the Federal Circuit over the
`issues of fraud and inequitable conduct in patent prosecu-
`tion when an antitrust violation is asserted in the com-
`plaint.
`I agree that “[w]hile not perfectly translatable to the
`question before us, the[] guideposts [of Gunn] are helpful.”
`Madstad Eng’g, Inc. v. USPTO, 756 F.3d 1366, 1370 (Fed.
`Cir. 2014). In Madstad, this court considered how adjudi-
`cation of the constitutional challenge to the America
`Invents Act would affect the “balance [of] matters com-
`mitted to the jurisdiction of this court and those commit-
`ted to the regional circuits.” Id. at 1371. The court stated
`that the “balance would be upset by placing jurisdiction
`over interpretations of the AIA and an assessment of its
`constitutional validity in the hands of any circuit other
`than this one.” Id. The same applies here, as the panel
`upsets the balance established by Congress and moves to
`the regional circuits the issue of fraud or inequitable
`conduct in the PTO.
`The case at bar is not a “hypothetical ‘case within a
`case,’” as in Gunn, 568 U.S. at 261. The adjudication of
`fraud in procuring the patent in the PTO is a substantial
`issue of patent law. The panel states that Gunn requires
`moving the appeal to the Fifth Circuit because in the case
`at bar “[t]here is no dispute over the validity of claims.”
`Transfer Order, 882 F.3d at 1078. This is a puzzling
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`9
`
`statement, for that is the dispute: Xitronix states that a
`finding of fraud or inequitable conduct will “result in the
`’260 patent claims being rendered collaterally invalid
`and/or unenforceable.” Reh’g Resp. Br. 9. The dispute is
`indeed over the validity and enforceability of the patent.
`The Court did not obliterate this jurisdiction of the Fed-
`eral Circuit in Gunn’s resolution of state court malprac-
`tice jurisdiction.
`I turn briefly to Federal Circuit precedent, for this
`court has traditionally resolved antitrust aspects of
`Walker Process appeals when raised in conjunction with
`patent prosecution in the PTO.
`The Panel Rejects Federal Circuit Precedent
`In Nobelpharma AB v. Implant Innovations, Inc., the
`en banc court considered the question of whether Federal
`Circuit or regional circuit law should apply to the fraudu-
`lent “procuring or enforcing” aspect of a Walker Process
`claim. 141 F.3d 1059, 1068 (Fed. Cir. 1998).4 We held
`that: “Whether conduct in the prosecution of a patent is
`sufficient to strip a patentee of its immunity from the
`antitrust laws is one of those issues that clearly involves
`our exclusive jurisdiction over patent cases.” Id. at 1068.
`The en banc court further explained that “we hereby
`change our precedent and hold that whether conduct in
`procuring or enforcing a patent is sufficient to strip a
`patentee of its immunity from the antitrust laws is to be
`decided as a question of Federal Circuit law.” Id.
`The panel’s ruling contradicts this en banc holding;
`this alone requires en banc attention, for precedent may
`
`
`4 This section of Nobelpharma was “considered and
`decided unanimously by an in banc court.” 141 F.3d
`1068 n.5.
`
`

`

`
`
` 10
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`not be changed by a panel, see South Corp. v. United
`States, 690 F.2d 1368, 1370 n.2 (Fed. Cir. 1982) (en banc).
`In re Ciprofloxacin Hydrochloride Antitrust Litigation
`was a transfer to the Federal Circuit from the Second
`Circuit, because “the determination of fraud before the
`PTO necessarily involves a substantial question of patent
`law.” 544 F.3d 1323, 1330 & n.8 (Fed. Cir. 2008), abro-
`gated on other grounds by FTC v. Actavis, 570 U.S. 136,
`146–47, 160 (2013). Although there were also non-patent
`issues in this litigation, the Second Circuit and Federal
`Circuit agreed that the patent issues were substantial
`and that the action arose under the patent law, placing
`jurisdiction in the Federal Circuit.
`The panel now announces that Nobelpharma and
`Ciprofloxacin were rendered “invalid” by Gunn. Transfer
`Order, 882 F.3d at 1079. Gunn, a malpractice case on the
`question of state-federal authority for attorney discipline,
`made no such dramatic holding pertaining to patent
`jurisdiction, even in dictum. The panel’s discard of dec-
`ades of precedent requires more than silent inference
`from unrelated situations.
`Other rulings on our jurisdiction are in tension with
`the panel’s decision. In Jang v. Boston Scientific Corpora-
`tion, 767 F.3d 1334, 1337 (Fed. Cir. 2014), an action for
`breach of contract, this court was clear in its rejection of
`the concept that Gunn had broadly deprived the Federal
`Circuit of jurisdiction: “Here, by contrast [with Gunn], the
`disputed federal patent law issues presented by Jang’s
`well-pleaded complaint are substantial and neither en-
`tirely backward-looking nor hypothetical. In addition to
`infringement, the court may be called upon to determine
`the extent to which validity is made relevant to the reso-
`lution of the breach-of-contract claim by the language of
`the contract itself.” Id. at 1337. This court deemed
`patent validity a “substantial” issue of patent law and
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`11
`
`explained that appeal of the breach of contract claim was
`properly to the Federal Circuit:
`Permitting regional circuits to adjudicate ques-
`tions of patent validity, for example, could result
`in inconsistent judgments between a regional cir-
`cuit and the Federal Circuit, resulting in serious
`uncertainty for parties facing similar infringe-
`ment charges before district courts within that re-
`gional circuit.
` Maintaining Federal Circuit
`jurisdiction over such contractual disputes to
`avoid such conflicting rulings is important to “the
`federal system as a whole” and not merely “to the
`particular parties in the immediate suit.”
`Id. at 1338 (quoting Gunn, 568 U.S. at 260).
`By further example, in Vermont v. MPHJ Technology
`Investments, LLC, this court observed that the substantial
`question of patent law present in a challenge to a Ver-
`mont consumer protection law was not like the malprac-
`tice issue in Gunn, a “‘backward-looking . . . legal
`malpractice claim’ that would be unlikely to have any
`‘preclusive effect’ on future patent litigation.” 803 F.3d
`635, 646 (Fed. Cir. 2015) (quoting Gunn, 568 U.S. at 261,
`263). Such distinction from Gunn also applies to the case
`at hand.
`The panel’s ruling directly contradicts the court’s pri-
`or holdings. A contradictory ruling by the panel is im-
`proper, for “[t]his court has adopted the rule that prior
`decisions of a panel of the court are binding precedent on
`subsequent panels unless and until overturned in banc.”
`Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed.
`Cir. 1988). In the vast number of cases that have raised
`non-patent issues along with patent issues, no precedent
`of the Supreme Court or the Federal Circuit supports the
`panel’s ruling on the panel’s facts.
`
`

`

`
`
` 12
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`The Panel Also Misconstrues Regional Circuit
`Jurisdictional Rulings
`The panel also cites decisions of other circuits to sup-
`port transfer of this appeal to the Fifth Circuit. None of
`these cases, not their holdings nor their procedural pos-
`tures nor their reasoning, supports this transfer.
`In re Lipitor Antitrust Litigation, 855 F.3d 126
`(3d Cir. 2017), dealt with the antitrust aspects of reverse-
`payments between the patent owner and generic produc-
`ers of the patented drug. The panel states that the reten-
`tion of jurisdiction in the Third Circuit supports removal
`of the instant appeal from Federal Circuit jurisdiction.
`Transfer Order, 882 F.3d at 1079. The Lipitor litigation
`raised several antitrust aspects unrelated to patent law.
`See 855 F.3d at 146 (“Here, plaintiffs could obtain relief
`on their section 2 monopolization claims by prevailing on
`an alternative, non-patent-law theory . . . .”). The Third
`Circuit distinguished this case from the Second Circuit’s
`transfer to the Federal Circuit, stating: “But unlike the
`Lipitor and Effexor appeals before us, the appeal trans-
`ferred from the Second Circuit to the Federal Circuit
`involved stand-alone Walker Process claims.” Id. at 148
`(referencing In re Ciprofloxacin). The Third Circuit
`observed that “Actavis teaches that reverse-payment
`antitrust claims do not present a question of patent law”
`and found patent law was not “necessary for relief on
`every theory of liability supporting an antitrust claim.”
`Id. at 146 (citing 570 U.S. at 156–58). The court further
`stated that “courts must look to the monopolist’s conduct
`taken as a whole rather than considering each aspect in
`isolation.” Id. at 147 (quoting LePage’s Inc. v. 3M, 324
`F.3d 141, 162 (3d Cir. 2003)). Finding “patent-law related
`theories” to be but “aspects of an overall monopolistic
`scheme,” the Third Circuit concluded that appellate
`jurisdiction was properly found in that court. Id. at 147,
`152.
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`13
`
`In contrast, here Xitronix presented no “alternative,
`non-patent-law theory” for its antitrust claim. Lipitor,
`855 F.3d at 146. The only basis of Xitronix’s claim was
`the asserted fraud or inequitable conduct in the PTO.
`The Lipitor ruling does not support divesting the Federal
`Circuit of jurisdiction over appeals where the potential
`antitrust issue necessarily turns on finding fraud or
`inequitable conduct in patent prosecution in the PTO.
`The panel also cites a Fifth Circuit case in purported
`support of this jurisdictional change. In USPPS, Ltd. v.
`Avery Dennison Corp., 541 F. App’x 386 (5th Cir. 2013)
`the issue was breach of fiduciary duty, where a patent
`applicant sued its licensee and attorneys on various
`grounds. There was no issue of fraud or inequitable
`conduct in prosecution of the patent application. The
`appeal bounced from the Fifth Circuit to the Federal
`Circuit to the Supreme Court, back to the Federal Circuit,
`and then back to the Fifth Circuit, which ruled that any
`patent aspects were “hypothetical” because resolution of
`the breach of fiduciary duty question would not affect the
`validity or enforceability of any patent. Id. at 389–90.
`Although the panel cites this case as an example of re-
`gional circuit jurisdiction of fraud in the PTO, there was
`no issue of fraud in the PTO; the asserted fraud was
`common law fraud based on contract and fiduciary rela-
`tionships.
`The panel further cites MDS (Canada) Inc. v. Rad
`Source Technologies, Inc., 720 F.3d 833 (11th Cir. 2013),
`for the proposition that the regional circuit had jurisdic-
`tion of the appeal of a “contract claim with an underlying
`patent infringement issue.” Transfer Order, 882 F.3d at
`1080. In that contract dispute, the court stated that the
`case was for breach of a license agreement, and that the
`question of infringement was not substantial because the
`patent had expired and “resolution of this issue is unlike-
`ly to impact any future constructions of claims.” MDS,
`720 F.3d at 842. The circuit construed the contract and
`
`

`

`
`
` 14
`
` XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`the licensed patents, considered the asserted breaches
`such as failure to pay the maintenance fees, and certified
`other contract issues to the Florida Supreme Court. The
`appeal before us is not such a complex case—the appeal
`turns on the issue of patent prosecution conduct in the
`PTO, for which appellate jurisdiction is in this court.
`Another regional circuit case on which the panel relies
`is Seed Co. Ltd. v. Westerman, a malpractice case that
`was appealed to the D.C. Circuit. 832 F.3d 325 (D.C. Cir.
`2016). The asserted malpractice was the attorney’s
`failure to successfully prosecute an application before the
`PTO. The panel correctly states that the D.C. Circuit had
`“appellate jurisdiction because the case ‘involve[d] no
`forward looking questions about any patent’s validity, but
`instead solely concern[ed] whether unsuccessful patent
`applicants can recover against their attorneys.’” Transfer
`Order, 882 F.3d at 1079 (quoting Seed, 832 F.3d at 331).
`The Federal Circuit had several years earlier reviewed
`the patent questions in Seed, in an interference proceed-
`ing. As in Gunn, no patent rights were involved in or
`affected by this malpractice action. This case does not
`support the panel’s holding that the Federal Circuit does
`not have jurisdiction over cases based on fraud or inequi-
`table conduct in the PTO.
`Until today, there has been stability in the jurisdic-
`tional path of Walker Process appeals. No precedent
`deprives the Federal Circuit of jurisdiction of appeals that
`turn on issues of fraud or inequitable conduct in patent
`prosecution. These issues are not only substantial, but
`because they determine patent enforceability and validity,
`they are fundamental.
`To summarize why en banc review of this panel deci-
`sion is appropriate and necessary:
`1) The panel, at its own initiative, raised the question
`of our jurisdiction of Walker Process appeals. Although
`supplemental briefing was requested of the parties, the
`
`

`

`XITRONIX CORPORATION v. KLA-TENCOR CORPORATION
`
`15
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`ramifications of this jurisdictional change were not ex-
`posed in public debate.
`2) Precedent is contrary to the panel’s rejection of this
`appeal. Neither Gunn nor any other precedent supports
`the panel’s ruling that claims turning on patent invalidity
`and unenforceability due to fraud or inequitable conduct
`in patent prosecution do not “arise under” the patent law.
`3) The reason for formation of the Federal Circuit as a
`national court was to stabilize the patent law and provide
`uniformity throughout the nation. Patent prosecution is a
`complex and specialized interaction between inventors
`and examiners. This ruling will require each regional
`circuit to review patent prosecution in the PTO, creating
`regional precedent and forum-shopping.
`4) Appellate review of cases that arise under the pa-
`tent law is our assignment and our obligation. The Su-
`preme Court did not silently divest this court of the
`jurisdiction that was established in 1982.
`If the court now wishes to remove itself from jurisdic-
`tion of cases that may involve issues in addition to patent
`issues, we should make this change en banc. From the
`court’s denial of en banc rehearing, I respectfully dissent.
`
`