Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. In a recent opinion from the Ninth Circuit Court of Appeals, the Court affirmed Rule 11 sanctions against a plaintiff and its attorney for filing a lawsuit against Crocs based on a verifiably inaccurate allegation, and for an improper purpose. More specifically, the Ninth Circuit affirmed that the case was baseless inasmuch as the plaintiff’s allegation that Crocs illegally accessed confidential information was verifiably false based on information available to the plaintiff at the time. In addition, the Ninth Circuit agreed that it was improper for the plaintiff to file the lawsuit, particularly where based on allegations that would have been easy to determine were inaccurate, in order to create settlement leverage in another case between the parties. Thus, the sanctions were upheld. The takeaway here is obvious – don’t file cases that are easily shown to be bogus in order to try to gain leverage over another party.
2. In an important, but fractured opinion from the Supreme Court, the Court vacated and remanded the Federal Circuit’s decision in Arthrex v. Smith & Nephew. The basic gist of the case was previously covered on our blog (Takeaway No. 3), and involves the Federal Circuit Court of Appeals vacating and remanding a ruling of the Patent Trial and Appeals Board (PTAB) in which the three-judge PTAB panel found that the challenged patent was invalid for anticipation by prior art. The Federal Circuit did not overturn the finding of anticipation per se. Rather, the Federal Circuit determined that the process for appointing PTAB administrative law judges violated the Appointments clause of the Constitution. Basically, the Secretary of Commerce appoints PTAB judges, but because of a provision restricting the judges’ removal, they judges are deemed “principal officers” that needed to be appointed by the President with Senate approval. The Secretary of Commerce could appoint the judges if they are “inferior officers.” Ultimately, a petition for certiorari was filed and the Supreme Court took up the case for review. As a result, dozens of PTAB proceedings were stayed pending the outcome of the matter. The Supreme Court in some ways legislated from the bench, but came up with a solution that should not require Senate confirmation of the PTAB judges, but rather, gives the Director of the U.S. Patent and Trademark Office (USPTO) (a position that is presently vacant) discretionary authority to review final written decisions of PTAB panels. The ruling does not provide for new PTAB proceedings for Arthrex before a new panel of PTAB judges, but gives Arthrex the ability to seek discretionary review by the Acting Director of the USPTO. This seems to be a more practical solution to the issue, but one which obviously yielded varying opinions from the justices. The takeaway here is that if you have a stayed PTAB matter, the possibility of Director review should now be factored into the overall strategy for the proceeding.
3. In a recent opinion from the Federal Circuit Court of Appeals, the Court transferred an appeal to the Fifth Circuit Court of Appeals in connection with a Walker Process claim over which the Federal Circuit determined it lacked subject matter jurisdiction. The appeal originated out of the Northern District of Texas. A Walker Process claim is an antitrust claim based on assertion of a fraudulently obtained patent. The issue in the case was whether there was an issue to be resolved that was sufficiently intertwined with patent law such that it would fall within the Federal Circuit’s exclusive appellate jurisdiction over patent matters. The patent attempting to be enforced, which was the subject of an antitrust claim against the patent owner, had already been declared unenforceable by the Federal Circuit in a separate case. As such, there was no substantial issue of patent law for the Federal Circuit to resolve vis-à-vis the Walker Process claim. Accordingly, the Federal Circuit sent the case to the Fifth Circuit. The Federal Circuit also went to great lengths to attempt to prevent the Fifth Circuit from arguing there were substantial issues of patent law such that it could send the case back to the Federal Circuit. The takeaway here is that the Federal Circuit has some limitations on its jurisdiction even in cases that may involve patents (see Gunn v. Minton), and it is important to make sure that the Federal Circuit is the correct appellate court for one’s case.
