Nguyen: Is Circuit jurisdictional battle judicial wisdom or patent envy?

By Xuan-Thao Nguyen

Nguyen Nguyen

The Federal Circuit has enjoyed its rise in prominence, as patent cases have attracted media attention across the nation and the world. A little more than three decades since its creation by a congressional act to inject uniformity into the patent law system and to discourage forum shopping, the Federal Circuit saw its patent docket multiply four times from inception — from 110 cases in 1983 to 448 cases in 2013. All indications demonstrate “a sure bet” that the Federal Circuit will continue to be “the Almighty” and “the envy of the system.”

Perhaps the Federal Circuit desires more than being enthroned upon the apex of the system, though. The Federal Circuit has previously overreached into areas that it should not and must not. For example, the Federal Circuit’s overreach into areas of state law, from sales of intellectual property assets to secured transactions with patents serving as collateral, has drawn much scrutiny and criticism from scholars and judges. The Federal Circuit’s expansion has prompted a new patent jurisdictional battle emboldened by the U.S. Supreme Court’s decision in Gunn v. Minton, 133 S. Ct. 1059 (2013), finding no Federal Circuit jurisdiction over state claims of legal malpractice in patent cases — and being waged by the 11th and 7th Circuits.

The 11th Circuit could not sit idly by watching the Federal Circuit hear all cases related to patents. The 11th Circuit decided to strike back. In a case of first impression, the 11th Circuit embarked on a patent claim construction and infringement analysis under literal infringement and the doctrine of equivalents. (MDS (Can), Inc. v. Rad Source Techs, Inc., 720 F.3d 833, 846–48 (11th Cir. 2013)). Conducting de novo review of the District Court’s claim construction, the 11th Circuit allowed general dictionaries, such as Merriam-Webster’s Collegiate Dictionary and Oxford English Dictionary, to be the primary sources for constructing ordinary meanings of claim terms. The 11th Circuit’s standard for claim construction is in direct conflict with the Federal Circuit’s standard, paving the way for forum shopping.

While the 11th Circuit is quietly grabbing jurisdiction to justify its new experiment in patent claim construction and infringement analysis, the 7th Circuit — through its chief judge — has employed a different approach. The chief judge of the 7th Circuit grabbed the public’s attention by vocalizing policy reasons in support of a quest to end the Federal Circuit’s exclusive patent jurisdiction. (C.J. Diane P. Wood, Keynote Address: Is It Time to Abolish the Federal Circuit’s Exclusive Jurisdiction in Patent Cases?, 13 Chi.-Kent J. Intell. Prop. 1, 6–10 (2013)) The chief judge announced that the 7th Circuit is ready and able to handle patent issues in complex cases:

“So why we should treat patent law differently is a puzzle. If the answer is simply that patent appeals are much more difficult than any other type of case that comes before the courts, there are two responses. … [T]he regional courts of appeals routinely deal with all manner of difficult, technically complex subjects. If there are doubters among you, I would direct you to the Seventh Circuit’s recent opinion in Bernstein v. Bankert, in which we clarify (in over seventy-six pages) what events trigger the availability of a § 113 contribution claim under the Comprehensive Environmental Response, Compensation, and Liability Act (or CERCLA), and when the party must instead resort to a § 107 claim for cost recovery.”

What could be some possible explanations for the 11th Circuit seizing jurisdiction in patent cases and the 7th Circuit demanding a share of patent cases? Why do they desire and seek to hear patent cases? Do they have judicial wisdom to offer, or are they envious of the Federal Circuit’s rising prominence? Are there some merits to the circuits’ actions that other regional circuits may soon adopt?

If other circuits follow suit — either by demanding or seizing jurisdiction to engage in claim construction — the end of patent law uniformity and the beginning of forum shopping will soon arrive.

Facing this new reality, I would suggest to regional circuit courts that there are more legitimate grounds for asserting appellate jurisdiction in cases involving patents. For example, in cases where the patent issues are non-substantial and where state interests are stronger than federal interest in resolving state claims, federalism principles dictate that state courts have jurisdiction over those cases. That means if the cases are in federal courts due to diversity and supplemental jurisdiction, regional circuits will have jurisdiction on appeals and can decide the patent issues related to the state law claims. Additionally, in cases where the patent claims are non-compulsory counterclaims, regional circuit courts can also have jurisdiction.

Having legitimate grounds to hear cases involving patent issues comes with a responsibility that regional circuits must address. The body of substantive patent law has grown in the last three decades without regional circuits’ involvement. They cannot simply disregard this growth under the banner of judicial wisdom. Patent litigation has already become expensive. Uncertainty and forum shopping will fuel the cost of patent litigation, and all involved will suffer. That does not mean regional circuit courts should shy away from cases where patents are involved. Sharing judicial labor is a task of delicate balance that all Circuit courts must treasure in the interest of justice.•

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• Professor Xuan-Thao Nguyen is the Gerald L. Bepko Chair in Law and is the director of the Center for Intellectual Property Law and Innovation at the Indiana University Robert H. McKinney School of Law. This column is based on her article, “Judicial Wisdom or Patent Envy? The Eleventh, Seventh and Federal Circuits’ Patent Jurisdictional Battle,” which was published in the Georgia State Law Review. (32 Georgia State Law Review 303 (2016)). The opinions expressed are those of the author.

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