Why the Ninth Was Reluctant to Depart from Sister Circuits on Patent Question

If you’re a federal circuit judge, and you and your colleagues on the panel are convinced the court should come out one way, but all other circuits to consider the question have come out the other way, what do you do?  “Circuit splits arise all the time,” you tell yourself.  “We should decide this the way we see it.”

Well, maybe that’s what you do most of the time.  But in Zila, Inc. v. Tunnell, case no. 05-15031 (9th Cir. Sept. 5, 2007), the Ninth Circuit shows deference to the other circuits’ interpretation of Supreme Court precedent because the issue involves an inventor’s right to royalty payments after expiration of patents, and thus implicates federal patent law, which in turn invokes “particularly strong national uniformity concerns”:

This consensus view [of the other circuits] may overread both Brulotte and Aronson for the reasons we have surveyed, and gives rise to the trenchant criticisms of the commentators and of the Seventh Circuit in Scheiber.  But the Supreme Court opinions are sufficiently opaque that we cannot say with any certainty that the consensus view is wrong.  As patent matters give rise to particularly strong national uniformity concerns, see S. Rep. No. 97-275, at 4 (1982) (citing the “special need for national uniformity” in the interpretation of patent law as support for the creation of the Federal Circuit), we hesitate more than is ordinarily the case to open up an intra-circuit conflict [citation].  We therefore adopt the majority approach . . . .

A good lesson to remember when it comes to appeals involving patents.

It’s also good to remember that the court should have referred to its potential split from other circuits as an inter-circuit split, not an intra-circuit split.  Another of my pet peeves.

A Trip Down a “Dark Corridor”

In Linear Technology Corp v. Applied Materials, Inc., case no. H028343 (June 18, 2007), the Sixth District Court of Appeal offers a primer on determining whether a case is one “arising under any Act of Congress relating to patents” within the meaning of that language in Title 28 United States Code section 1338(a).

Linear purchased equipment from the three defendants and was sued for patent infringement by a third party, with whom it settled.  Linear alleged its use of the equipment led to the patent infringement suit and sought indemnity from the sellers by suing them in state court on multiple causes of action.  The superior court dismissed the case in its entirety, finding that the complaint failed to state a claim as to two of the causes of action and that it lacked jurisiction over the remainder because section 1338(a) conferred exclusive jurisdiction over them to the federal district court.

The claims dismissed for lack of jurisdiction were for breach of contract, breach of the implied covenant of good faith and fair dealing, implied equitable indemnity, and breach of statutory warranty.  The Sixth District finds that the claims do not “arise under” the patent laws, and therefore reverses as to those claims (though it affirms the dismissal of fraud and unfair competition claims on non-jurisdictional grounds).  The decision makes for a good read in part because Linear wins the jurisdictional argument despite the court’s disagreement with it over the nature of the third party action.

The single best line of the opinion is this quotation from Arthur Young & Co. v. City of Richmond (4th Cir. 1990) 895 F.2d 967, 969 fn.2, which the court uses to set the stage for its jurisdictional analysis:

The line between cases that “arise under” [the patent laws] and those that present only state law contract issues is “a very subtle one,” [citation] and the question leads down “one of the darkest corridors of the law of federal courts and federal jurisdiction.” [Citation.]

Makes it sound creepy, doesn’t it?