Intellectual Property Antitrust Issues in Litigation

• Pages: 315-354

315

CHAPTER V

INTELLECTUAL PROPERTY ANTITRUST ISSUES

IN LITIGATION

Litigation involving the intersection of intellectual property and

antitrust law raises complex jurisdictional, procedural, and choice-of-law

issues because appeals of most lawsuits involving patent law go to the

Court of Appeals for the Federal Circuit, whereas appeals from antitrust

cases go to the regional federal courts of appeal. Proceedings involving

patents and antitrust may also be heard at the International Trade

Commission (ITC) and the Federal Trade Commission (FTC).

Part A of this chapter reviews the history and scope of Federal

Circuit jurisdiction and then explores the choice-of-law questions that the

Federal Circuit faces when adjudicating nonpatent matters, such as

antitrust claims. It also reviews the choice-of-law issues that arise when

other courts of appeal and district courts adjudicate patent matters that

may involve antitrust issues. Part B of this chapter discusses procedural

issues that arise in intellectual property/antitrust litigation, including

when antitrust counterclaims are compulsory, and the possibility of

severing intellectual property and antitrust issues during litigation.

Finally, Part C of this chapter reviews available remedies in intellectual

property antitrust cases, including damages in private actions, damages

for prevailing patent infringement defendants, and equitable relief.

A. The Federal Circuit—Creation and Purpose

The Federal Circuit was established by the Federal Courts

Improvement Act of 19821 to create uniformity in patent law by, among

other things, “centralizing appeals in patent cases.”2 The creation of an

appellate forum with nationwide jurisdiction over patent cases was

expected to “increase doctrinal stability in the field of patent law.”3

1. Pub. L. No. 97-164, 96 Stat. 25 (1982).

2. See S. Rep. No. 97-275, at 2 (1982), reprinted in 1982 U.S.C.C.A.N. 11,

12.

3. Id. at 5, 1982 U.S.C.C.A.N. at 15. See generally, Ronald S. Katz & Adam

J. Safer, Why Is One Patent Court Deciding Antitrust Law for the Whole

Country, ALI-ABA Course of Study Materials (Oct. 2000).

316 Intellectual Property and Antitrust Handbook

Congress intended the Federal Circuit’s jurisdiction to be confined to

the subject matter set forth in the Federal Courts Improvement Act.4

Aware of the potential for the new court to address issues beyond this

limited scope, Congress cautioned that “it is not the committee’s

judgment that broader subject matter jurisdiction is intended for this

court.”5 Of particular concern were the jurisdictional considerations in

patent-antitrust cases, where parties were likely to engage in forum

shopping by adding or dropping patent claims.6 Notwithstanding these

concerns, Congress left it to the Federal Circuit to interpret its own

jurisdictional mandate in accordance with the goals of the act and the

concerns expressed in the act’s legislative history.7 Consequently, the

Federal Circuit has taken responsibility for deciding questions of its own

jurisdiction on a case-by-case basis.

4. In addition to patent appeals, the Federal Circuit also exercises exclusive

jurisdiction over appeals from several types of other judicial and

administrative agency proceedings. 28. U.S.C. § 1295(a); see also Paul R.

Michel, A Review Of Recent Decisions Of The United States Court Of

Appeals For The Federal Circuit: Foreword: Assuring Consistency And

Uniformity Of Precedent And Legal Doctrine In The Areas Of Subject

Matter Jurisdiction Entrusted Exclusively To The U.S. Court Of Appeals

For The Federal Circuit: A View From The Top, 58 AM. U.L. REV. 699,

699-701 (2009) (article by then-Chief Judge of the Federal Circuit on the

court’s jurisdiction and operation).

5. S. Rep. No. 97-275, at 4 (1982), reprinted in 1982 U.S.C.C.A.N. 11, 14.

6. Id. at 19-20, 1982 U.S.C.C.A.N. 29-30 (warning against potential

manipulation of appellate jurisdiction by litigants whose claims are

predominantly antitrust-related).

7. Id.; see Atari, Inc. v. JS & A Grp., 747 F.2d 1422, 1428 (Fed. Cir. 1984)

(en banc) (noting that Congress expected the Federal Circuit to

“formulate appropriate standards for determining jurisdiction in cases

involving patent and non-patent claims in accordance with the objectives

of the Act”) (internal quotations omitted), overruled on other grounds by

Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059 (Fed. Cir.

1998). As the Atari court noted, Congress anticipated the need for the

Federal Circuit to determine the precise contours of its jurisdictional

mandate, stating: “[s]hould questions legitimately arise respecting

ancillary and pendent claims and for the direction of appeals in particular

cases, the Committee expects the courts to establish, as they have in

similar situations, jurisdictional guidelines respecting such cases.” Id.

(quoting H.R. REP. NO. 97-312, at 41 (1981)).

Issues in Litigation Involving Intellectual Property 317

The Federal Circuit applies its own precedent and that of its

predecessor courts to patent law claims.8 The Federal Circuit applies its

own circuit law to determine whether its exclusive appellate jurisdiction

is appropriate in a given case.9 When evaluating an antitrust claim, the

Federal Circuit applies its own law to those elements of the claim that are

unique to patent law and regional circuit law to those elements of the

claim that are not unique to patent law, such as relevant market and

market power.10

1. Jurisdiction: The Federal Circuit, Regional Circuits, and the

International Trade Commission

The Federal Circuit’s appellate jurisdiction is exclusive for cases in

which jurisdiction in the district court is based “in whole or in part” on

28 U.S.C. § 1338(a), the statute that gives district courts original

jurisdiction over claims “arising under” patent law.11 In all other cases,

8. See South Corp. v. United States, 690 F.2d 1368, 1369 (Fed. Cir. 1982)

(holding in the court’s first published decision that “the holdings of our

predecessor courts, the United States Court of Claims and the United

States Court of Customs and Patent Appeals, announced by those courts

before the close of business September 30, 1982, shall be binding as

precedent in this court”).

9. See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1146 (Fed.

Cir. 2011) (“Whether this court has jurisdiction over an appeal taken from

a district court judgment is a question of Federal Circuit law, not that of

the regional circuit from which the case arose.”) (internal quotations

omitted); see also Woodard v. Sage Prods., 818 F.2d 841, 844 (Fed. Cir.

1987) (en banc) (Federal Circuit may look to regional circuits for

guidance on jurisdictional issues but that its “decision to follow another

circuit’s interpretation of a common jurisdictional statute results from the

persuasiveness of its analysis, not any binding effect.”).

10. IGT v. Alliance Gaming Corp., 702 F.3d 1338, 1343 (Fed. Cir. 2012)

(citing Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059,

1068 (Fed. Cir. 1998)).

11. 28 U.S.C. § 1295(a). Federal district courts exercise original jurisdiction

over all civil actions “arising under” the federal patent, copyright, and

trademark statutes. 28 U.S.C. § 1338(a). Claims based on an intellectual

property license or contract do not “arise under” such statutes for

purposes of federal subject matter jurisdiction. See Jim Arnold Corp. v.

Hydrotech Sys., 109 F.3d 1567, 1572 (Fed. Cir. 1997) (“well settled” that

causes of action based on contract rights or the common law of torts do

not arise under patent law); Schwarzkopf Dev. Corp. v. Ti-Coating, Inc.,

800 F.2d 240, 244 (Fed. Cir. 1986) (claim based on failure to pay