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Attorneys

Patent Infringement and Appellate Jurisdiction

July 17 2015

By: James Kachmar

In general, any appeal from a civil action involving claims of patent infringement must be made to the Federal Circuit in Washington, D.C. A recent case from the Ninth Circuit, Amity Rubberized Pen Company v. Market Quest Group, illustrates this principle as well as demonstrating the practical measures an appellate court will take to help an appeal survive.

In Amity Rubberized Pen Co., Amity held a patent for a device that dispensed both toothpicks and tablets such as breath mints. In 2006, Amity sued Market Quest Group alleging infringement of its patent and brought various other federal and state law claims. Counsel for Amity withdrew from the case during trial and the court declared a mistrial and ordered that Amity substitute in new counsel. It also awarded Market Quest its attorney’s fees and costs for the mistrial and warned Amity that it would dismiss the case if it failed to pay. Amity did not pay the fees and in 2010, the Court dismissed the case with prejudice.

Approximately three years later, in 2013, Amity filed a new lawsuit against Market Quest alleging similar claims as the previous action, including claims for patent infringement. Market Quest filed a motion to dismiss the lawsuit on the grounds of res judicata, arguing that the present actin was barred by the dismissal with prejudice of similar claims three years earlier. The District Court agreed and dismissed the 2013 lawsuit. Amity appealed this dismissal to the Ninth Circuit Court of Appeals instead of to the Federal Circuit.

The Ninth Circuit concluded that it lacked jurisdiction to hear Amity’s appeal. The Court recognized that generally it had appellate jurisdiction over appeals emanating “from the United States District Courts within the geographical boundaries of the Circuit.” The Court recognized, however, that this jurisdiction was not absolute in that Congress had granted the Federal Circuit “exclusive jurisdiction … of an appeal from a final decision of a district court of the United States … in any civil action arising under … any act of Congress relating to patents.” Although the dismissal was premised on the common law doctrine of res judicata, the Ninth Circuit recognized that “a case arises under the patent laws where `a well pleaded complaint establishes … that federal patent law creates the cause of action.’” Here, Amity had asserted a claim for patent infringement in the 2013 lawsuit against Market Quest thereby triggering the Federal Circuit’s appellate jurisdiction. Given this, the Ninth Circuit lacked the jurisdiction to determine the merits of Amity’s appeal.

However, rather than dismiss the appeal which, depending on certain timing issues would likely have barred Amity from refiling the appeal in the Federal Circuit, the Ninth Circuit decided to order that the appeal be transferred to the Federal Circuit. In reliance on 28 U.S.C. section 1631, the Ninth Circuit concluded that it had the authority to transfer the appeal to a federal court of competent jurisdiction provided: “(1) the Court to which the appeal is to be transferred would have had jurisdiction at the time the appeal was filed; and (2) transfer is `in the interest of justice’.” The Ninth Circuit also recognized that it could order the transfer of the appeal on its own without Amity filing a motion for such transfer.

In applying the two prong test, the Ninth Circuit concluded that the Federal Circuit had original jurisdiction over the appeal at the time it was mistakenly filed in the Ninth Circuit. This was because 28 U.S.C. section 1295 gives the Federal Circuit exclusive appellate jurisdiction over patent infringement claims. The Ninth Circuit then turned to whether a transfer of the appeal would be “in the interest of justice” finding this a more complex issue.

The Ninth Circuit recognized that it had taken a broad view of when a transfer would be appropriate, having previously held a “transfer will be in the interest of justice because normally dismissal of an action that could be brought elsewhere is ‘time consuming and just as defeating’.” The Ninth Circuit had also recognized that transfer is often times a suitable remedy so as not to penalize a party for “an honest procedural mistake.” The Court continued that a transfer should be ordered “where … the plaintiffs appear to have been `unaware of or confused about the proper forum in which to file [their] action’ as well as having held that it was in the interest of justice to transfer a case `when the time period has elapsed to file in the appropriate court’.” Finally, the Ninth Circuit recognized that it had rarely held that it would not be in the interest of justice to order the transfer of a case to another court. Thus, unless the matter to be transferred “is frivolous or was filed in bad faith,” the Ninth Circuit concluded that it would be in the interest of justice to transfer the case to the Federal Circuit rather than dismissing the appeal.

The Amity decision is a reminder to counsel in litigating patent infringement claims that any appeal from an unfavorable ruling must be made to the Federal Circuit. However, at least in the Ninth Circuit, there does not appear to be the likelihood of the severe penalty of dismissal should counsel mistakenly appeal to the wrong court.