Federal Circuit Lacks Jurisdiction Over Standalone Antitrust Claim Concerning An Unenforceable Patent

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CHANDLER v. PHOENIX SERVICES LLC

Before Chen, Wallach, and Hughes. Appeal from the United States District Court for the Northern District of Texas.

Summary: The Federal Circuit lacks subject matter jurisdiction over a standalone Walker Process antitrust claim concerning an unenforceable patent because such a cause of action does not inherently present a substantial issue of patent law.

Chandler asserted a Walker Process antitrust claim against Phoenix alleging that by listing a patent on Phoenix’s website after the Federal Circuit held it was unenforceable, Phoenix was continuing to enforce this patent. Despite the fact that a Walker Process claim requires, inter alia, proving that the antitrust-defendant obtained the patent by knowing and willful fraud on the patent office and maintained and enforced the patent with knowledge of the fraudulent procurement, the Federal Circuit held that it lacked subject matter jurisdiction over Chandler’s appeal. The Federal Circuit explained that although Walker Process antitrust claims may relate to patents in the colloquial use of the term, the appellate court’s jurisdiction over cases arising under patent law only extends to those cases where (1) federal patent law creates the cause of action or (2) the plaintiff’s right to relief necessarily depends on the resolution of a substantial question of federal patent law. The Federal Circuit concluded that, here, neither prong was met. For example, federal patent law did not create the cause of action because Chandler’s allegations arose under the Sherman Act. Additionally, the Federal Circuit explained that Chandler failed to raise any federal patent law question, let alone a substantial question of federal patent law, that had not already been addressed in the previous Federal Circuit case holding the patent-at-issue unenforceable. Accordingly, the Federal Circuit found that it lacked subject matter jurisdiction and transferred the case to the regional circuit.

Editor: Paul Stewart

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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