Adrift on a Sea of Uncertainty: Preserving Uniformity in Patent Law Post-Vornado Through Deference to the Federal Circuit

Georgetown Law Journal, Mar 2004 by Thompson, Larry D Jr

INTRODUCTION

Congress created the United States Court of Appeals for the Federal Circuit in 1982. In doing so, Congress granted that court exclusive, nationwide jurisdiction over all appeals from final decisions of federal district courts in cases where the jurisdiction of the district court was based, "in whole or in part,"1 on "any civil action arising under any Act of Congress relating to patents."2 The primary congressional goal in centralizing appeals from patent cases in a single appellate court was to ensure a more uniform patent jurisprudence, thereby producing a more consistent resolution of patent disputes and reducing forum shopping based on favorable patent law.3 In the eyes of many commentators, the Federal Circuit has done an admirable job achieving those goals.4

Relatively early in its existence, the Federal Circuit recognized that its exclusive appellate jurisdiction did not include cases containing only a patent issue, but not any patent claim-for example, those cases in which a patent defense was raised to a nonpatent claim.5 In attempting to fulfill the congressional goals for which it was created, however, the Federal Circuit interpreted its exclusive jurisdiction to include cases where the complaint did not allege a patent claim, but the answer contained a patent counterclaim.6 For over a decade this was considered established doctrine: The Federal Circuit asserted jurisdiction over an appeal regardless of whether patent claims had been raised in the complaint or in the answer (at least for compulsory patent counterclaims), and applied its own law to patent issues present in these cases.7

This changed abruptly in 2002. That year, the Supreme Court decided Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.8 in which the Court concluded that in determining whether a patent-infringement counterclaim "arises under" federal patent law, the well-pleaded complaint rule defined the Federal Circuit's jurisdiction to the same extent that it did with general federal-question jurisdiction. The Vornado Court thus held that the Federal Circuit could not assert jurisdiction over an appeal based solely on a compulsory patent counterclaim raised in the answer.9

Vornado opens the door for the Regional Circuit Courts of Appeals (RCCOAs)-for example, the United States Court of Appeals for the Second Circuit-to hear appeals of cases where patent claims are presented only as counterclaims, while leaving unanswered the question of what law will govern these claims. Generally, however, federal courts of appeals follow what can be called the "rule of no deference," which allows courts to treat the decisions of coordinate federal courts as persuasive, but prohibits deference to them.10 Application of this rule here would free RCCOAs to independently develop patent caselaw in appeals where patent claims are presented only as counterclaims.

This situation has several detrimental consequences. As a practical matter, the RCCOAs are inexperienced in deciding patent appeals, not having done so on a regular basis since the Federal Circuit's creation more than twenty years ago. In addition, confusion may ensue in federal district courts as to whether the old RCCOA patent precedents or the newer Federal Circuit ones should govern a particular issue. But more important, by both threatening the uniformity in patent jurisprudence produced by the Federal Circuit and facilitating patent-based forum shopping, the application of the rule of no deference in this context potentially reintroduces the very problems that the Federal Circuit was created to resolve. To borrow the words that the Federal Circuit used when departing from the rule of no deference to avoid an analogous situation, blind adherence to that rule here would set the patent-litigating public "adrift on a sea of uncertainty."11

The serious problems Vornado creates in this regard have been recognized by several commentators.12 But many proposals to resolve these problems appear predicated on assumptions similar to the one made by no less eminent a jurist than John Paul Stevens: that, post-Vornado, other courts will of necessity independently develop patent case law when they adjudicate patent counterclaims.13 As such, industry groups and commentators have focused their attention on approaches that attempt to preserve uniformity and prevent patent-based forum shopping by expanding the jurisdiction of the Federal Circuit to include some or all patent counterclaims.14 No one yet has provided a detailed analysis of the merits and feasibility of deference to the Federal Circuit as a means of addressing the problems created by Vornado.15

This Article demonstrates that deference to the Federal Circuit on patent issues produced by patent counterclaims not only is possible, but is the best way to address these problems. First, close analysis reveals that the traditional justifications for the rule of no deference are inapplicable in this context. Second, by preserving uniformity in patent law and reducing motivation for patent-based forum shopping, deference to the Federal Circuit would further the clear congressional goals for which the Federal Circuit was created. Third, such deference is also supported under choice-of-law principles by analogy to other areas where federal courts of appeal have departed from the general rule of no deference and, instead, voluntarily deferred to the precedents of other federal appellate courts. Of particular interest is the Federal Circuit's policy to defer conclusively on nonpatent issues to the decisional law of the RCCOA for the circuit from which a case originated.