United States Court of Appeals for the Federal Circuit
2006-1592, 2007-1142
NISUS CORPORATION,
Plaintiff,
v.
PERMA-CHINK SYSTEMS, INC.,
Defendant,
v.
MICHAEL H. TESCHNER,
Movant-Appellant,
Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P, of
Washington, DC, argued for movant-appellant. With him on the brief were Paul W.
Browning, of Washington, DC, and Michael J. McCabe, II, of Atlanta, Georgia.
Appealed from: United States District Court for the Eastern District of Tennessee
Judge Thomas A. Varlan
United States Court of Appeals for the Federal Circuit
2006-1592, 2007-1142
NISUS CORPORATION,
Plaintiff,
v.
PERMA-CHINK SYSTEMS, INC.,
Defendant,
v.
MICHAEL H. TESCHNER,
Movant-Appellant.
___________________________
DECIDED: August 13, 2007
___________________________
Before RADER, BRYSON, and LINN, Circuit Judges.
BRYSON, Circuit Judge.
Michael Teschner appeals from a district court order that he characterizes as
“adjudging [him] guilty of inequitable conduct” in the prosecution of a patent application.
He also appeals from an order denying his motion to intervene in the underlying
infringement action between plaintiff Nisus Corporation and defendant Perma-Chink
Systems, Inc. We dismiss the first appeal for lack of jurisdiction. As to the second
appeal, we affirm.
I
In the underlying case, Nisus brought suit against Perma-Chink in the United
States District Court for the Eastern District of Tennessee. Nisus alleged that Perma-
Chink had infringed Nisus’s U.S. Patent No. 6,426,095 B2 (“the ’095 patent”). Perma-
Chink asserted the affirmative defense that the patent was unenforceable due to
inequitable conduct. Perma-Chink alleged that the attorneys who prosecuted the
patent—Mr. Teschner and Mr. Allan Altera—engaged in inequitable conduct when they
failed to disclose to the U.S. Patent and Trademark Office the existence of an earlier
lawsuit involving related patents as well as material documents that were at issue in that
lawsuit. Following a bench trial, the district court held that the ’095 patent was
unenforceable because of inequitable conduct and entered judgment in Perma-Chink’s
favor. Nisus and Perma-Chink subsequently settled all aspects of the litigation between
them and have disclaimed any interest in appealing from the judgment.
After the district court entered its judgment, Mr. Teschner filed a motion to
intervene in the litigation and a motion to amend and reconsider the judgment. In his
submissions to the district court, Mr. Teschner alleged that the district court erred in
finding that he engaged in inequitable conduct. Mr. Teschner pointed out that although
he served as Nisus’s patent counsel in connection with the application that matured into
the ’095 patent, Mr. Altera replaced him in that capacity early in the prosecution. Mr.
Teschner represented that he turned over to Mr. Altera all the relevant materials in his
possession at the time of the transition between the two counsel. Because the time for
submitting pertinent materials to the patent examiner had not expired at the time of the
transition, Mr. Teschner argued that the document turnover fulfilled his duty of
2006-1592, 2007-1142 2
disclosure and that the district court was therefore in error in characterizing his behavior
in the course of the prosecution as constituting inequitable conduct.
The district court denied the motion to intervene. Although the court amended its
opinion in response to the motion to amend the judgment, it otherwise denied the
motion. Mr. Teschner then noticed an appeal of both orders.
II
At the outset, we must determine whether we have jurisdiction to hear the
present appeal pursuant to 28 U.S.C. § 1295(a)(1). We resolve questions as to our
jurisdiction by applying the law of this circuit, not the regional circuit from which the case
arose. Silicon Image, Inc. v. Genesis Microchip, Inc., 395 F.3d 1358, 1362 (Fed. Cir.
2005); H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1382 (Fed. Cir. 2002);
Woodard v. Sage Prods., Inc., 818 F.2d 841, 844 (Fed. Cir. 1987) (en banc).
Ordinarily, nonparties may not appeal from judgments or other actions of a
district court. See Marino v. Ortiz, 484 U.S. 301, 304 (1988); Karcher v. May, 484 U.S.
72, 77 (1987); Gautreaux v. Chicago Hous. Auth., 475 F.3d 845, 850 (7th Cir. 2007).
That is true even if the nonparty asserts that the judgment, or some action taken by the
court in reaching the judgment, has an adverse effect on him. Marino, 484 U.S. at 304.
As an exception to that general rule, a nonparty such as an attorney who is held
in contempt or otherwise sanctioned by the court in the course of litigation may appeal
from the order imposing sanctions, either immediately or as part of the final judgment in
the underlying case. See U.S. Catholic Conference v. Abortion Rights Mobilization,
Inc., 487 U.S. 72, 76 (1988); Sanders Assocs., Inc. v. Summagraphics Corp., 2 F.3d
394, 395-98 (Fed. Cir. 1993). The reasoning underlying this rule is that when a court
2006-1592, 2007-1142 3
imposes a sanction on an attorney, it is not adjudicating the legal rights of the parties
appearing before it in the underlying case. Instead, the court is exercising its inherent
power to regulate the proceedings before it. See Roadway Exp., Inc. v. Piper, 447 U.S.
752, 764-66 (1980); see also Gompers v. Buck’s Stove & Range Co., 221 U.S. 418, 450
(1911). Once that power to punish is exercised, the matter becomes personal to the
sanctioned individual and is treated as a judgment against him. See Alexander v.
United States, 201 U.S. 117, 121-22 (1906); cf. Doyle v. London Guar. & Accident Co.,
204 U.S. 599, 604-05 (1907); Bessette v. W. B. Conkey Co., 194 U.S. 324, 328-29
(1904).
Conversely, a court’s power to punish is not exercised simply because the court,
in the course of resolving the issues in the underlying case, criticizes the conduct of a
nonparty. Critical comments, such as in an opinion of the court addressed to the issues
in the underlying case, are not directed at and do not alter the legal rights of the
nonparty. We recognize that critical comments by a court may adversely affect a third
party’s reputation. But the fact that a statement made by a court may have incidental
effects on the reputations of nonparties does not convert the court’s statement into a
decision from which anyone who is criticized by the court may pursue an appeal.
It is not always easy to determine whether a court’s criticism of an attorney
should be regarded as a sanction in a collateral proceeding, and there is some
disagreement among the courts of appeals as to the circumstances in which an appeal
from a court’s criticism of an attorney is permitted. The Seventh Circuit permits such
appeals only if the court has imposed a formal sanction against the attorney carrying a
monetary penalty. See Seymour v. Hug, 485 F.3d 926, 929 (7th Cir. 2007) (“[A]n
2006-1592, 2007-1142 4
attorney can bring an appeal on her own behalf when challenging a district court
decision imposing monetary sanctions on the attorney, but this rule does not allow an
appeal of otherwise critical comments by the district court when no monetary sanctions
have been imposed.”). Other courts permit an attorney to appeal from a judicial order in
which the court states that the attorney has engaged in professional misconduct,
holding that such a declaration is itself an appealable sanction. See Butler v. Biocore
Med. Techs., Inc., 348 F.3d 1163, 1168-69 (10th Cir. 2003); United States v. Talao, 222
F.3d 1133, 1137 (9th Cir. 2000); Walker v. City of Mesquite, 129 F.3d 831, 832-33 (5th
Cir. 1997); Sullivan v. Comm. on Admissions & Grievances, 395 F.2d 954, 956 (D.C.
Cir. 1967). The First Circuit has adopted a middle position, not requiring a monetary
sanction, but finding that “[w]ords alone may suffice if they are expressly identified as a
reprimand.” In re Williams, 156 F.3d 86, 92 (1st Cir. 1998); see Bowers v. Nat’l
Collegiate Athletic Ass’n, 475 F.3d 524, 542-44 (3d Cir. 2007).
We have taken the position that a court’s order that criticizes an attorney and that
is intended to be “a formal judicial action” in a disciplinary proceeding is an appealable
decision, but that other kinds of judicial criticisms of lawyers’ actions are not reviewable.
In Precision Specialty Metals, Inc. v. United States, 315 F.3d 1346 (Fed. Cir. 2003), we
considered an attorney’s appeal from an order formally reprimanding the attorney for
misconduct before the court. In holding that we had jurisdiction over the attorney’s
appeal from that ruling, we followed the line of cases distinguishing between court-
imposed sanctions, which the sanctioned lawyer may appeal, and “judicial statements
that criticize the lawyer, no matter how harshly, that are not accompanied by a sanction
or findings, [which] are not directly appealable.” Id. at 1352. We declined to require that
2006-1592, 2007-1142 5
the district court impose a monetary sanction as a predicate for permitting the attorney
to challenge a finding of misconduct, but we held that a formal reprimand was sufficient
to give the attorney a basis for appeal. Id. We explained that a formal reprimand
constitutes a final decision in a collateral proceeding, from which the sanctioned
attorney may appeal; we made clear, however, that our decision should not be taken to
suggest that every statement criticizing an attorney or suggesting that the attorney has
failed to comply with some legal or ethical norm amounts to a sanction sufficient to
constitute a final decision in a collateral proceeding.
We adhere to the standard applied in Precision Metals. In the absence of some
type of formal judicial action directed at Mr. Teschner, such as an explicit reprimand or
the issuance of some mandatory directive, see, e.g., Dawson v. United States, 68 F.3d
886, 894 (5th Cir. 1995) (order that an attorney attend an ethics course), a court’s
criticism of an attorney is simply commentary made in the course of an action to which
the attorney is, legally speaking, a stranger. To allow appeals by attorneys, or others
concerned about their professional or public reputations, merely because a court
criticized them or characterized their conduct in an unfavorable way would invite an
appeal by any nonparty who feels aggrieved by some critical statement made by the
court in an opinion or from the bench. Treating such critical comments by a court as
final decisions in collateral proceedings would not only stretch the concept of collateral
proceedings into unrecognizable form, but would potentially result in a multiplicity of
appeals from attorneys, witnesses, and others whose conduct may have been relevant
to the court’s disposition of the case but who were not parties to the underlying dispute.
Nor would it be appropriate to limit such appeals to attorneys, while forbidding others
2006-1592, 2007-1142 6
from appealing from critical court comments, as such a limitation would smack of
special treatment for members of the bar and would be difficult to justify as a matter of
principle. Accordingly, we hold that absent a court’s invocation of its authority to punish
persons before it for misconduct, actions by the court such as making adverse findings
as to the credibility of a witness or including critical language in a court opinion
regarding the conduct of a third party do not give nonparties the right to appeal either
from the ultimate judgment in the case or from the particular court statement or finding
that they find objectionable.
In the present case, the district court did not exercise its power to sanction Mr.
Teschner. The court’s comments about Mr. Teschner were simply subsidiary findings
made in support of the court’s ultimate findings and legal conclusion that Nisus’s patent
was unenforceable. At no point did the district court purport to affect the legal rights or
obligations of Mr. Teschner. Without the exercise of the sanctioning power, a finding of
inequitable conduct is insufficient to confer appellate jurisdiction over an appeal by the
aggrieved attorney.
Mr. Teschner places great weight on the fact that Precision Metals indicated
standing could be conferred by “sanctions or findings.” 315 F.3d at 1352. He argues
that “findings” refers to any finding that an attorney has failed to comply with a legal or
ethical norm. In context, however, it is clear that the phrase “sanctions or findings”
referred to the formal imposition of the court’s inherent power to penalize those who
appear before it. Precision Metals, 315 F.3d at 1352 (“[J]udicial statements that criticize
the lawyer, no matter how harshly, that are not accompanied by a sanction or findings,
are not directly appealable.”). The alleged “finding” that Mr. Teschner committed
2006-1592, 2007-1142 7
inequitable conduct does not aggrieve him in the sense of inflicting a legal injury, and
thus is no different from any other critical comment about a nonparty that a court might
make in the course of resolving a dispute between the two parties before the court.
There is an important difference between this case and many of the cases in
which courts have held that an attorney may appeal from a court’s formal or informal
sanctions against the attorney. In those cases, including Precision Metals, the attorney
was before the court as a participant in the underlying litigation, and the court’s action
was directed at regulating proceedings before the court or over which the court had
supervisory authority. In this case, by contrast, Mr. Teschner was not a participant in
the district court proceedings other than as a witness, and the conduct at issue was not
his conduct before the court or in the course of the litigation—it was conduct that
occurred long before the litigation. Mr. Teschner’s pre-litigation conduct was plainly
outside the scope of the court’s authority to impose disciplinary sanctions, and the
court’s criticism of Mr. Teschner cannot reasonably be characterized as the imposition
of a disciplinary sanction against him. For this reason, those cases in which courts
have struggled with the issue of the appealability of an order of a court critical of an
attorney’s conduct in the very proceedings that are before the court are not directly
applicable here. See, e.g., Bowers, 475 F.3d at 544; Butler, 348 F.3d at 1165-66;
Walker, 129 F.3d at 831-32.
As other courts have noted, the dismissal of a nonparty’s appeal from derogatory
comments by a court does not leave the nonparty without a remedy. To the extent that
an individual is harmed by the mere existence of a statement in an opinion, that
individual “is free to petition for a writ of mandamus, see 28 U.S.C. § 1651, and request
2006-1592, 2007-1142 8
that offending commentary be expunged from the public record.” In re Williams, 156
F.3d at 92-93; see also Clark Equip., 972 F.2d at 820; Bolte, 744 F.2d at 573; cf.
Fromson v. Citiplate, Inc., 886 F.2d 1300, 1304 (Fed. Cir. 1989). Moreover, to the
extent that Mr. Teschner is concerned about the collateral effects of the court’s findings
in the underlying case, we note that for the very reason that he was a stranger to the
proceedings before the district court in this case, he has not had a full and fair
opportunity to respond to the court’s characterizations of his conduct. Particularly in this
case, in which Mr. Teschner vigorously contests the findings against him, and in which
there appears to be some force to his argument on the merits, we would expect that he
would be accorded an opportunity to make his case before any sanctions were imposed
on him based on the comments made by the district court.
III
Mr. Teschner also argues that the district court erred in denying his motion to
intervene. The district court denied the motion on the ground that the motion, which
was filed after the entry of judgment in the case, was untimely.
We hold that the district court did not err in denying the motion to intervene
because, even if Mr. Teschner had been permitted to intervene in the proceedings
before the district court for purposes of pursuing this appeal, the grant of intervention
would not have affected his rights, as we would still lack jurisdiction over his appeal. As
discussed above, the district court’s findings regarding Mr. Teschner’s conduct do not
constitute a final decision sufficient to confer jurisdiction in this court, and Mr.
Teschner’s status as an intervenor would not give him a right to appeal a judgment
resolving the rights of Nisus and Perma-Chink. See Diamond v. Charles, 476 U.S. 54,
2006-1592, 2007-1142 9
68 (1986) (“Permission to intervene in a district court action does not confer standing on
appeal.”); Warner/Elektra/Atl. Corp. v. County of DuPage, 991 F.2d 1280, 1282 (7th Cir.
1993) (“If an appellant is complaining not about a judgment but about a finding . . . the
appeal does not present a real case or controversy.”).
In support of his appeal from the denial of the motion to intervene, Mr. Teschner
cites the Second Circuit’s decision in Penthouse International, Ltd. v. Playboy
Enterprises, Inc., 663 F.2d 371 (2d Cir. 1981), but that case is of no help to him. In that
case, the attorney for a sanctioned party sought to intervene both in the district court
and on appeal from an order directing the attorney to pay the opposing party’s
expenses for his role in certain discovery abuses. The court of appeals permitted him to
intervene on appeal, noting that on remand the district court would be required to
determine whether the attorney should be ordered to pay the opposing party’s
expenses. There is no similar sanction that is either pending or may arise in further
proceedings in this case. Because Mr. Teschner lacks a substantial legal interest in the
underlying litigation, see Jordan v. Mich. Conference of Teamsters Welfare Fund, 207
F.3d 854, 862 (6th Cir. 2000), the district court did not commit legal error in denying his
motion to intervene. See generally Donaldson v. United States, 400 U.S. 517, 531
(1971) (no intervention as of right because would-be intervenor had no “significantly
protectable interest” in the underlying litigation). 1
1
Following Second Circuit law, this court in Fromson v. Citiplate, Inc., 886
F.2d 1300 (Fed. Cir. 1989), allowed a sanctioned attorney to intervene in the appeal of
his client. Unlike in Fromson, however, Mr. Teschner was not the trial attorney for either
party and neither party has taken an appeal. There is no reason to believe Sixth Circuit
law would permit Mr. Teschner to intervene for purposes of pursuing an appeal in the
2006-1592, 2007-1142 10
For the foregoing reasons, we conclude that the finding Mr. Teschner seeks to
appeal is not a final decision within the meaning of 28 U.S.C. § 1295(a)(1), and that Mr.
Teschner does not have standing to appeal from the final judgment in the lawsuit
between Nisus and Perma-Chink. We therefore dismiss the appeal from the district
court’s inequitable conduct decision, and we affirm the denial of Mr. Teschner’s motion
to intervene.
DISMISSED IN PART and AFFIRMED IN PART.
present case under these circumstances. See Jordan, 207 F.3d at 862; Associated
Builders & Contractors v. Perry, 16 F.3d 688, 690-93 (6th Cir. 1994).
2006-1592, 2007-1142 11