Case: 10-50612 Document: 00511544412 Page: 1 Date Filed: 07/19/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 19, 2011
No. 10-50612 Lyle W. Cayce
Clerk
USPPS, LTD.,
Plaintiff–Appellant
v.
AVERY DENNISON CORPORATION; RENNER, OTTO, BOISELLE &
SKLAR, L.L.P.; NEIL DUCHEZ, Individually,
Defendants–Appellees
Appeal from the United States District Court
for the Western District of Texas
Before DAVIS, PRADO, and OWEN, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
This suit, involving state-law claims of fraud and breach of fiduciary duty
in connection with a patent application, reaches us for a third time. We most
recently reversed the district court’s dismissal of the case as time-barred at the
pleading stage and remanded for further factual development. USPPS, Ltd. v.
Avery Dennison Corp., 326 F. App’x 842 (5th Cir. 2009) (per curiam)
(unpublished). Plaintiff–Appellant USPPS, Ltd. (“USPPS”) now appeals the
district court’s grant of summary judgment in favor of Defendants–Appellees
Avery Dennison Corp. (“Avery”); Renner, Otto, Boiselle & Sklar, L.L.P.
(“Renner”); and Neil DuChez. The district court held that there was no genuine
Case: 10-50612 Document: 00511544412 Page: 2 Date Filed: 07/19/2011
No. 10-50612
dispute of material fact as to whether USPPS’s claims were time-barred such
that the defendants were entitled to judgment as a matter of law, and that in the
alternative there was no genuine dispute of material fact as to the causation
elements of USPPS’s claims. We requested supplemental briefing on the issue
of whether exclusive appellate jurisdiction rests in the United States Court of
Appeals for the Federal Circuit under 28 U.S.C. §§ 1295(a) and 1338(a). After
reviewing the record, we conclude that this case raises a substantial issue of
patent law such that we lack jurisdiction over the appeal, and we order the
appeal transferred to the Federal Circuit.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Facts
The Supreme Court has explained that our assessment of whether this
Circuit or the Federal Circuit has jurisdiction over the appeal must be made by
reference to the allegations made in the plaintiff’s “well-pleaded complaint”; that
is, “from what necessarily appears in the plaintiff’s statement of his own claim
in the [complaint], unaided by anything alleged in anticipation or avoidance of
defenses which it is thought the defendant may interpose.” Christianson v. Colt
Indus. Operating Corp., 486 U.S. 800, 809 (1988) (citation and quotation marks
omitted). We therefore limit our recitation of the facts to those relevant to this
inquiry.
USPPS filed suit in federal district court against Avery; Avery’s law firm,
Renner; and one of Renner’s partners, Neil DuChez, on the basis of diversity
jurisdiction. The dispute stems from the efforts of USPPS and its owner and
founder, Joe Pat Beasley, to obtain a patent for an invention of Beasley’s related
to personalized postage stamps.
In 1999, Beasley filed a patent application with the United States Patent
and Trademark Office (“PTO”). While the patent application was pending,
Beasley negotiated a licensing and manufacturing contract with Avery. In
2
Case: 10-50612 Document: 00511544412 Page: 3 Date Filed: 07/19/2011
No. 10-50612
March 2001, the PTO approved Beasley’s patent application and notified him
that it would issue the patent upon payment of the requisite fees. In May 2001,
Beasley and Avery entered into an agreement under which Avery agreed to
assume responsibility for prosecuting Beasley’s patent application and to pay all
related fees and expenses. Beasley subsequently revoked all previous powers of
attorney and appointed attorneys from Renner, Avery’s law firm, to act on his
behalf. USPPS’s complaint alleges that Renner never disclosed to Beasley or
anyone at USPPS that the firm did not represent Beasley and held a higher
loyalty to Avery’s interests.
In June 2001, Renner, acting pursuant to Beasley’s power of attorney,
formally abandoned Beasley’s original patent application and submitted a second
application pursuing more claims. In August 2001, USPPS and Avery entered
into an agreement under which Avery would pay USPPS a royalty on sales of
personalized postage stamps. In mid-2002, the PTO rejected the patent
applications. Renner filed responses, but the PTO again rejected the
applications. Avery notified USPPS that there was no hope that the applications
could be revived by additional claim language. Finally, on May 14, 2003, Renner
notified Avery and USPPS that the applications had been abandoned. In 2004,
Avery notified USPPS that it intended to sell personalized postage stamps to
third parties without further payment of royalties after the royalty agreement
expired by its own terms.
USPPS’s complaint contends that Renner’s representation of Avery
created a conflict of interest with its representation of Beasley and USPPS in the
patent-prosecution process. Specifically, USPPS argues that Avery benefitted
from the rejection of the patent application because Avery could produce the
stamps without paying royalties once the patent was rejected. Neither Avery
nor Renner supposedly disclosed this conflict to USPPS.
3
Case: 10-50612 Document: 00511544412 Page: 4 Date Filed: 07/19/2011
No. 10-50612
B. Prior Appeals
This lawsuit was preceded by a nearly identical one filed with Beasley
named as the plaintiff. The district court dismissed that case for lack of
standing after it was discovered that Beasley had previously assigned all his
intellectual property rights to USPPS. The district court also denied Beasley’s
motion to add USPPS as a party and sanctioned him for concealing the
assignment. Beasley appealed but filed no briefing, and the clerk of this court
entered an order dismissing the appeal for failure to prosecute. See Beasley v.
Avery Dennison Corp., No. 07-51311, 2008 U.S. App. LEXIS 28075, at *1 (5th
Cir. Feb. 7, 2008) (citing 5TH CIR. R. 42.3).
The lawsuit was then refiled in USPPS’s name, including additional
allegations based on information learned in the course of discovery in the prior
suit. The district court dismissed the claims as time-barred. USPPS appealed,
and we reversed and remanded for further factual development, concluding that
the discovery rule or fraudulent-concealment doctrine might apply on the face
of the complaint. USPPS, 326 F. App’x at 851. The parties made no arguments
concerning jurisdiction in that appeal, and our prior opinion makes no mention
of the basis for the court’s jurisdiction other than to describe the complaint as
asserting that the case was “based on diversity of citizenship.” Id. at 843.
II. STANDARD OF REVIEW
“We must always be sure of our appellate jurisdiction and, if there is
doubt, we must address it, sua sponte if necessary.” Castaneda v. Falcon, 166
F.3d 799, 801 (5th Cir. 1999). Whether an appeal properly belongs in this Court
or the Federal Circuit is such a question of appellate jurisdiction. See 28 U.S.C.
§ 1295(a). If we conclude that our jurisdiction is lacking, we cannot reach the
merits of the appeal. See Christianson, 486 U.S. at 818.
4
Case: 10-50612 Document: 00511544412 Page: 5 Date Filed: 07/19/2011
No. 10-50612
III. DISCUSSION
“Under 28 U.S.C. § 1295(a), the Federal Circuit has exclusive jurisdiction
of an appeal where the district court’s jurisdiction was based, in whole or in part,
on 28 U.S.C. § 1338.” NaTec, Inc. v. DeTer Co., 28 F.3d 28, 29 (5th Cir. 1994)
(per curiam). Where an appeal over which the Federal Circuit has exclusive
jurisdiction is taken to this Court in error, we are directed by statute to, “if it is
in the interest of justice, transfer such . . . appeal to” the Federal Circuit. See 28
U.S.C. § 1631. The Supreme Court has clarified that if such a transfer is not “in
the interest of justice,” our sole alternative is to dismiss the appeal. See
Christianson, 486 U.S. at 818. All the parties agree that if we lack jurisdiction,
then transfer rather than dismissal best serves the interest of justice. We agree
that “a balancing of equities weighs in favor of transfer because a new appeal .
. . at this point would be barred as untimely and we find nothing to indicate that
the [appellants] acted in bad faith by filing the instant appeal” with this Court.
Scherbatskoy v. Halliburton Co., 125 F.3d 288, 292 (5th Cir. 1997).
We therefore must transfer this appeal to the Federal Circuit if the district
court’s jurisdiction was based, even in part, on § 1338. In relevant part,
§ 1338(a) grants exclusive jurisdiction to the federal district courts over “any
civil action arising under any Act of Congress relating to patents.” In
Christianson, the Supreme Court summarized its precedents delimiting the
scope of this language:
[I]n order to demonstrate that a case is one “arising under” federal
patent law the plaintiff must set up some right, title or interest
under the patent laws, or at least make it appear that some right or
privilege will be defeated by one construction, or sustained by the
opposite construction of these laws. . . . [Thus] § 1338(a) jurisdiction
. . . extend[s] only to those cases in which a well-pleaded complaint
establishes either that federal patent law creates the cause of action
or that the plaintiff’s right to relief necessarily depends on
resolution of a substantial question of federal patent law, in that
patent law is a necessary element of one of the well-pleaded claims.
5
Case: 10-50612 Document: 00511544412 Page: 6 Date Filed: 07/19/2011
No. 10-50612
. . . Under the well-pleaded complaint rule, as appropriately
adapted to § 1338(a), whether a claim “arises under” patent law
must be determined from what necessarily appears in the plaintiff’s
statement of his own claim in the [complaint], unaided by anything
alleged in anticipation or avoidance of defenses which it is thought
the defendant may interpose.
486 U.S. at 807–09 (internal citations and quotation marks omitted). In Grable
& Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, the
Supreme Court clarified the role that federalism concerns should play in this
analysis: “[T]he question is, does a state-law claim necessarily raise a stated
federal issue, actually disputed and substantial, which a federal forum may
entertain without disturbing any congressionally approved balance of federal
and state judicial responsibilities[?]” 545 U.S. 308, 314 (2005).1
This is therefore a two-part inquiry: first, whether the case requires
deciding an issue of patent law; and second, where a patent issue must be
decided, whether that issue rises to the level of creating a substantial federal
interest such that the Federal Circuit has exclusive appellate jurisdiction. In
evaluating these questions, we frequently look to the jurisdictional decisions of
the Federal Circuit, see, e.g., Scherbatskoy, 125 F.3d at 291; Du Val Wiedmann,
LLC v. InfoRocket.com, Inc., 374 F. App’x 482, 484 (5th Cir. 2010) (per curiam)
1
As Christianson explains, the fact that federal jurisdiction is clearly proper under
some theory—diversity of citizenship under 28 U.S.C. § 1332 or patent law under § 1338—does
not diminish the importance of this federalism inquiry in assessing whether § 1338 applies.
See 486 U.S. at 808–09 n.2 (“[I]n this case our interpretation of § 1338(a)’s ‘arising under’
language will merely determine which of two federal appellate courts will decide the
appeal. . . . Since, however, § 1338(a) delineates the jurisdiction of the federal and state courts
over cases involving patent issues, the phrase . . . ‘masks a welter of issues regarding the
interrelation of federal and state authority and the proper management of the federal judicial
system.’” (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust, 463 U.S. 1,
8 (1983))). In other words, because our interpretation of § 1338 here will govern the division
of federal and state jurisdiction no less than the division between the Federal Circuit and ours,
we must be sensitive to issues of federalism that would be present were the alternative to
§ 1338 jurisdiction in this case be a remand to state court rather than consideration of the
merits by this Circuit.
6
Case: 10-50612 Document: 00511544412 Page: 7 Date Filed: 07/19/2011
No. 10-50612
(unpublished), although we are not bound by them. See Singh v. Duane Morris
LLP, 538 F.3d 334, 340 (5th Cir. 2008).
A. Federal Circuit Cases
Several opinions of the Federal Circuit applying Christianson suggest that
USPPS’s claim “arises under” patent law within the meaning of § 1338. In Air
Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, LLP, 504
F.3d 1262 (Fed. Cir. 2007), and its companion case Immunocept, LLC v.
Fulbright & Jaworski, LLP, 504 F.3d 1281 (Fed. Cir. 2007), the Federal Circuit
held that a Texas state-law claim of attorney malpractice in a patent
infringement case “arises under” patent law for purposes of § 1338. In Air
Measurement Technologies, the court explained its reasoning thus:
Under Texas state law, the elements of a malpractice claim
are (1) an attorney owed plaintiff a duty stemming from the
attorney-client relationship, (2) the attorney breached that duty, (3)
the breach proximately caused plaintiff’s injuries, and (4) damages.
Because [the plaintiff]’s malpractice claim stems in part from
unsuccessful prior litigation, [the plaintiff] must establish that they
would have prevailed in the prior litigation but for [the defendant
law firm]’s negligence that compromised the litigation. This is
called the “case within a case” requirement of the proximate cause
element of malpractice. . . . Because [in this case] proof of patent
infringement is necessary to show [the plaintiff] would have
prevailed in the prior litigation, patent infringement is a “necessary
element” of [the plaintiff]’s malpractice claim and therefore
apparently presents a substantial question of patent law conferring
§ 1338 jurisdiction.
504 F.3d at 1268–69 (internal citations omitted) (quoting Christianson, 486 U.S.
at 809).
In Immunocept, decided on the same day as Air Measurement
Technologies, the Federal Circuit addressed the federalism question that Grable
reemphasized in a case presenting nearly identical issues to Air Measurement
Technologies. The Immunocept plaintiffs filed suit against their law firm
7
Case: 10-50612 Document: 00511544412 Page: 8 Date Filed: 07/19/2011
No. 10-50612
alleging a Texas state-law claim of attorney malpractice in prosecuting a patent
on their behalf, specifically claiming a drafting mistake. Echoing Air
Measurement Technologies, the court held that,
[b]ecause it is the sole basis of negligence, the claim[ed] drafting
error is a necessary element of the malpractice cause of action. As
such, there is no way [the plaintiffs] can prevail without addressing
claim scope. The parties, however, dispute whether there was a
drafting mistake. Therefore, if determining claim scope involves a
substantial question of federal law that passes the federalism
muster of Grable, there is § 1338 jurisdiction over the malpractice
claim under both Christianson and Grable.
....
Because patent claim scope defines the scope of patent
protection, we surely consider claim scope to be a substantial
question of patent law. As a determination of patent infringement
serves as the basis of § 1338 jurisdiction over related state law
claims, so does a determination of claim scope.
504 F.3d at 1285 (internal citations omitted). The court then briefly turned to
the propriety of federal jurisdiction as a question of federalism, an issue not
explicitly addressed in Air Measurement Technologies:
Claim scope determination is a question of law that can be
complex in that it may involve many claim construction doctrines.
Litigants will benefit from federal judges who are used to handling
these complicated rules. Additionally, Congress’[s] intent to remove
non-uniformity in the patent law, as evidenced by its enactment of
the Federal Courts Improvement Act of 1982, is further indicium
that § 1338 jurisdiction is proper here.
Id. at 1285–86 (citing Pub. L. No. 97-164, 96 Stat. 25) (other internal citations
omitted).
Both Air Measurement Technologies and Immunocept thus concluded that
the exercise of § 1338 federal jurisdiction was proper over state-law claims of
malpractice where the alleged malpractice required the court to construe a
patent. In Davis v. Brouse McDowell, L.P.A., 596 F.3d 1355 (Fed. Cir. 2010),
8
Case: 10-50612 Document: 00511544412 Page: 9 Date Filed: 07/19/2011
No. 10-50612
cert. denied, 131 S. Ct. 118 (2010), the Federal Circuit extended this doctrine to
a question of patentability where no patent had actually issued. In Davis, the
plaintiff sued her attorney for malpractice under Ohio state law, alleging that
the lawyer had failed to timely file her patent application, resulting in the loss
of patent protection and the withdrawal of her investors’ funding. The court
held that because the plaintiff in Davis was obliged to “prove, by a
preponderance of the evidence, that she would have obtained patents on her
inventions but for [her attorney]’s alleged negligence . . . patent law is a
necessary element of one of the legal malpractice claims presented in [the]
complaint, and the district court properly exercised jurisdiction pursuant to 28
U.S.C. § 1338(a).” Id. at 1361–62.
The relevant facts of this case are similar to those in Davis, though there
are of course some distinctions. Here, USPPS alleges that Renner’s misconduct
constituted a breach of fiduciary duty that ultimately led to USPPS’s loss of
patent protection in its invention.2 Under Texas law, a cause of action for breach
of fiduciary duty may take one of two forms: if the suit seeks damages, then the
plaintiff must prove duty, breach, actual injury, and causation; whereas if the
suit seeks an equitable forfeiture of the fee paid to the fiduciary, then the
plaintiff need only prove duty and breach to recover. See, e.g., Si Kyu Kim v.
Harstan, Ltd., 286 S.W.3d 629, 635 n.1 (Tex. App.—El Paso 2009, pet. denied)
(citing Burrow v. Arce, 997 S.W.2d 229, 240 (Tex. 1999)). USPPS’s complaint
does not seek fee forfeiture; indeed, it does not even allege that USPPS ever paid
Renner or DuChez a fee that could be forfeited. Rather, USPPS explicitly seeks
2
Specifically, USPPS’s theory of injury is that the defendants’ failure to disclose their
lack of loyalty to USPPS caused it to have its patent ultimately denied by the PTO: “[w]ith
patent counsel representing Plaintiff and loyal to it at least some of the claims in the patent
applications could have overcome the PTO’s rejections,” and “[i]f Beasley and USPPS had
patent counsel loyal to them they would today have a patent with at least some claims
allowed.”
9
Case: 10-50612 Document: 00511544412 Page: 10 Date Filed: 07/19/2011
No. 10-50612
damages for the breach in the amount of lost revenues and royalties that it
alleges it would have earned had the patent issued. Proof of “injury and
causation [is] . . . required when a plaintiff seeks to recover damages for a breach
of fiduciary duty,” Si Kyu Kim, 286 S.W.3d at 635 n.l, and USPPS would
therefore have to prove both in order to prevail on the breach of fiduciary duty
claim set out in its complaint. As in Davis, USPPS cannot prove causation
without proving the patentability of its invention. Otherwise, the cause of
USPPS’s loss of patent protection would be based on the simple fact that its
invention could not be patented, and not on any breach of fiduciary duty by
Renner or DuChez.3
USPPS argues that the validity of the patent is not necessary to the
overall success of its claims. Rather, it argues that even if its patent was
eventually found invalid, with better counsel it would have received royalties in
the time between the date of patent issuance and when the patent was
eventually found invalid. This assumes, of course, that USPPS’s patent would
have issued at all had USPPS had loyal counsel, a question that necessarily
involves deciding an issue of patent law. USPPS also ignores the fact that it
cannot recover from Renner and DuChez on its state-law claims for breach of
fiduciary duty and fraud if their misconduct, no matter how egregious, did not
injure USPPS. USPPS’s stated theory of injury is that “[m]illions of
3
Comparing the requirement of proof of causation in the present case to the
requirement of proof of causation in a malpractice case helps to clarify this point. The Texas
Supreme Court has explained that, in a legal malpractice case, the reason that the client must
prove that he would have succeeded in the underlying action is simply because the plaintiff
must prove proximate cause. See State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 969, 708
(Tex. 1996) (“To prove proximate cause, the client must show that his lawsuit or defense would
have been successful ‘but for’ the attorney’s negligence.” (quoting Zuniga v. Groce, Locke &
Hebdon, 878 S.W.2d 313, 318 (Tex. App.—San Antonio 1994, writ ref’d))). As discussed above,
USPPS must similarly prove proximate cause in its breach of fiduciary duty action, see Si Kyu
Kim, 286 S.W.3d at 635 n.1, and patentability thus becomes an element of USPPS’s
affirmative case just as in Davis.
10
Case: 10-50612 Document: 00511544412 Page: 11 Date Filed: 07/19/2011
No. 10-50612
personalized postage stamps have been manufactured” that are “an infringement
against which the patent would have afforded a right of recovery of royalties by
USPPS.” Without a valid patent—and indeed, without also showing other
personalized postage stamps would have infringed on its patent (another
substantial question of patent law that likely would have to be decided)—USPPS
has no injury. USPPS’s claims therefore depend upon resolving at least one
issue of patent law in its favor.
It therefore seems clear that,were we to merely apply the Federal Circuit’s
case law to this appeal, our inquiry would be at an end. Two complications
preclude us from that simple resolution, however. First, our Circuit has
expressed some skepticism of Air Measurement Technologies, see Singh, 538 F.3d
at 340, and second, we must address USPPS’s contention that the prior panel’s
decision on the merits at the motion-to-dismiss stage constitutes the “law of the
case” that jurisdiction is proper before this court.
B. Fifth Circuit Cases
In Singh, we considered whether federal question jurisdiction existed over
a malpractice suit between nondiverse parties. The plaintiff had filed suit in
Texas state court alleging malpractice in a prior federal trademark lawsuit. The
defendant removed to federal court, contending that jurisdiction was proper in
federal court in part on the basis of § 1338(a) and Air Measurement Technologies.
The defendant reasoned that,because the plaintiff would be required to prove
that he would have succeeded on his federal trademark claim but for the alleged
malpractice, the suit raised sufficiently substantial questions of federal
trademark law to create jurisdiction under § 1338. On appeal, we vacated the
judgment entered and rendered a judgment of dismissal for want of jurisdiction,
holding that the case did not meet the standard for federal jurisdiction. We
explained that the extension of “federal jurisdiction over this state-law
malpractice claim would upend the balance between federal and state judicial
11
Case: 10-50612 Document: 00511544412 Page: 12 Date Filed: 07/19/2011
No. 10-50612
responsibilities” in violation of the directive of Grable. 538 F.3d at 339. We
emphasized that “[l]egal malpractice has traditionally been the domain of state
law,” id., and that the federal interest in trademark cases was not sufficiently
substantial to justify such a “usurpation of state authority in an area in which
states have traditionally been dominant,” id. at 340.
Singh expressly “decline[d] to follow or extend” Air Measurement
Technologies and offered two reasons for doing so. Id. First, because the Federal
Circuit “did not consider the . . . federal interest and the effect on federalism” in
its opinion.4 Id. Second, because Air Measurement Technologies was a patent
case, we suggested without expressing an opinion that “[i]t is possible that the
federal interest in patent cases is sufficiently more substantial, such that it
might justify federal jurisdiction,” especially in light of the fact that patent
cases—unlike trademark cases—are subject to the exclusive jurisdiction of the
federal courts under § 1338(a). Id.
We are now squarely faced with the question of whether this state-law tort
claim presenting questions of patent law involves a sufficiently substantial
federal interest to permit federal jurisdiction over a state-law tort. We hold that
it does.
Our decision is guided by both (1) the strong federal interest in the
“removal [of] non-uniformity in the patent law” that Immunocept explains
exclusive federal jurisdiction was intended to ensure, 504 F.3d at 1285, and (2)
our holding in Scherbatskoy, 125 F.3d at 291. In Scherbatskoy, we ordered a
breach of contract case transferred to the Federal Circuit after determining that
“resolution of the [plaintiffs’] substantive claim implicates the federal patent
laws” because “determining whether [the defendant] infringed the [plaintiffs’]
patents is a necessary element to recovery.” Id. The opinion offers no further
4
As we noted above, though Air Measurement Technologies is silent as to the Grable
question of federalism, Immunocept provides more substantive engagement with that issue.
12
Case: 10-50612 Document: 00511544412 Page: 13 Date Filed: 07/19/2011
No. 10-50612
analysis of the federalism question, but it is nevertheless binding on us. We see
no basis for finding any less of a federal interest in patent law in the present
case than in Scherbatskoy. In so holding, we conform both to Singh’s
requirement of balancing the federal and state interests involved and
Scherbatskoy’s implicit recognition of the special federal interest in patent law.5
C. Law of the Case
Finally, we address USPPS’s contention that our prior consideration of the
merits of its appeal at the motion-to-dismiss stage without sua sponte
disclaiming jurisdiction constitutes law of the case that jurisdiction is proper.
We hold that it does not.
“The law of the case doctrine, as formulated in this circuit, generally
precludes reexamination of issues of law or fact decided on appeal, either by the
district court on remand or by the appellate court itself on a subsequent appeal.”
Todd Shipyards Corp. v. Auto Transp., S.A., 763 F.2d 745, 750 (5th Cir. 1987).
The rule, though generally adhered to, is not inflexible:
[T]he law-of-the-case doctrine merely expresses the practice of
courts generally to refuse to reopen what has been decided, not a
limit to their power. A court has the power to revisit prior decisions
of its own or of a coordinate court in any circumstance, although as
a rule courts should be loathe to do so in the absence of
extraordinary circumstances such as where the initial decision was
clearly erroneous and would work a manifest injustice.
Christianson, 486 U.S. at 817 (internal citations and quotation marks omitted).
5
As in Scherbatskoy, “[i]t is irrelevant that the summary judgment appealed did not
address the patent issue for purposes of section 1338 and section 1295 jurisdiction.” 125 F.3d
at 291. As discussed at length above, the relevant question is instead whether “the complaint
includes allegations that federal patent law creates the cause of action or federal patent law
is a necessary element of the claim,” id. (citing Christianson, 486 U.S. at 808), because such
a case would entail jurisdiction under § 1338 at least in part. And every appeal in which
jurisdiction is based “in whole or in part” on § 1338 must be heard exclusively in the Federal
Circuit, NaTec, 28 F.3d at 29, regardless of whether a patent issue is in fact involved in the
appeal.
13
Case: 10-50612 Document: 00511544412 Page: 14 Date Filed: 07/19/2011
No. 10-50612
As to its scope, the doctrine “applies only to issues that were decided in the
former proceeding but not to questions which might have been decided but were
not.” Morrow v. Dillard, 580 F.2d 1284, 1290 (5th Cir. 1978) (internal citations
omitted). However, the doctrine does encompass “things decided by necessary
implication as well as those decided explicitly.” Id. We have previously held
that there is no “jurisdiction exception” to the law-of-the-case doctrine. Free v.
Abbott Labs., Inc., 164 F.3d 270, 272–73 (5th Cir. 1999). No one contends that
the propriety of jurisdiction in this Circuit was actually argued to the prior panel
or that the prior panel’s decision actually addresses that question. Indeed, the
prior panel opinion makes no statement announcing its jurisdiction over the
appeal. Rather, the question presented here is whether jurisdiction was “decided
by necessary implication” simply by the prior panel hearing and deciding the
earlier appeal.
Where the question of jurisdiction was actually raised and argued before
the prior panel and the panel subsequently exercised jurisdiction without
explanation in its opinion, it is clear enough that “the necessary assumption is
that the prior panel found subject matter jurisdiction present,” and the ruling
constitutes law of the case. Trans World Airlines, Inc. v. Morales, 949 F.2d 141,
144 (5th Cir. 1991) (per curiam). Similarly, in cases decided prior to the
Supreme Court’s rejection of the doctrine of hypothetical jurisdiction in Steel Co.
v. Citizens for a Better Environment, 523 U.S. 83, 93–102 (1998),6 we had held
that, if the prior panel “did not address the issue of subject matter jurisdiction,”
then the panel “cannot be regarded as having ruled on it.” Todd Shipyards, 763
F.2d at 751 n.10. We have not been faced with the question of whether, after
6
In Steel Co., the Court emphatically disapproved of the practice of the exercise of
“hypothetical jurisdiction” by federal courts, 523 U.S. at 101, and held that Article III courts
must always resolve true questions of jurisdiction before proceeding to the merits. See id. at
93–102.
14
Case: 10-50612 Document: 00511544412 Page: 15 Date Filed: 07/19/2011
No. 10-50612
Steel Co.—which made the determination of jurisdiction a necessary antecedent
to a ruling on the merits—the undisputed exercise of jurisdiction by a prior panel
over a case constitutes a ruling “by necessary implication” on the question of
jurisdiction so as to constitute law of the case.
The Supreme Court’s decision in Steel Co. itself offers some insight on this
point. There, in addressing a different issue, the Court rejected a prior decision
that did not address jurisdiction as nonprecedential on the question of whether
jurisdiction was proper:
The short of the matter is that the jurisdictional character of the
[issue involved in the prior case] made no substantive difference
(nor even any procedural difference that the Court seemed aware
of), had been assumed by the parties, and was assumed without
discussion by the Court. We have often said that drive-by
jurisdictional rulings of this sort . . . have no precedential effect.
523 U.S. at 91. Our Court articulated a similar rule in Kershaw v. Shalala, in
which we held that “our exercise of jurisdiction in [a prior case] [did not]
constitute a binding precedent, . . . because the issue was neither raised by the
parties nor addressed by the Court.” 9 F.3d 11, 13 n.3 (5th Cir. 1993). Following
this logic, we see no reason to accord a prior panel’s ruling the discretionary
status of law of the case where the Court’s resolution of that issue would not
even constitute binding precedent had it been decided in a separate appeal. Cf.
Trans World Airlines, 949 F.2d at 144 (“While use of law of the case doctrine is
not mandatory, a court is more likely to apply the doctrine when the prior
opinion was apparently well-considered . . . .”).
We therefore decline to defer to the prior panel’s exercise of jurisdiction as
correct where the issue was neither raised by the parties nor addressed by the
court. The law-of-the-case doctrine presents no bar to transfer.
15
Case: 10-50612 Document: 00511544412 Page: 16 Date Filed: 07/19/2011
No. 10-50612
IV. CONCLUSION
The federal courts are courts of limited jurisdiction and are tasked with
the duty to continually, and sua sponte, assess their jurisdiction. This case
raises issues of patent law, and those issues are substantial because of the
special federal interest in developing a uniform body of patent law in the Federal
Circuit as recognized in Scherbatskoy and expressed by Congress’s grant of
exclusive appellate jurisdiction over patent cases to that court. We therefore
lack jurisdiction over the appeal. The prior panel’s unstated assumption of
jurisdiction is not the “law of the case” and does not bar us from ensuring that
the statutory directive is followed and the federal interest is vindicated in this
case.
We therefore order this appeal transferred to the United States Court of
Appeals for the Federal Circuit pursuant to 28 U.S.C. § 1631. The clerk of this
Court is directed to transmit the record, briefs, and other documents relating to
this appeal to the clerk of the Federal Circuit.
APPEAL TRANSFERRED.
16