The U.S. Court of Appeals for the Federal Circuit recently dismissed the appeal of a patent attorney involved in the prosecution of an application, resulting in a patent that a district court held unenforceable due to inequitable conduct. Nisus Corp. v. Perma-Chink Sys., Inc., Case Nos. 06-1592, 07-1142 (Fed. Cir., Aug. 13, 2007) (Bryson, J.).
In the underlying case, Nisus Corp. brought suit against Perma-Chink alleging infringement of U.S. Patent No. 6,426,095 (the ’095 patent). Perma-Chink asserted the affirmative defense that the patent was unenforceable due to inequitable conduct based on the failure of the attorneys who prosecuted the patent—Mr. Michael Teschner and Mr. Allan Altera—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. 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, alleging that the district court erred in finding that he engaged in inequitable conduct. The district court denied Teschner’s motion to intervene; Teschner appealed.
At the outset, the Court first had to determine whether it had jurisdiction to hear the appeal. The Court noted that, while a nonparty typically cannot appeal a district court judgment, an attorney who is held in contempt or otherwise sanctioned by the court may appeal from the order imposing sanctions. However, the Court clarified this rule by stating that mere critical comments of an attorney in an opinion are not equivalent to court-imposed sanctions. Thus, the Court said, a nonparty attorney cannot pursue an appeal. The mere fact that a critical statement may have an incidental affects on a nonparty’s reputation does not convert the statement into a final decision from which the nonparty can appeal.
With respect to the finding of inequitable conduct, the Court stated that district court’s comments about Teschner were subsidiary findings made in support of the court’s ultimate finding that the patent was unenforceable. Importantly, the district court did not exercise its power to sanction Teschner, and the finding that Teschner actions constituted inequitable conduct does not inflict legal injury. As a result, the Court found that Teschner did not have standing to appeal the district court finding of inequitable conduct, meaning the Federal Circuit did not have jurisdiction over the appeal.
Turning to the district court’s decision to deny Teschner motion to intervene, the Federal Circuit held that the district court was correct to deny the motion. Specifically, even if Teschner were permitted to intervene in the litigation, the Federal Circuit would still lack jurisdiction because the findings regarding Teschner’s conduct did not constitute a final decision sufficient to confer Federal Circuit jurisdiction. In particular, Teschner’s status as an intervener would not give him the right to appeal a judgment resolving the rights of the parties. As a result, the Court affirmed the district court’s denial of Teschner’s motion to intervene.
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