                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        FEB 5 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

WESTLAKE SERVICES, LLC,                         No.    18-55139

                Plaintiff-Appellant,            D.C. No.
                                                15-cv-07490-SJO
 v.

CREDIT ACCEPTANCE CORPORATION, MEMORANDUM*

                Defendants-Appellees.




                   Appeal from the United States District Court
                       for the Central District of California
                    S. James Otero, District Judge, Presiding

                     Argued and Submitted August 16, 2019
                     Submission Vacated September 18, 2019
                         Resubmitted February 3, 2020
                              Pasadena, California

Before: CALLAHAN and CHRISTEN, Circuit Judges, and CHEN,** District
Judge.




      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Edward M. Chen, United States District Judge for the
Northern District of California, sitting by designation.
      Credit Acceptance Corporation (CAC) and Westlake Services compete to

provide car dealers with services for indirectly financing used car sales. Westlake

sued CAC, asserting it violated Section 2 of the Sherman Act by attempting to

enforce an invalid patent related to expediting the financing and sales process.

                                 BACKGROUND

      In January 2000, CAC began developing the Credit Approval Processing

System (CAPS). CAPS makes the financing process for car dealers more efficient.

Starting in August 2000, CAC ran a pilot program of CAPS with five dealers. In

September 2000, CAC held a demonstration of CAPS for its dealers; it included a

panel discussion and sought to advertise CAPS for future use. On or around

January 9, 2001, the first of CAC’s dealers began paying a licensing fee to use

CAPS, and it thereon became available to all CAC’s dealers.

      CAC filed a patent application in December 2001. The patent was issued on

September 27, 2005. CAC filed maintenance fees to keep it active in 2009, 2013,

and 2017.

      In 2013, CAC sued Westlake, alleging Westlake infringed the patent. The

patent was ruled invalid due to patent-ineligible subject matter. See Credit

Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1048, 1057 (Fed. Cir. 2017).

During the course of that litigation, Westlake learned that CAC’s pre-2001 uses of

CAPS (i.e., the pilot program and dealer demonstration) were not disclosed to the


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PTO. Westlake contends these uses would have invalidated the patent under the

public-use bar.

      Westlake filed this action against CAC in 2015, alleging CAC’s 2013 suit to

enforce its invalid patent violated the Sherman Act. CAC defended on the grounds

of Noerr-Pennington immunity, which protects the First Amendment right to

petition the government, a right which includes the filing of lawsuits. See E. R. R.

Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); see also

United Mine Workers of Am. v. Pennington, 381 U.S. 657 (1965). Westlake

alleged two claims to overcome that immunity: (1) a Walker Process claim; and

(2) a sham litigation claim. Both stem from CAC’s failure to disclose prior public

use. Westlake’s Walker Process claim alleges CAC fraudulently obtained its

patent by intentionally failing to disclose its prior disqualifying sales and public

uses to the PTO. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp.,

382 U.S. 172, 176–77 (1965). The sham litigation claim alleges CAC’s

infringement lawsuit against Westlake was objectively baseless and in bad faith

because CAC knew the patent was invalid. See Prof’l Real Estate Inv’rs, Inc. v.

Columbia Pictures Indus., Inc., 508 U.S. 49, 60–61 (1993).

      The district court granted CAC’s motion for summary judgment, denied

Westlake’s cross-motion, and dismissed the suit. Westlake appeals. We review

Westlake’s appeal de novo. Frudden v. Pilling, 877 F.3d 821, 828 (9th Cir. 2017).


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                                  JURISDICTION

      We must first determine whether 28 U.S.C. § 1295(a)(1) vests exclusive

jurisdiction over this case in the Federal Circuit.1 Exclusive appellate jurisdiction

vests in the Federal Circuit when: (1) federal patent law creates the cause of

action; or (2) the plaintiff’s right to relief necessarily depends on resolution of a

substantial question of federal patent law. Christianson v. Colt Indus. Operating

Corp., 486 U.S. 800, 808–09 (1988); cf. Gunn v. Minton, 568 U.S. 251, 258 (2013)

(district court has exclusive federal jurisdiction under § 1338 when a substantial

question of federal law is: “(1) necessarily raised, (2) actually disputed, (3)

substantial, and (4) capable of resolution in federal court without disrupting the

federal-state balance approved by Congress”). The precise contours of the Federal

Circuit’s exclusive jurisdiction and the impact, if any, of Gunn on the scope of that

jurisdiction is unsettled. Compare Xitronix Corp. v. KLA-Tencor Corp., 882 F.3d

1075, 1078 (Fed. Cir. 2018) (patent issue in a “case within a case” is not sufficient

to raise a substantial issue of patent law over which Federal Circuit has exclusive

appellate jurisdiction under Gunn) with Xitronix Corp. v. KLA-Tencor Corp., 916

F.3d 429, 442 (5th Cir. 2019) (“The four-factor test applied in Gunn . . . is not a




1
 The parties agree this Court has jurisdiction under 28 U.S.C. § 1291, but the
Court considers its own jurisdiction sua sponte. See Diaz-Covarrubias v.
Mukasey, 551 F.3d 1114, 1117 (9th Cir. 2009).

                                           4
tool for the task of sorting cases between the circuits.”), cert. denied, 140 S. Ct.

110 (2019).

      Regardless of whether Gunn expands the jurisdiction of regional circuit

courts over matters involving patents, we have jurisdiction over this appeal.

Westlake’s right to relief does not depend on resolution of a “substantial question

of federal patent law” under Christianson. The at-issue patent has already been

declared invalid, and the claim of invalidity based on the public-use bar involves

no doctrinal dispute but instead turns on a fact-intensive analysis particular to this

case. Thus, the memorandum disposition herein will have no practical effect on

the patent at issue nor will it impact the development of federal patent law. See

Christianson, 486 U.S. at 811–13. We thus address the merits of the appeal.

                                    DISCUSSION

      Under Noerr-Pennington, Westlake cannot sue CAC under the Sherman Act

based on CAC’s 2013 patent suit unless it proves CAC obtained its patent by

fraudulent omission or that CAC’s 2013 infringement lawsuit was objectively

baseless and in bad faith. See Kaiser Found. Health Plan, Inc. v. Abbott Labs.,

Inc., 552 F.3d 1033, 1044–45 (9th Cir. 2009).

      To successfully assert such a Walker Process claim, Westlake must produce:

(1) independent and clear evidence of deceptive intent; and (2) a clear showing that

the patent would not have issued but for the omission. See Nobelpharma AB v.


                                           5
Implant Innovations, Inc., 141 F.3d 1059, 1071 (Fed. Cir. 1998). Westlake

contends CAC engaged in public use of CAPS when it rolled out an earlier version

in the pilot program and conducted the dealer demonstration. Westlake must prove

by clear and convincing evidence that either the pilot program or dealer

demonstration was a public use, and this evidence must overcome any rebuttal

evidence of experimental use. Lisle Corp. v. A.J. Mfg. Co., 398 F.3d 1306, 1316

(Fed. Cir. 2005).

       Westlake failed to carry its burden. As to the pilot program, Westlake does

not dispute that no dealers paid a license fee for CAPS during this short program;

nor is it disputed that CAC made changes to CAPS based on feedback it solicited

from the five (out of eleven) participating dealers. Westlake fails to satisfy the

factors used to evaluate the experimental-use exception to the public-use bar. See

EZ Dock v. Schafer Sys., Inc., 276 F.3d 1347, 1357 (Fed. Cir. 2002). With respect

to the dealer demonstrations, Westlake failed to present any evidence that CAC

disclosed all claim limitations during these meetings. Netscape Commc’ns Corp.

v. Konrad, 295 F.3d 1315, 1321 (Fed. Cir. 2002) (“Section 102(b) may bar

patentability by anticipation if the device used in public includes every limitation

of the later claimed invention . . . .”).

       Westlake’s citation to CAC’s 2001 newsletter, which informed shareholders

that it began a “gradual roll-out” of CAPS in December 2000, does not create a


                                            6
triable issue of fact. There is no evidence of any activity in December 2000 that

would constitute prior public use. Indeed, in its 2002 Form 10-K filing with the

SEC, CAC said “CAPS was installed on a pilot basis in August 2000 and was

offered to all dealer-partners located in the United States beginning in January

2001.” This statement is consistent with the undisputed facts.

      As to the sham exception to Noerr-Pennington immunity, Westlake must

prove by clear and convincing evidence, see Kaiser, 552 F.3d at 1044, that: (1) the

lawsuit was objectively baseless; and (2) CAC had the subjective motivation to

conceal an attempt to interfere directly with a competitor’s business relationships.

Prof’l Real Estate, 508 U.S. at 60–61. For the reasons stated above, Westlake fails

to prove the patent suit was objectively baseless for the same reasons Westlake

cannot establish a Walker Process claim.

      The district court’s grant of summary judgment is AFFIRMED.




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