Summary
noting that the Federal Circuit decisions which theKosower court relied upon contained claims arising under § 256, not § 116
Summary of this case from Airport Surface Technologies, L.L.C. v. Fieldturf, Inc.Opinion
CIVIL ACTION, No. 02-6265
October 29, 2002
MEMORANDUM AND ORDER
Plaintiff Joseph Murray brought this action for declaratory and injunctive relief to secure his ownership rights to intellectual property in smart card technology that he claims to have invented. He alleges theft and misappropriation of this technology by Defendant Gemplus International ("Gemplus"), his sometime employer, and further seeks to obtain damages for fraud, attorney malpractice, breach of client loyalty and conspiracy against Gemplus, its attorneys and others. Presently before this Court is a motion by Plaintiff to remand this action to state court. Because the action does not arise under federal patent law, and this Court therefore lacks jurisdiction, I grant Plaintiffs motion and remand this action to the Court of Common Pleas for Philadelphia County.
I. BACKGROUND
A. Procedural History
Plaintiff commenced this action by filing a Praecipe to Issue Writ of Summons in the Common Pleas Court of Philadelphia County on Dec., 12, 2001 (Docket No. 01-1201399). On Jan 30, 2002, Defendants Jason Cohen and Steven Knauer filed a notice of removal in this court, seeking removal on diversity grounds. On February 28, 2002, Plaintiff filed a motion to remand on the ground that removal was improper because no complaint had been filed. On April 15, 2002, I granted Plaintiffs motion to remand and subsequently denied Defendants' motion for reconsideration.
Prior to July 1, 2002, this matter proceeded as Civil Action Number 02-508.
Plaintiff filed a verified complaint in state court on July 16, 2002 naming additional defendants and specifying the nature and extent of his claims for misappropriation of patents. On July 31, 2002, Defendants Burns, Doane, Swecker Mathis, LLP and Mark Kresloff filed a notice of removal in this court, asserting that the action arises under federal patent law and seeking removal under § 1441 and § 1338(a). On August 21, 2002, Plaintiff timely filed the motion to remand that is the subject of this memorandum and order.
II. DISCUSSION
A. Jurisdiction Over The Action
Removal of an action to federal court is proper only where the case could have been filed in federal court originally. 28 U.S.C. § 1441; Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). "If at any time before final judgment," however, "it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). "The removal statutes `are to be strictly construed against removal and all doubts should be resolved in favor of remand.'" Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987)), cert. denied, 498 U.S. 1085, 112 L.Ed.2d 1046, 111 S.Ct. 959 (1991).
Plaintiffs well-pleaded complaint controls the jurisdictional determination. Caterpillar, 482 U.S. at 392. As masters of their complaint, plaintiffs may avoid a federal question by exclusive reliance on state law. Id. As the Third Circuit teaches, however, the "mere presence of a federal issue in a state cause of action does not automatically confer federal question jurisdiction." Smith v. Industrial Valley Title Insurance Co., 957 F.2d 90, 92-93 (3d Cir. 1992) (quotingMerrell Dow Pharmaceuticals v. Thompson, 478 U.S. 804, 813 (1986))
In ruling on a motion for remand, "the district court must focus on the plaintiffs complaint at the time the petition for removal was filed . . . [and] must assume as true all factual allegations of the complaint." Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987) (citation omitted), cert. dismissed sub nom. American Standard, Inc. v. Steel Valley Auth., 484 U.S. 1021, 98 L.Ed.2d 756, 108 S.Ct. 739 (1988); accord Pullman Co. v. Jenkins, 305 U.S. 534, 537, 83 L.Ed. 334, 59 S.Ct. 347 (1939).
Under 28 U.S.C. § 1338(a) federal district courts have exclusive jurisdiction over cases arising under the patent laws. The Supreme Court has held that, under § 1338(a), there are two classes of actions arising under federal patent law: those in which the federal law creates the cause of action, and those in which "the plaintiffs 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, 809 (1988). Here, Plaintiff seeks declaratory and injunctive relief to secure his ownership rights to patents and other intellectual property in technology that he claims to have invented, but for which no patent has yet issued. He alleges theft and misappropriation of this technology by Defendants and further seeks to obtain damages for fraud, attorney malpractice, breach of client loyalty and conspiracy. Defendants argue that Plaintiffs claims arise under the federal Patent laws because Plaintiffs right to relief depends on a threshold determination as to the inventorship of the technology at issue. Thus, the issues before this Court are: 1) whether Plaintiff must prove inventorship to succeed on his claims for relief and 2) if so, whether this action may therefore be said to arise under federal patent law.
Section 1338(a) states that the district court shall have original jurisdiction of any civil action arising under "any act of Congress relating to patents . . ."
B. The Threshold Inventorship Determination
The gravamen of Plaintiffs fourteen count complaint lies with Defendants' alleged scheme to deprive Plaintiff of his ownership rights in derogation of express contractual language between the parties. In his prayer for relief, Plaintiff requests that Defendants be ordered to "assign or otherwise transfer all ownership rights in patents that describe inventions made by the Plaintiff"
It is well settled that contract disputes involving an underlying patent do not "arise under" patent law as required by 28 U.S.C. § 1338(a). Beghin-Say Int'l, Inc. v. Ole-Bendt Rasmussen, 733 F.2d 1568, 1571 (Fed. Cir. 1984); Boggild v. Kenner Products, 853 F.2d 465, 468 (6th Cir. 1988) (distinguishing patent claims arising under patent laws from contract claims in which patent issues are incidentally implicated'); Rustevader Corp. v. Cowatch, 842 F. Supp. 171, 173 (W.D. Pa. 1993) (noting that if all defendants in assignment of rights case were parties to employment agreement it would not have jurisdiction). The Confidentiality Agreement executed between the parties gives the Plaintiff "full and exclusive rights to inventions and intellectual property rights" that he has "conceived, planned, and/or designed prior to employment" with Defendant, including inventions and intellectual property that involve smart cards and smart card technology." (Pl.'s Mot. to Remand, Ex. C.) This contractual language is clearly capable of disposing of the question of ownership rights, as between these two parties, in whatever patents may issue. Thus, Plaintiffs prayer for assignment does not require determination as to inventorship.
However, Plaintiff also seeks a declaration that he is "the sole owner of the patent and other rights to his smart card inventions." Defendants correctly assert that in order to grant this relief as it applies to patent rights, an inventorship analysis must be undertaken to determine whether, in fact, Murray is the sole inventor of the claims making up the patent in which he seeks ownership rights. See Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248 (Fed. Cir. 1993). ("at the heart of any [patent] ownership analysis lies the question of who first invented the subject matter at issue").
C. Jurisdiction to Determine Inventorship
1. Murray's Claim to Sole Ownership of Smart Card Technology
Defendants argue that Murray cannot succeed on his claim that he is the sole owner of property rights in smart card technology without a claim-by-claim inventorship analysis and without proving that the other named inventors actually did not contribute to the claimed subject matter of the patent applications. Such an undertaking, they argue, raises questions of federal patent law over which this court has exclusive jurisdiction. Plaintiff, on the other hand, asserts that this Court, as a matter of law, lacks subject matter jurisdiction to determine inventorship in the first instance. I agree with Plaintiff.
The relevant statute, 35 U.S.C. § 116, which governs inventorship disputes over pending patent applications, does not explicitly create authority in the district courts to preside over such issues. At the same time, 35 U.S.C. § 256, which governs inventorship disputes over issued patents, explicitly creates such authority in the district courts. Various courts have interpreted this difference to mean that district courts have jurisdiction over inventorship issues only where the patent has issued. see MCV, Inc. v. King-Seeley Thermos Co., 870 F.2d 1568, 1570 (Fed. Cir. 1989); Iowa State Univ. Research Found. v. Sperry Rand Corp., 444 F.2d 406, 408 (4th Cir. 1971) (noting that only a court can resolve a dispute over the issued patent because "after issuance of a patent, the Commissioner tacks jurisdiction over it.") (citing 35 U.S.C. § 141, 146)); Display Research Labs. v. Telegen Corp., 133 F. Supp.2d 1170; RustEvader Corp. v. Cowatch, 842 F. Supp. 171, 173 (W.D. Pa. 1993).
Defendants acknowledge that no patents have issued in this case, but nevertheless contend that this Court must exercise jurisdiction. They point to a number of authorities in support of their position, including Hunter Douglas, Inc. v. Harmonic Design, Inc. 153 F.3d 1318, 1329 (Fed. Cir. 1998), Heineken Technical Services v. Darby, 103 F. Supp.2d 476, 479 (D. Mass. 2000), and Kosower v. Gutowitz, Civ. A. No. 00-9011, 2001 WL 1488440, 2001 U.S. Dist. LEXIS 19111 (S.D.N.Y., Nov. 18, 2001) for proposition that this Court does, in fact, have jurisdiction over inventorship issues under § 116.
In Hunter-Douglas, the court observed that, for purposes of § 1338(a) jurisdiction, prior Federal Circuit cases had held that inventorship issues under 35 U.S.C. § 116 are substantial enough to satisfy one prong of the jurisdictional analysis announced in Christianson. See 153 F.3d at 1330 (citing MCV, Inc. v. King-Seeley Thermos Co., supra, and RustEvader Corp. v. Cowatch, supra, as the examples of these prior holdings). In both MCV and King-Seeley, the court found that the plaintiffs claim to arose under § 256, because the patent in question had already issued. Moreover, the Hunter Douglas court did not reach the issue discussed here, because it had only to decide whether issued patents were invalid or unenforceable. 153 F.3d at 1321-22.
Subsequently, the Heineken court determined that inventorship issues under § 116 are substantial enough to convey § 1338(a) jurisdiction by simply citing to Hunter Douglas. 103 F. Supp.2d at 479. The Kosower court attributed its arrival at the same conclusion to the Heineken and Hunter Douglas decisions. 2001 U.S. Dist. LEXIS 19111, at *19-20.
Taken together, Defendants' authorities therefore do little to support their position. While I do not find Plaintiffs primary authority persuasive, given the statutory language in § 116 and § 256 and the above-noted authoritative interpretation thereof, I will not find a grant of exclusive jurisdiction where none currently exists.
Plaintiff relies on E.L duPont de Nemours Co. v. Okuley, Civ. A. No. C2-97-1205, 2000 U.S. Dist LEXIS 21385 (E.D. Ohio Dec. 21, 2000), for the contention that where a patent has not yet issued, the § 116 of the patent laws allows only an administrative remedy to correct errors in the patent application. This reliance is misplaced. Unlike du Pont, the case at bar is not exclusively a contest between two parties with regard to whose name belongs on the patent application. Here, Plaintiff, on the face of his complaint, seeks a declaration that he is the sole owner of all property rights in smart card technology. In du Pont, although one party sought a similar declaration, the court did not have to reach the question of jurisdiction on that basis because that prayer for declaratory relief appeared in a counterclaim and could be disposed of under the well-pleaded complaint rule. See du Pont, 2000 U.S. Dist. LEXIS at *38.
2. Ripeness
No patent has issued to date; only a PTC application is pending. This raises a ripeness question.
A PTC application serves, like a provisional application, as an inexpensive placeholder for applications to be filed with the PTO in the future.
I note that the court may rule sua sponte on ripeness at any point, see Schwob v. Standard Insurance Co., 37 Fed Appx. 465, 470 (10th Cir. 2002).
In order to establish a justiciable claim for declaratory relief, Murray must establish the existence of an actual "case or controversy," in the constitutional sense. 28 U.S.C. § 2201(a); Spectronics Corp. v. HB. Fuller Co., 940 F.2d 631, 633-34 (Fed. Cir. 1991). A "controversy" in this sense must be one that is appropriate for judicial determination . . . . "The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character." Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 240-41 (1937).
Here, Plaintiff seeks a declaration that he owns all patent rights to technology for which no patents have issued, not merely that he is the sole inventor of Smart Card technology. Thus, any case or controversy that Plaintiff might establish would have to arise under § 261, which governs the assignment of rights appurtenant to patent applications. See 35 U.S.C. § 261. The scope of rights conveyed in the assignment of patent rights before the granting of the patent "is much less certainly defined than that of a granted patent." Westinghouse Electric v. Formica Insulation, 266 U.S. 342, 352-53 (1924); see also Sarkes Tarzian, Inc. v. United States, 159 F. Supp. 253, 256(D. Ind. 1958) (patent application, although form of property, is only inchoate patent right, maturing into depreciable patent asset only when the patent issues). The Court could not find, and Murray did not cite, any statutes or cases governing the ownership of patent applications which incorrectly identify the inventor of underlying technology.
Thus, to the extent Plaintiff is asking the court to announce his ownership rights in whatever patents may issue based on his alleged invention of a particular technology, his claim is not ripe. Display Research Labs. v. Telegen Corp., 133 F. Supp.2d 1170, 1175; GAF Bldg. Materials Corp. v. Elk Corp., 90 F.3d 479, 483 (Fed. Cir. 1996); see also De Ferranti v. Lyndmark, 30 App.D.C. 417, 425 (1908) ("In a patent, no vested right of which the applicant cannot be deprived is acquired under the preliminary proceedings leading up to its issuance"). Declaratory relief under these circumstances is not appropriate. Display Research Labs., 133 F. Supp.2d at 1175; see also Licursi v. Jamison Plastic Corp., Civ. A. No., 98-5262, 1998 WL 808542 (E.D. Pa. Nov. 20, 1998). ("Here both patent applications are currently pending and thus, a cause of action arising under [§ 256] is premature.")
The fact that the patent applications may become patents is of no help to Defendants. Justiciability must be judged as of the time of filing, not as of some indeterminate future date when the court might reach the merits and the patent has issued." GAF Bldg. Materials Corp., 90 F.3d at 482; see also Spectronics Corp. v. HB. Fuller Co., 940 F.2d 631, 635 (Fed. Cir. 1991) ("Later events may not create jurisdiction where none existed at the time of filing").
D. Costs and Fees
Plaintiffs motion for remand includes a request for costs and fees based on the contention that Defendants have advanced baseless claims in support of two separate removals of the case and that the resource disparity between the parties counsels against requiring Murray to bear the costs of proceedings in this Court.
Pursuant to 28 U.S.C. § 1447(c), an order remanding the case "may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." A district court has broad discretion and may be flexible in determining whether to require the payment of fees under section 1447(c). See Mints v. Educational Testing Servs., 99 F.3d 1253, 1260 n. 6 (3d Cir. 1996).
While I am cognizant of the disparity in litigation resources between the parties, Defendants here had a reasonable basis for removal under the case law. The parties, therefore, will bear their respective costs.
III. CONCLUSION
For the foregoing reasons, I will decline to exercise jurisdiction over this matter and remand the case to the Court of Common Pleas. While Plaintiff must prove inventorship to succeed on his claim to ownership of smart card technology, that fact alone will not suffice to support subject matter jurisdiction under § 1338 because a) § 116 does not give rise to exclusive jurisdiction in the federal courts and b) Plaintiffs ownership claim to patent rights is premature. As the court wrote in Licursi, the Court of Common Pleas "is free to look for guidance to the law on inventorship as federal patent jurisprudence has explained it, but `because a court will look to federal law, however, does not confer federal jurisdiction.'" 1998 WL 808542, at *4 (quoting American Tel. and Tel. Co. v. Integrated Network Corp., 972 F.2d 1321, 1325 (Fed. Cir. 1992).
I will also decline to award fees and costs to Plaintiff. An appropriate order follows.