Digest of NeuroRepair, Inc. v. The Nath Law Group, No. 2013-1073 (Fed. Cir. January 15, 2015) (precedential). On appeal from S.D. Cal. Before Wallach, Chen, and Hughes.

Procedural Posture: Plaintiff NeuroRepair filed suit against Defendant The Nath Law Group (“Nath Law”) in the San Diego Superior Court, alleging professional negligence, breach of fiduciary duty, breach of written contract, breach of oral contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, and false promise related to the prosecution of a patent application. Defendant Nath Law removed the case to federal district court. The district court entered judgments in favor of Defendant Nath Law. Plaintiff NeuroRepair appealed, challenging the district court’s subject matter jurisdiction. The CAFC vacated and remanded the district court’s judgments with instructions to remand the case to California state court.

  • Subject Matter Jurisdiction: Under the applicable test, a cause of action created by state law may nevertheless arise under federal patent law within the meaning of 28 U.S.C. § 1338(a) if it involves a patent law issue that 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.

Here, the CAFC held that NeuroRepair’s suit would not “necessarily raise” issues of patent law because NeuroRepair could prevail on its causes of action under alternate bases that do not necessarily implicate substantive patent law. Further, the patent issue in NeurRepair’s suit is not substantial, the CAFC held, because the patent issue is not dispositive, but only one of several elements needed to prevail; the court’s decision is unlikely to control numerous other cases; and plaintiff did not establish that the PTO or any other governmental agency has a direct interest in the outcome of the case. Further, the CAFC held that the resolution by federal courts of attorney malpractice claims that do not raise substantial issues of federal law would usurp the important role of state courts in regulating the practice of law within their boundaries, disrupting the federal-state balance approved by Congress.