The following is a summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit for the week ending May 17, 2013.
ITC Practice and Procedure: Domestic Industry
Motiva, LLC v. U.S. International Trade Commission, No. 12-1252 (Fed. Cir. (I.T.C.) May 13, 2013). Opinion by Prost, joined by Newman and O’Malley.
The Federal Circuit affirmed the International Trade Commission (“Commission”) and the ALJ’s conclusion that Nintendo Co., Ltd. and Nintendo of America, Inc. (collectively “Nintendo”) did not violate § 337 because Motiva, LLC (“Motiva”) did not have a domestic industry for U.S. Patent Nos. 7,292,151 (“the ’151 patent”) and 7,492,268 (“the ’268 patent”).
In 2008, Motiva filed suit against Nintendo in the Eastern District of Texas accusing Nintendo’s Wii video game system of infringing the ’151 patent. The case was transferred to the Western District of Texas and stayed pending a reexamination of the ’151 patent. Then, in 2010, Motiva filed a complaint with the Commission, alleging that the Wii infringed the ’151 and ’268 patents. During the investigation, the ALJ granted Nintendo’s motion for summary determination that the domestic industry requirement of § 337 was not satisfied at the time Motiva filed its complaint because Motiva was relying only on its district court litigation activities against Nintendo to satisfy the domestic industry requirement. The ALJ found that these activities were insufficient to satisfy the domestic industry requirement because they were not directed toward licensing activities related to the patents’ claimed inventions. On appeal, the Commission vacated the ALJ’s summary determination and remanded for additional fact finding because litigation activities may be relied upon to show a domestic industry. On remand, the ALJ again ruled that Motiva had not shown that the economic prong of the domestic industry requirement was satisfied. The ALJ further held that the Wii did not infringe the asserted patents.
On appeal to the Federal Circuit, Motiva argued that its investments related to a domestic industry for the ’151 and ’268 patents were based on the litigation against Nintendo. The Federal Circuit stated that Motiva’s litigation activities against Nintendo could satisfy the economic prong of the domestic industry requirement if the litigation activities were substantial and directed toward a licensing program that would encourage adoption and development of articles that incorporated Motiva’s patented technology. The evidence of record, however, demonstrated that Motiva’s litigation against Nintendo was not directed at developing such a licensing program. Accordingly, the Federal Circuit affirmed the Commission’s finding of no violation of § 337 because of a lack of domestic industry. The Federal Circuit declined to address the Commission’s finding of noninfringement. Finally, the Federal Circuit affirmed the Commission’s use of the date of the filing of Motiva’s complaint in this case as the relevant date for determining whether the domestic industry requirement of § 337 was satisfied.
Litigation Practice and Procedure: Jurisdiction: Subject Matter Jurisdiction
Forrester Environmental Services, Inc., et al. v. Wheelabrator Technologies, Inc., No. 12-1686 (Fed. Cir. (D.N.H.) May 16, 2013). Opinion by Dyk, joined by Newman and Bryson.
Plaintiffs Forrester Environmental Services, Inc. and Keith E. Forrester (collectively “Forrester”) appealed a district court’s summary judgment in favor of defendant Wheelabrator Technologies, Inc. (“Wheelabrator”) regarding Forrester’s business tort claims based on New Hampshire law. The Federal Circuit vacated the district court judgment and remanded to the district court with instructions to remand the case to New Hampshire state court because the district court lacked subject matter jurisdiction over the claims.
Forrester and Wheelabrator are competitors in the market for phosphate-based treatment systems for stabilizing heavy metals in municipal and industrial waste. These treatments prevent the heavy metals from potentially leaching into sources of drinking water. Wheelabrator calls its treatment system “WES-PHix®” and has obtained several U.S. patents, including U.S. Patent Nos. 4,737,356; 5,430,233; and 5,245,114. Forrester calls its system “FESI-BOND.”
In 2001, Wheelabrator entered into a license agreement with a Taiwanese company called Bio Max Environmental Engineering (“Bio Max”). Bio Max then sublicensed WES-PHix® to Kobin Environmental Enterprise Co., Ltd. (“Kobin”). In 2004, Forrester learned that Kobin was dissatisfied with WES-PHix® due to the odor it generated. Forrester then developed a variation on its FESI-BOND system to address the odor problem and persuaded Kobin to license FESI-BOND for use at Kobin’s Taipei plant. On March 17, 2006, Wheelabrator sent Kobin a letter asserting that Kobin was in breach of its WES-PHix® sublicense agreement for failure to pay royalties. After the letter, Kobin stopped purchasing from Forrester and entered into a new WES-PHix® sublicense with Wheelabrator.
In 2010, Forrester filed suit against Wheelabrator in the Superior Court of the State of New Hampshire, Belknap County. Forrester alleged four causes of action: (1) a violation of the New Hampshire Consumer Protection Act; (2) tortious interference with a contractual relationship; (3) tortious interference with Forrester’s prospective advantage; and (4) trade secret misappropriation. Wheelabrator then removed the case to the U.S. District Court for the District of New Hampshire. Forrester filed a motion to remand to state court, arguing that the district court lacked subject matter jurisdiction. The district court denied Forrester’s remand motion and granted summary judgment for Wheelabrator in three separate orders.
On appeal, the question for the Federal Circuit was whether the district court would have had original jurisdiction under 28 U.S.C § 1338, which gives federal district courts original jurisdiction over “any civil action arising under any Act of Congress relating to patents.” 28 U.S.C. § 1338(a). A cause of action created by state law may “aris[e] under” federal patent law within the meaning of 28 U.S.C. § 1338 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.” Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013).
The Federal Circuit held that the case did not raise a substantial issue of patent law because there was no prospect of future conflict between the parties and thus no prospect of inconsistent judgments between state and federal courts. Specifically, there was no prospect of future conflict because the process was being used in Taiwan and could not violate United States patents, and because the patents were expired. Thus, the potential conflict was purely “hypothetical.” Accordingly, the district court lacked subject matter jurisdiction over Forrester’s claims, and the Federal Circuit vacated the district court’s judgment and remanded to the district court with instructions to remand the case to New Hampshire state court.