State law tortious interference and trade secret misappropriation claims did not raise a “substantial question of federal patent law” authorizing removal to federal court because the alleged conduct took place entirely in Taiwan and “did not concern activities that could infringe U.S. patent rights.”
Forrester Envtl. Servs., Inc., v. Wheelabator Techs., Inc., No. 2012-1686 (Fed. Cir. May 16, 2013).
A company brought state law claims against its patent owning competitor. The company alleged that its patent owning competitor made false statements to a mutual Taiwanese customer about the competitor’s patent coverage over the company’s products and services, causing the customer to stop purchasing from the company. The patent owning competitor removed the case to federal court. Although the company moved to remand for lack of subject matter jurisdiction, the patent owning competitor argued that federal jurisdiction existed because the company could only recover if it prevailed on a substantial question of U.S. patent law. The district court denied the motion to remand and granted summary judgment for the patent owning competitor.
On appeal, the Federal Circuit concluded that the district court lacked subject matter jurisdiction over the company’s claims, vacated the judgment, and remanded with instructions to remand the case to state court. The Federal Circuit looked to the recent Supreme Court case Gunn v. Minton, 133 S. Ct. 1059 (2013), which stated that even a cause of action created by state law could “‘arise 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.’”
Although in the past, the Federal Circuit had “concluded that similar state law claims premised on allegedly false statements about patents raised a substantial question of federal patent law,” this case did not raise “a substantial question of federal patent law.” Importantly, the patent owning competitor’s allegedly inaccurate statements regarding its patent rights concerned conduct taking place entirely in Taiwan and “did not concern activities that could infringe U.S. patent rights” since “[t]he use of a patented process outside the United States is not an act of patent infringement.”
Moreover, there was no product being imported into the U.S. and the U.S. patents had all expired, leaving “no prospect that future conduct in the U.S. could lead to an infringement suit regarding those patents.” Therefore, any potential patent conflict was “purely hypothetical,” and even if the company’s allegations raised a question of patent law, the patent law issues were not “substantial in the relevant sense” under Gunn.
A copy of the opinion can be found here.