United States: Presence of a Patent Issue in a Case Based on State Law Does Not, Alone, Create Federal Circuit Jurisdiction

The Federal Circuit has declined to exercise jurisdiction over a case where the fact of patent ownership may have had evidentiary significance, but the mere presence of the patent did not require resolution of a substantial question of U.S. patent law. Bd. of Regents, Univ. of Tex. Sys. v. Nippon Tel. & Tel. Corp., Case No. 04-1452, 2005 U.S. App. LEXIS 14083 (Fed. Cir. July 13, 3005) (Gajarsa, J.).

The University of Texas (UT) allowed a scientist from Nippon Telephone and Telegraph (NTT) to work in a UT facility with the understanding the fruits of his labors while at UT would be the exclusive property of the university. While at UT, the NTT scientist was involved in research on batteries, and UT later obtained a U.S. patent covering this battery research. NTT and its scientist, however, applied for patent protection in Japan themselves. UT sued NTT in state court in Texas, alleging the Japanese patent was based on the battery research performed at UT and that by seeking patent protection in Japan, NTT had misappropriated UT’s intellectual property and breached the agreement. NTT sought to remove the case to Federal District Court, alleging the district court had original jurisdiction under 28 U.S.C. § 1338(a) as the case arose under U.S. patent laws. The district court citing § 1338 denied the plantiff’s motion. The district court subsequently denied NTT’s motion to dismiss under the Foreign Sovereign Immunity Act, and NTT appealed that ruling to the Federal Circuit. The plaintiff sought remand back to the state court.

The issue before the Federal Circuit was whether UT’s state-law claim of tortious interference or the relief sought "necessarily depends on resolution of a substantial question of federal patent law" to give federal district courts jurisdiction over the claim pursuant to 28 U.S.C. § 1338(a), which grants district courts original jurisdiction over actions arising under U.S. patent laws.

The Federal Circuit found no jurisdiction. To prove tortious interference, UT had to establish that NTT’s alleged conduct—improperly claiming ownership of UT’s technology by filing the Japanese patent application—constituted a tort. While the ownership of the Japanese patent might be at issue, the Court found UT’s claim did not implicate any issue (e.g., inventorship, validity or claim construction) related to its U.S. patent. The Court held the mere fact that the U.S. patent could be evidence in support of UT’s allegations was insufficient to invoke the federal patent jurisdiction.

The Court also held that the relief sought—an injunction prohibiting NTT from disseminating information disclosed in UT’s U.S. patent—was not preempted by the patent laws and did not require resolution of a substantial question of U.S. patent law. The Court reasoned that UT’s filing of the U.S. patent application did not extinguish UT’s trade secret claim for misappropriation of property protected under state law at the time of its misappropriation. Accordingly, the Court held there was no federal jurisdiction over the case under § 1338(a).

Practice Note:

Litigants planning to sue in federal court in a case that involves patents (e.g., breach of contract or tortious interference) should be careful to craft their claims for relief so U.S. patent law issues (e.g., inventorship, invalidity, infringement or enforceability of a U.S. patent) are essential to the resolution of the action.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.