Addressing the jurisdictional effect of a remand order by a district court declining supplemental jurisdiction over patent-related claims, the U.S. Court of Appeals for the Federal Circuit ruled that because such an order is based on lack of subject matter jurisdiction, it is barred from federal appellate review. Hif Bio, Inc. v. Yung Shin Pharmaceuticals, LTD, Case No. 06-1522 (Fed. Cir., Nov. 13, 2007) (Gajarsa, J.).

The case arose from a dispute between a number of companies concerning rights to various inventions. The case was originally filed in state court but was subsequently removed to district court where a 12-count complaint was filed alleging a number of state law claims and a violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). After dismissing the RICO count, the district court declined to exert supplemental jurisdiction over the inventorship claims and remanded the case to state court. The ruling was appealed to the Federal Circuit.

An issue of first impression for the court, the Federal Circuit undertook an analysis of 28 U.S.C. §1447 and its related jurisprudence before concluding the appeal was barred, i.e., it had no jurisdiction to review the merits of the remand order. The Court noted that §1447(d) provides "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise." However, the Court concluded that Supreme Court jurisprudence had tempered this jurisdictional bar consistent with the language of §1447(c) such that the bar was limited to the review of remand orders based on a lack of subject matter jurisdiction and defects unrelated to subject matter jurisdiction.

The issue, then, became whether a remand based on declining supplemental jurisdiction was within the class of remands proscribed by the language of §1447(c) and thus barred from appellate review by §1447(d). The Federal Circuit found that it was, ruling that in every instance where a court declines supplemental jurisdiction, this necessarily involves a predicate finding that the claims at issue lack an independent basis of subject matter jurisdiction.

Practice Note: Should you be relying upon the patent-related nature of state claims alone to secure appellate jurisdiction before the Federal Circuit, be forewarned: if a district court remands your case to state court, the Federal Circuit will not visit the merits of any appeal.

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