Monday, September 28, 2015

CAFC addresses patent issues related to Vermont's Consumer Protection Act

The background:

On May 8, 2013, Plaintiff-Appellee State of Vermont
(“Vermont” or “the State”) filed a state court action
against Defendant-Appellant MPHJ Technology Investments
LLC (“MPHJ”) alleging violations of the Vermont
Consumer Protection Act, 9 V.S.A. §§ 2451 et seq.
(“VCPA”). The complaint alleged that letters mailed to
Vermont businesses informing them that they may be
infringing certain patents were deceptive and otherwise
violative of the VCPA. MPHJ removed the case twice to
the United States District Court for the District of Vermont,
once under the State’s original complaint (“original
complaint”) and once under the State’s amended complaint
(“amended complaint”). The district court remanded
the case to state court both times. Before this court is
MPHJ’s appeal of the district court’s second remand
order. Because removal under § 1442(a)(2) is not authorized
in the circumstances at issue here, and MPHJ does
not appeal the district court’s other removal rulings in the
second remand order, we affirm.

The issue in the first removal:

MPHJ timely filed a motion to remove the case to the
United States District Court for the District of Vermont
on June 7, 2013 (“the first removal”). MPHJ claimed that
the court had diversity jurisdiction and that the court had
federal question jurisdiction because the validity, infringement,
and enforcement of its patents were at issue.
The State thereafter moved to remand, arguing that its
complaint sounded solely in the VCPA, a state law.
MPHJ then filed a motion to dismiss the case for lack of
personal jurisdiction and a motion for sanctions under
Federal Rules of Civil Procedure (“FRCP”) 11. The district
court held a hearing on these pending motions on
February 25, 2014, and expressed concern that the State’s
second request for an injunction could prevent MPHJ
from sending legitimate assertions regarding patent
infringement to Vermont businesses.

As to jurisdiction, the CAFC noted:

The parties dispute our jurisdiction over this appeal.
The State asserts that we have none and asks that we
dismiss the appeal. MPHJ argues that we do have jurisdiction
over this appeal and correctly points out that, even
if we disagreed with that contention, the appropriate
remedy would be a transfer to the Second Circuit, not
dismissal. 28 U.S.C. § 1295 defines the scope of this
court’s jurisdiction. Specifically, it provides that this
court has jurisdiction “in any civil action arising under, or
in any civil action in which a party has asserted a compulsory
counterclaim arising under, any Act of Congress
relating to patents.” 28 U.S.C. § 1295(a)(1). Because we
find jurisdiction on the basis of at least one of MPHJ’s
counterclaims, counterclaim 5, we have jurisdiction over
this appeal. We, therefore, do not need to assess whether
this court could exercise jurisdiction on the basis of
MPHJ’s other counterclaims or Vermont’s claim.

An article in Law360 is discussed:

Finally, although MPHJ relies on a Law 360 article
featuring an interview with Vermont Attorney General
William Sorrell, which it originally included as an exhibit
to its notice of removal, that article supports the State’s
position. In that interview, which was published two
months after the State filed its conditional motion to
amend, Sorrell was asked whether the lawsuit against
MPHJ was filed under the VCPA:
Q: So the case against MPHJ was filed under the
then existing consumer protection law?
A: Yes.

In the end, MPHJ loses

In these circumstances, we see no reason to
disturb the district court’s finding that the State is not
seeking an injunction that requires MPHJ’s compliance
with the BFAPIA. Given this conclusion, if the State
prevails on the merits in state court, it may not seek an
injunction requiring MPHJ to comply with the BFAPIA
based on the amended complaint. Because MPHJ relies
on the BFAPIA as its basis for removal under
§ 1442(a)(2), the necessary consequence of our decision is
that we find no grounds for removal to federal court.

Given these conclusions, we decline to decide whether
§ 1442(a)(2) applies to intellectual property rights or
whether the phrase “derived from” a federal officer means
the property right at issue must have been obtained by
the removing defendant itself from such an officer, rather
than by a predecessor in interest to that defendant.
Because MPHJ has not appealed the district court’s
ruling pursuant to 28 U.S.C. § 1454, we have no occasion
to address the timeliness or propriety of MPHJ’s attempted
removal under that statute or how that newly enacted
provision should be interpreted in light of the other
amendments to jurisdictional statutes adopted in the AIA.

For the foregoing reasons, we hold that there is no basis
for removal to federal court under § 1442(a)(2). We,
therefore, affirm.

Docket: 2015-1310


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