Friday, September 15, 2017

No jurisdiction when claim under patent law is secondary to resolving assignment issue

The outcome

First Data Corporation (“First Data”) and Frank Bisignano
(“Bisignano”) appeal from the district court’s dismissal
of their counterclaims and their declaratory
judgment action under Federal Rule of Civil Procedure
12(b)(1). See Bisignano v. Inselberg, Nos. 15-8301 (KM)
(JBC), 16-317 (KM) (JBC), 2016 U.S. Dist. LEXIS 113563
(D.N.J. Aug. 25, 2016) (District Court Opinion). They also
object to the district court’s order remanding their state
law claims to state court. Because the district court
correctly dismissed the federal claims for lack of subject
matter jurisdiction and we cannot review the remand
order, we affirm.

Of the jurisdiction issue

This court reviews de novo a district court’s order
dismissing claims for lack of subject matter jurisdiction.
Powertech Tech. Inc. v. Tessera, Inc., 660 F.3d 1301, 1306
(Fed. Cir. 2011). The party claiming declaratory judgment
jurisdiction has the burden to establish that jurisdiction
existed at the time the claim was filed. Id.

Citing Bell v. Hood, the CAFC noted:

There, the Court explained
that the failure to state a proper cause of action requires a
judgment on the merits rather than a dismissal for jurisdiction,
but that “previously carved out exceptions are
that a suit may sometimes be dismissed for want of
jurisdiction where the alleged claim under the Constitution
or federal statutes clearly appears to be immaterial
and made solely for the purpose of obtaining jurisdiction
or where such a claim is wholly insubstantial and frivolous.”
Id. at 682–83; see also The Fair v. Kohler Die &
Specialty Co., 228 U.S. 22, 25 (1913) (“No doubt if it
should appear that the plaintiff was not really relying
upon the patent law for his alleged rights, or if the claim
of right were frivolous, the case might be dismissed.”).

The CAFC discussed Jim Arnold:

First Data’s and Bisignano’s argument ignores the actual
context we addressed in Jim Arnold. The assignor in
Jim Arnold stated in its complaint that the assignment
was “null and void” and that the assignee was infringing
the patent. But we did not include this allegation as an
example by which an assignment would be declared null
and void “by operation of law.” See id. at 1576–77. To the
contrary, we explained that the gravamen of the complaint
was founded in state contract law. Similarly, here,
the claims focus on state law contract remedies, and
Inselberg and Interactive admit that they cannot pursue a
patent claim unless a state court grants rescission of the
assignment agreement. See, e.g., Appellees’ Br. 2 (“Eric
Inselberg and Inselberg Interactive, LLC do not own any
patents. They used to own 21 patents, and they have filed
state-law claims to try to get those patents back. But at
the time the cases below were filed, they owned zero (0)
patents.”); id. at 3 (“Inselberg and his company lack title
to the patents, and thus lack standing to bring a patent
claim.”); Oral Arg. at 13:59–14:05, http://oralarguments. (explaining
that there is no threat of an infringement claim by
Inselberg against First Data because Inselberg has “no
present ownership of any patents”).

First Data case, D. N.J. 2016-2677, 2016-2696


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