07/12/2014

Krauser v. BioHorizons, Inc.: No Plausible Basis for Jurisdiction


Category: Civil Procedure   
 
 
 
  By: John Kirkpatrick, Contributor
 
TitleKrauser v. BioHorizons, Inc., No. 2013-1461 (Fed. Cir. June 4, 2014).
Issues
[1] [Does] Krauser’s complaint [raise] a substantial patent law issue [that requires the Federal Circuit to accept a transfer from a sister circuit, according to the following theories?]
Krauser at *7 (text added).
[1a] Krauser’s original complaint contained a patent law claim of inventorship.
Id. (text added).
[1b] [T]he well-pleaded complaint rule requires [the Federal Circuit] to consider the issue of patent law inventorship even when adjudicating Krauser’s claims of ownership [based on past agreements] and a quantum meruit theory.
Id. at *10 (text added).
[1c] [E]ven if Krauser’s [ownership] claims are based in state law, there is federal jurisdiction because Krauser seeks remedies that might be preempted by federal patent law.
Id. at *11 (text added).
[2] [E]ven if [the above theories are] ultimately incorrect, [the theories] are nonetheless “plausible” and require [the Federal Circuit] to follow the law of the case of [the] sister circuit.
Id. at *8 (text added).
Holdings
[1a] We have repeatedly held that an amendment to the complaint that dismisses the patent law claims without prejudice, as here, deprives this court of jurisdiction over the case. Krauser at *10 (internal citation removed).
[1b] The resolution of the inventorship question is neither “necessary” nor “substantial” to the case.
Id. at *11.
[1c] [In an analogous situation, we found no] federal jurisdiction where plaintiff “[sought] remedies that might be preempted by federal patent law” because federal preemption was only a defense to the plaintiff’s suit.
Id. at *12 (text added, internal citation removed).
[2] [The Supreme Court] held that a transferee court would “not exceed its power in revisiting the jurisdictional issue, and once it conclude[s] that the prior decision was ‘clearly wrong’ it [is] obliged to decline jurisdiction.”
Id. at *8 (text added, internal citation removed).
 
 
 
Procedural HistoryKrauser sued [BioHorizons] in Florida state court, seeking a declaration that [...] Krauser “is the inventor and owner of the subject matter set forth in all of the Defendants’ patents based on [U.S. Patent No. 5,316,476] [and] of the [related] Dental Implant System, [among other things]." [...] [BioHorizons] removed the case to federal district court based on diversity jurisdiction under 28 U.S.C. § 1332 and patent jurisdiction under 28 U.S.C. § 1338(a) based on Krauser’s inventorship claims. [...] [In response to BioHorizons motion to dismiss,] Krauser filed his Second Amended Complaint that included only ownership claims [...]. [...] [T]he district court granted [BioHorizons'] motion for summary judgment. [...] Krauser appealed, initially to the Eleventh Circuit. [BioHorizons] moved to dismiss the appeal or, in the alternative, to transfer to [the Federal Circuit]. [...] The Eleventh Circuit transferred the case [...].
Krauser at *5-7 (text added, internal citations removed).
 
 
 
Legal Reasoning (Lourie, Clevenger, Dyk)
[1] Federal Circuit Patent Law Jurisdiction
Relevant Law“Federal courts have exclusive jurisdiction over cases ‘arising under any Act of Congress relating to patents.’” Gunn v. Minton, 133 S. Ct. 1059, 1062 (2013) (quoting 28 U.S.C. § 1338(a)). An action “arises under” patent law when “federal [patent] law creates the cause of action asserted” or when it presents a federal patent 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.” Krauser at *9 (text added, internal citation removed). [Under 28 U.S.C. § 1295(a)(1),] "the Federal Circuit has exclusive appellate jurisdiction in civil actions ‘arising under . . . any Act of Congress relating to patents,’ [...]." Id. at *5 (text added, internal citation removed).
[1a] Second Amended Complaint Has No Substantial Question of Federal Patent LawKrauser’s First Amended Complaint, with its inventorship claim, as filed in state court, “arose under” federal patent law and was subject to § 1338(a) jurisdiction, and correspondingly, our appellate jurisdiction under 28 U.S.C. § 1295(a)(1). [...] But after Krauser’s withdrawal without prejudice of his inventorship claims, the Second Amended Complaint did not contain any claims which depended “on resolution of a substantial question of federal patent law.” [...] [A]n amendment to the complaint that dismisses the patent law claims without prejudice, as here, deprives this court of jurisdiction over the case. Id. at *9-10 (text added, internal citations removed).
[1b] Ownership Does Not Necessarily Require Consideration of InventorshipKrauser’s [...] ownership theories do not rest on a theory of inventorship or require resolution of any issue of patent law. In addition, on appeal to this court, Krauser stated that he had withdrawn his claim in the Second Amended Complaint that “he is the owner of the subject matter set forth in the Defendants’ patents.” [...] Therefore, [...] [t]he resolution of the inventorship question is neither “necessary” nor “substantial” to the case. A claim of ownership does not necessarily require consideration of patent law inventorship. A state law contract claim or quantum meruit claim may entitle Krauser to royalties from the Dental Implant System even if he is not listed as an “inventor” [...]. Given that there is no federal issue in this case, an exercise of federal question jurisdiction would certainly disrupt “Congress’s intended division of labor between state and federal courts.”
Id. at *11 (text added, internal citations removed).
[1c] Federal Preemption is Ordinarily a Federal Defense[BioHorizons] argues that because Krauser’s ownership claims are based on his contribution of the ideas in the dental implant system, these claims are preempted [by federal patent law]. [...] But even if Krauser’s ownership claims are preempted, this does not give this court jurisdiction. The Supreme Court addressed this very issue [...] —finding that because “[f]ederal preemption is ordinarily a federal defense to the plaintiff’s suit . . . it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court.”
Id. at *11-12 (text added, internal citations removed).
[2] Law of the Case
Relevant LawThe Supreme Court [...] explained that the “law of the case” from a sister circuit could counsel against re-transfer—“transferee courts that feel entirely free to revisit transfer decisions of a coordinate court threaten to send litigants into a vicious cycle of litigation,” [...] “[I]f the transferee court can find the transfer decision plausible, its jurisdictional inquiry is at an end.” [...] But it held that a transferee court would “not exceed its power in revisiting the jurisdictional issue, and once it conclude[s] that the prior decision was ‘clearly wrong’ it [is] obliged to decline jurisdiction.”
Krauser at *8 (text added, internal citations removed).
No Plausible Basis for JurisdictionHere, the Eleventh Circuit has transferred this case to [the Federal Circuit], and accordingly, the Eleventh Circuit’s decision should normally be the law of the case. This is true even though the transferring court had not explained the basis for its decision. [...] We conclude, however, that there is no “plausible” basis for [the Federal Circuit's] jurisdiction [because the theories discussed in [1] are implausible].
Id. at *8 (text added, internal citation and footnote removed).
Conclusion
[1a] [T]he existence of inventorship claims in the original complaint does not support our exercise of jurisdiction in this case.
Krauser at *10 (text added).
[1b] [T]here is no federal issue in this case [...].
Id. at *11 (text added).
[1c] BHI’s theory [of preemption] does not support our exercise of jurisdiction in this case.
Id. at *12 (text added).
[2] [T]here is no plausible claim that this court has jurisdiction.
 Id. at *12 (text added).
 
 
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