HIF BIO v. Yung Shin Pharmaceuticals (Fed. Cir. 2007)
In 2005, HIF sued Yung Shin, Carlsbad Technology, the Fish & Richardson law firm, and others in California State Court. In its complaint, HIF asked the court for a declaratory judgment for ownership and inventorship of various anti-angiogenesis drugs. The complaint also asserts claims of slander, conversion, fraud, business interference, and unjust enrichment. The case was removed to Federal Court. However, the only federal claim — the RICO allegation — was dismissed and the district court declined to exercise its supplemental jurisdiction to hear the other state claims (thus, remanding the state claims back to the state court).
On appeal, the defendants argued that the federal district court should be required to hear the supplemental state claims because the claims are intricately tied to the federal patent law issue of inventorship. 28 USC §1367 provides a district court discretion in determining whether to hear supplemental issues. Although generally broad, the discretion is not completely unfettered and may be reviewed on appeal. In Voda, for instance, the CAFC found that a district court had abused its 1367 discretion by hearing foreign patent infringement claims.
In its decision, the appellate panel found that it lacked subject matter jurisdiction to hear the appeal. In particular, the court held that 28 USC §1447(d) blocks federal appellate jurisdiction over remands back to state court. From its text, 1447(d) appears to be broadly written to block any appellate review of a remand to state court (except for a small unrelated exception). Supreme Court precedent, however, has narrowly interpreted the statute to allow federal appeals for remands except for remands based on a lack of subject matter jurisdiction.
Thus, the question here was whether the remand based on discretionary denial of supplimental jurisdiction is the same as a remand based on lack of subject matter jurisdiction. The CAFC found the two overlapping — certainly once the court excerts its discretion to refuse the case, it certainly lacks subject matter jurisdiction.
Interestingly, the court has gone out on a limb with this case — splitting with decisions from the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits. Precedent from courts indicate a willingness to hear cases appealing remands based on denials of supplimental jurisdiction. Writing for the CAFC panel, Judge Gajarsa found that a recent Supreme Court case (Powerex 2007) opened the door for the new direction.
- This case would have a good shot of being granted certiorari. Its impact on patent law, however, is nil. (Perhaps a good thing).