Carlsbad Technology v. HIF Bio (Supreme Court 2009)
The Supreme Court held oral arguments in this case on February 24. In its opinion, the Federal Circuit held that it lacked appellate jurisdiction to review a district court order to remand a case back to state court. The Federal Circuit's decision goes against precedent set by the Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh Circuits. And, the case appears in conflict with the Supreme court's Powerex v. Reliant (2007) decision.
During oral arguments the Justice Roberts was considering when lower courts follow Supreme Court holdings when he made the following statement:
CHIEF JUSTICE ROBERTS: Well, they don't have a choice, right? They can't say, I don't like the Supreme Court rule so I'm not going to apply it, other than the Federal Circuit.
(Laughter).
Re inventorship as FQ for SMJ
Other reasons why there is no federal patent law question of inventorship. First, no patent exists. Second, no declared interference exists. Take a listen early in the oral arguments beginning at about 2:57 – 5:40 into the session:
link to oralarguments.cafc.uscourts.gov
Babel Boy, the Fed Cir did not reach the issue of whether inventorship was a federal question because it dismissed the appeal on the threshold 1447 issue (see 6-7).
You raise an interesting question about whether this appeal should have gone to the 9th Cir instead. I may be wrong, but I don’t think the Fed Cir can simply send an appeal over to 9th Cir – it has to dismiss the appeal for lack of smj or hear the appeal. The issue is probably moot anyway because Defendant had to argue in its appeal, in order to overturn the remand, that the inventorship issue was a federal question under the patent laws. So, the 9th Cir would have dismissed the appeal for lack of smj if it had been filed there.
Also, perhaps the asymmetry you describe is a good thing. The federal appellate system should check district courts that erroneously hold on to non-federal cases. But, if a case has been erroneously remanded (that is, it still has a federal question), it could always be removed again to federal court.
As to your final point, the issue before the CD Cal was not whether it lacked subject matter jurisdiction but rather whether state law claims predominated and it should remand under 1367. As the Fed Cir explained, the court had smj even after the RICO claims were dismissed.
CQ,
Not sure I understand. This wasn’t per curiam. Judge Gajarsa wrote the opinion.
link to cafc.uscourts.gov
oh nevermind…i forgot panel decisions don’t have such information normally.
just out of curiosity, does anyone know the way the voting went at the Fed. Cir.? It looks like per curiam since there is no language on joining the opinion…
After reading the CAFC opinion (thanks WCG), this one just ain’t makin’ a whole lot of sense to me.
Forget the RICO claims. What about federal subject matter jurisdiction based on inventorship?
The CAFC does not decide or even mention whether the inventorship claim raises a question of federal law. I always thought that 35 USC 116 was a federal law, but maybe I’m wrong on that.
Anyway, if inventorship is not a federal issue, why is this appeal before the CAFC and not the 9th Circuit? Does CAFC have exclusive jurisdiction over RICO claims? Of course not. For instance, here’s an 8th Circuit case on removal of RICO claims: link to ca8.uscourts.gov
So the CAFC’s jurisdiction to refuse to review the remand must be predicated on the inventorship claim, otherwise CAFC should have sent it to 9CA, who would have heard the appeal.
But if inventorship is a sufficient federal patent issue for the CAFC to be involved, then it’s federal subject matter that gives CAFC jurisdiction to review the remand. So why didn’t they?
The whole question is: why did the CAFC ignore the essential question of whether inventorship is a question of federal law that confers subject matter jurisdiction? That’s where I’m lost.
Basically, what we’ve got here is a great example of the USSCt messing up big time. They could have easily resolved all of these pesky Section 1447 issues with Cohill, Things Remembered, Powerex, or Quackenbush. Instead, they issue a series of uninterpretable, goofed-up opinions, dissents, and concurances that force these poor dupes to pay huge sums to resolve.
If you want to know where the flaws in a system are — almost always, look at the top.
Also, note this interesting asymmetry in subject matter jurisdiction: as this case shows, in many cases, under 28 USC 1447(d) there is no appellate review of a USDC remand, but there is always federal appellate review of the USDC’s refusal to remand.
Also, if you are a USDC D and you recognize that there is no federal subject matter jurisdiction, or if you are a state P and your state case has been removed but there is no federal subject matter jurisdiction, you can sit on it until the USDC enters judgment — right through the trial if you want — and then file your motion to remand. You can even wait to see how the first appeal comes out. If you then establish lack of SMJ — slam — the case goes right back to the state court and you start over. Nothing like 2 bites of the apple — but you might have to cough up some costs.
As David Boundy says, get it right. SMJ can be a stinker.
Perhaps this is a reason why inventorship would not be a federal question:
Inventorship is a defense to infringement and not a cause of action. Infringement is a cause of action established under federal statute providing federal courts jurisdiction. Since a claim of infringement is not mentioned (or a DJ action asking for non-infringement), there doesn’t appear to be a federal question before the federal court, and because it lacked SMJ, it was proper to remand to the state court.
I suspect that had a claim of infringement or DJ of non-infringement been added in the complaint, there would have been no remand.
West Coast Guy has it exactly right. SCOTUS will affirm. The Fed Cir panel did an excellent job applying Supreme Court precedent. It is probably error to hastily overinterpret a snarky comment from CJ Roberts.
WCJ-I vaguely recall a series of cases where a state court had to determine inventorship as a corollary to its main inquiry, but I cannot remember the state cause of action.
“I’m going to go out on a limb and say that the Supreme Court will affirm the Federal Circuit.”
West Coast Guy,
Very astute observation. I went back and read the Federal Circuit opinion, and the panel was very careful to point out how it was applying the precedent in Powerex as accepting Kennedy’s view in the his concurrence in Things Remembered. So those who say the Federal Circuit is “defying” SCOTUS precedent are being a bit hasty here. And you may also be right that CJ Roberts is actually complementing the Federal Circuit for not simply accepting, without appropriate judicial thought, the view of the other circuits which may have been undermined. Frankly, an affirmance here of the Federal Circuit (or at least a comment that the Federal Circuit was at least right to question whether the view of the other circuits remained correct) would give it a huge (and necessary) shot of judicial confidence from SCOTUS.
Peeling back the layers raised by West Coast Guy is interesting…
The basis for the Federal Circuit’s decision is whether the *remand* has based on a subject matter jurisdictional ground. A statute strips the Court of Appeals of jurisdiction to review remand orders, if the remand was based on subject matter jurisdiction. So whether inventorship is or isn’t a federal question in the underlying suit doesn’t matter to the Appeals Court’s jurisdiction, if the remand was based on subject matter grounds!
Whew! Interesting! A counterargument for the defendant that wants the removal is that a court always has jurisdiction to determine its own jurisdiction, and statute or no statute has to look past the surface of the remand decision to determine whether the district court’s subject matter decision is or isn’t correct.
The important issue in this case for patent folks is how finely jurisdictional issues must be sliced, and how carefully they must be analyzed. Broad brush inquiries of subject matter jurisdiction – like the typical PTO decision – simply don’t cut the mustard.
I’m going to go out on a limb and say that the Supreme Court will affirm the Federal Circuit. The Federal Circuit has very good reasons for not following the other circuits — namely, the other circuits’ decisions are based on the 1988 Cohill decision, a change in the statutory scheme in 1988, Justices Kennedy’s concurrence in 1995’s Things Remembered, and the Supreme Court’s acknowledgement in 2007’s Powerex that Kennedy had it right.
Although Chief Justice’s comment may give the impression that the Federal Circuit is getting the same reputation as the Ninth Circuit, don’t be surprised that the Supreme Court will affirm. As weird as this may sound, I think that the Chief Justice’s comment was complimentary in this particular case and an acknowledgement of an acute procedural acumen displayed by Judge Gajarsa, Chief Judge Michel, and Chief District Judge Holderman (sitting by designation) in its unanimous panel decision.
For those interested, here are the links to the decision and Patently-O’s discussion:
link to cafc.uscourts.gov
link to patentlyo.com
As a separate issue…although the issue on cert is procedural in nature, since when is the determination of inventorship a matter of state law? I understand ownership is a matter of state law — but inventorship? Wasn’t this ever raised as a basis for the federal district court retaining jurisdiction?
Why do they defy the SC on stuff like this? Keep the gunpowder dry for the stuff that matters…
Dennis,
I have to wonder if the Fed Circuit isn’t going to replace the 9th Circuit as the Supremes’ favorite punching bag. What is wrong with this court? Seems to me that they almost routinely misconstrue, if not openly defy, Supreme Court precedent.