Does License of Future Inventions Invoke Patent Law Based Court Jurisdiction?

By Dennis Crouch

National Pasteurized Eggs v. Davidson (Fed. Cir. 2012)

010713_1547_DoesLicense1In yet another patent contract dispute, the Federal Circuit has transferred appellate jurisdiction back to the regional circuit. Here, it appears that the mistake was due to an error by the district court clerk who thought of the case as a patent case.

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National Pasteurized Eggs (NPE) filed the case in 2007 asking the New Hampshire district court to quiet title in several US and foreign patents. From the complaint:

By this action, NPE seeks a declaratory judgment of rightful ownership of three United States patents and two international patent applications and resulting foreign patents, as specified below.

Download Davidsoncomplaint.

The patents at issue all list Mr. Leon J. Davidson (LJD) as the inventor and involve methods of pasteurizing in-shell chicken eggs and treating eggs with anti-bacterial agents. See U.S. Patent No. 6,322,833.

Davidson founded the Pasteurized Egg Corporation (PEC). When he left the company in 2000, he signed an assignment and further cooperation agreement.  [Appendix to Complaint] PEC went bankrupt in 2003 and its intellectual property assets were purchased by National Pasteurized Eggs (NPE) who is looking to ensure all of the Davidson patents are assigned to the company. (Note โ€“ the Davidson's brand shown to the right is also owned by PEC).

In considering what rights Mr. Davidson retains, the agreement uses the term "inventiveness." The agreement states:

New processes or intellectual property ("inventiveness") developed prior to January 1, 2001 ("Old Inventiveness"), including a method for extending the shelf life of pasteurized eggs by treatment with antibacterial agents, shall be the property of PEC and LJD shall take such actions as may be reasonably required by PEC to assist PEC to complete the development, improvement, documentation, protection and patenting of such Old Inventiveness.

Inventiveness developed by LJD, whether in combination with "Old Inventiveness" or prior inventiveness, which results in protection from new patents or patent applications providing broader or improved protection, on or subsequent to January 1, 2001 ("New Inventiveness") shall be considered the property of LJD.

It is this poorly written agreement that has led to the legal conflict.

Davidson filed a number of patent applications following the 2001 agreement and argued that those applications involved new inventiveness. In its ruling, the district court sided with NPE โ€“ holding that the inventiveness associated with the primary disputed patent occurred prior to the 2001 date since testing had already begun on the new process.   Download Davidsonfinaljudgment.  It is this decision being appealed.

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After losing at the district court, Davidson filed a Notice of Appeal to the First Circuit. However, the district court clerk sent the docket and certificate to the Federal Circuit. On unopposed motion, the Federal Circuit has now transferred the case to the First Circuit.

In its order, the Federal Circuit suggested, but did not decide, that the First Circuit is the proper site of appellate jurisdiction. In this case, however, the transfer was required because the Fed. R. App. P. 3(d)(1) does not allow a district court clerk to unilaterally change the appellate court.

Fed. R. App. P. 3(d)(1) states that the clerk of the district court "must promptly send a copy of the notice of appeal and of the docket entries .,. to the clerk of the court of appeals named in the notice."

Because of the mandatory language of Rule 3(d)(1), we believe we must transfer this appeal to the First Circuit, i.e., the clerk of the district court was required to send the notice of appeal to that court. Although we do not address jurisdiction, the case appears to involve ownership of patents rights and contract interpretation. See Luckett v. Delpark, Inc., 270 U.S. 496 (1926).

The appeal will now be heard by the Court of Appeals for the First Circuit.

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There is some chance that the Federal Circuit will see the case again โ€“ depending upon whether the First Circuit sees a substantial question of patent law buried in whether Davidson's new patents include some "inventiveness developed by LJD . . . subsequent to January 1, 2001."

2 thoughts on “Does License of Future Inventions Invoke Patent Law Based Court Jurisdiction?

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    I find it odd that the court didn’t directly address jurisdiction, rather than merely hint that it doesn’t think it has jurisdiction. My guess is that there have been many cases where a party erroneously mentioned a regional circuit court of appeals in the Notice of Appeal, the district court clerk caught the mistake, sent the case to the Federal Circuit, and the CAFC assumed jurisdiction. If that is so, the CAFC would have not considered the appellant’s choice of appellate courts to be controlling.

    Here, however, the Federal Circuit considered it mandatory under FRAP 3(d)(1) to transfer the case to the 1st Cir. I think the better course would have been to decide jurisdiction sua sponte and, if lacking, transfer the case to the 1st Cir. under 28 U.S.C. ยง 1631.

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