Federal Circuit Lacked Jurisdiction Over Claims that Assignment Agreement was Invalid

In In Re Cray, the panel grants Cray’s petition for a writ of mandamus, ruling that the district court’s handling of the case is not consistent with its case law regarding what is “a regular and established place of business.” In First Data v. Inselberg, the panel affirms that there is no subject matter jurisdiction over a declaratory judgment action in which the party asserting infringement had previously assigned the patents to the accused infringer/declaratory judgment plaintiff. Idemitsu v. SFC affirms an IPR determination of obviousness, rejecting the patentee’s contention that arguments regarding the prior art were raised too late in the IPR process. NFC v. Matali involved a reversal of an IPR decision in which the Board found claims obvious despite NFC’s argument that it had created a prototype embodying the invention before the priority date of the cited prior art.

In October 2014, Inselberg met with Bisignano claiming that First Data was using his patents without a license and that the assignment to Bisignano was invalid. In October 2015, Inselberg’s counsel sent Bisignano and First Data a draft complaint, asserting a number of state law claims and seeking a declaration that Inselberg and Interactive were the true owners of the patents and were entitled to sue for patent infringement. In November 2015, Inselberg’s counsel sent Bisignano and First Data a second draft complaint and stated that it intended to file the complaint unless the parties reached a settlement.
Bisignano and First Data responded by seeking a declaratory judgment, in district court, that the assignment agreement was valid and that First Data did not infringe. Shortly thereafter, Inselberg and Interactive filed a complaint in New Jersey Superior Court, asserting various state business tort and contract claims and seeking a declaration that the assignment agreement was invalid and that Interactive owned the patent valuation. Bisignano and First Data removed the state court action to district court, invoking the federal court’s jurisdiction over patent cases. They also counterclaimed, seeking a declaration that the patents were not infringed and that at least one of the patents in the portfolio was invalid.

Inselberg and Interactive filed a motion to dismiss Bisignano and First Data’s declaratory judgment claims and state court counterclaims, and moved to remand the action to state court. The district court agreed, finding that it lacked jurisdiction over Inselberg and Interactive’s claims that the assignment agreement was invalid. Those claims were based on questions of state law and did not depend on any federal issues or interpretations of federal law. First Data’s invalidity and infringement counterclaims were deemed “incidental and contingent” to Inselberg and Interactive’s ownerships claims and could not be resolved unless or until a state court determined that Inselberg and Interactive owned the patents. 

First Data and Bisignano also challenged the district court’s remand of the state law claims. The Court noted that under 35 U.S.C. § 1447(d), it cannot review an order remanding a case to the state court from which it was removed if the district court remanded the case after finding that it lacked subject matter jurisdiction over the claims. Because the district court’s decision to remand the case to state court was based on a lack of subject matter jurisdiction under 28 U.S.C. § 1447(c), the Court was precluded from reviewing the remand order.