No Appellate Jurisdiction Over Remanded Inventorship Dispute

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).

Comments

[Kevin E. Noonan]

"This case would have a good shot of being granted certiorari. Its impact on patent law, however, is nil. (Perhaps a good thing)."

Perhaps?

[TJ]

I haven't seen the underlying documents in this case, but here is something I don't get. The complaint apparently sought DJ that Park and Chun were the true inventors of "the invention," which includes U.S. Patent Applications filed by defendants listing defendants as inventors. This would seem, to me at least, to state a claim for correction of inventorship under 35 U.S.C. 256, and exclusive jurisdiction would arise in federal court under 28 U.S.C. 1338. This makes the entire discussion of supplemental jurisdiction irrelevant.

And if I am right, then the case's impact on patent law is not nil. If federal district courts can remand claims arising under 1338 willy-nilly with no appellate review, then district courts can remand a patent infringement action filed in state court. There is something seriously wrong with that picture. Am I missing something obvious here?

[Jon]

"If federal district courts can remand claims arising under 1338 willy-nilly with no appellate review, district courts can remand a patent infringement action filed in state court. There is something seriously wrong with that picture. Am I missing something obvious here?"

Which would first require that the action be filed in state court in the first place, as a federal court can't remand a case to state court that was never there in the first place.

[TJ]

Jon:

Two points:

1. My hypo was that the patentee files in state court. Not inconceivable, and more so if I am right about this case.

2. Suppose, more extremely, that there is no filing in the state court, and the district court just "remands" a case that was never filed in state court anyway. Remember, here, it appears the case should never have been filed in state court because the state court was without jurisdiction under 28 U.S.C. 1338, so this is not such a stretch. According to the Federal Circuit, such a remand is _unreviewable_.

If the district court can flagrantly ignore 28 U.S.C. 1338 (exclusive federal jurisdiction) without the possibility of appellate review; what makes flagrant disregard of 28 U.S.C. 1441 (the removal statute) any more reviewable? Read broadly, the Federal Circuit appears to be saying: "If the district court (1) calls it a 'remand' to state court and (2) does not say the federal court is without jurisdiction; then we have no appellate jurisdiction to review the decision no matter how wrong." And is there a way to read this case narrowly on these facts (i.e. an inventorship claim that appears to have been properly pled)?