By Jason Rantanen
This case is significant because even as it applies the Supreme Court's recent ruling in Gunn v. Minton to find a lack of subject matter jurisdiction over state law tortious interference claims involving patent issues it also expressly suggests that there are limits to the effects of the Court's ruling.? This issue is particularly important to be cognizant of because, as here, a lack of subject matter jurisdiction can instantly reset a lawsuit regardless of how far along it has proceeded.?
Forrester Envtl. Servs., Inc. v. Wheelabrator Techs., Inc. (Fed. Cir. 2013)
Download Forrester v Wheelabrator (2013)
Panel: Newman, Bryson, Dyk (author)
Forrester, a player in the market for industrial and municipal waste treatment systems, sued competitor Wheelabrator in New Hampshire state court for a violation of the New Hampshire Consumer Protection Act, tortious interference with a contractual relationship, tortious interference with Forrester's prospective advantage, and trade secret misappropriation.? Forrester's claims were based on the allegation that in 2007, Wheelabrator met with Kobrin, a Taiwanese company that Forrester had a business arrangement with, telling Korbin that Wheelabrator's US patents covered the technology provided to Kobin by Forrester.? Forrester contended that this statement was false and that as a result of the false statement Korbin ended its arrangement with Forrester.
After Forrester filed its suit in state court, Wheelabrator removed the action to federal district court.? The district court summarily denied Forrester's remand motion and subesequently ruled in Wheelabrator's favor on all of Forrester's substantive claims.? Forrester appealed.
Recap of Section 1338 Requirements: Under 28 U.S.C. ? 1338, federal district courts have original jurisdiction over "any civil action arising under any Act of Congress relating to patents."? While this applies on its face to standard patent infringement suits, "a cause of action created by state law may 'aris[e] under' federal patent law within the meaning of 28 U.S.C. ? 1338 if it involves a patent law issue that is '(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.' Gunn v. Minton, 568 U.S. ___, ___, 133 S. Ct. 1059, 1065 (2013)."? Slip Op. at 6-7.
Patent law issue here not "substantial": The central issue on appeal was whether Forrester's state law claims necessarily raise a substantive issue of patent law because Forrester's allegations "necessarily require the trial court to construe the claims of the patent in order to determine whether the alleged statements were [] false."? Slip Op. at 8, quoting Wheelabrator's brief.? The Federal Circuit held that this did not raise a substantial issue of patent law here because, as in Gunn, there is "no prospect of future conflict between inconsistent judgments in state and federal courts."? Id. at 10.? Due to the? circumstances of this case, "there is no prospect of a future U.S. infringement suit arising out of Kobin's [operations in Taiwan]" and because the patents have all expired, there is "no prospect that future conduct in the U.S. could lead to an infringement suit regarding those patents."? Id.
The Federal Circuit also rejected Wheelabrator's specific argument that resolution of the claim construction issues necessarily would have potential preclusive effects in future litigation involving the patents.? "[T]he Supreme Court rejected a related argument in Gunn, concluding that any such collateral estoppel effect ?would be limited to the parties and patents that had been before the state court,? and that '[s]uch ?fact-bound and situation-specific? effects are not sufficient to establish federal arising under jurisdiction.'"? Id., quoting Gunn.?
Limits on Gunn: Even while concluding that here the district court did not have jurisdiction,?Forrester recognizes some potential limits when applying Gunn to state law claims:
In the past, we have concluded that similar state law claims premised on allegedly false statements about patents raised a substantial question of federal patent law. For example, in Additive Controls & Measurement Systems, Inc. v. Flowdata, Inc., we concluded that the plaintiff?s state law business disparagement claims arose under patent law for the purposes of 28 U.S.C. ? 1338. [] We noted that under state law, ?a business disparagement claim requires [the] plaintiff to prove . . . the falsity of [the] defendant?s allegedly disparaging statements.? []? There, the allegedly disparaging statement was an accusation of patent infringement; thus, we concluded that in order to prove the falsity of that statement, the plaintiff would have to ?show that its product does not infringe the . . . patent.? [] Reasoning that the infringement issue presented a substantial question of patent law, we concluded that the claims arose under federal patent law for the purposes of ? 1338. [CAFC also discusses Hunter Douglas]
Those cases may well have survived the Supreme Court?s decision in Gunn. Unlike the purely ?backward looking? legal malpractice claim in Gunn, [], permitting state courts to adjudicate disparagement cases (involving alleged false statements about U.S. patent rights) could result in inconsistent judgments between state and federal courts. For example, a federal court could conclude that certain conduct constituted infringement of a patent while a state court addressing the same infringement question could conclude that the accusation of infringement was false and the patentee could be enjoined from making future public claims about the full scope of its patent as construed in federal court.?
Slip Op. at 8-9 (internal citations omitted and emphasis added).
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