Briefs and Other Related Documents

Judges and Attorneys

United States Court of Appeals,Federal Circuit.

HIF BIO, INC. and Bizbiotech Co., Ltd., Plaintiffs-Appellees,

v.YUNG SHIN PHARMACEUTICALS INDUSTRI-AL CO., LTD. (doing business as Yung Shin Phar-maceuticals and Yung Shin Pharm. Ind. Co. Ltd.),Yung Zip Chemical Co., Ltd., Fang-Yu Lee, and

Che-Ming Teng, Defendants,and

Carlsbad Technology, Inc., Defendant-Appellant,and

Fish And Richardson P.C., and Y. Rocky Tsao, De-fendants.

No. 2006-1522.March 31, 2010.

As Amended on Rehearing in Part June 14, 2010.

Background: Assignee of patent applicants' rightsbrought suit in state court, seeking declaratoryjudgment that applicants were true discovers of theinvention, and alleging, inter alia, claims underRacketeer Influenced and Corrupt OrganizationsAct (RICO). Following removal, the United StatesDistrict Court for the Central District of California,Dean D. Pregerson, J., 2006 WL 6086295, dis-missed RICO cause of action, and declined supple-mental jurisdiction over remaining claims and re-manded action. Defendant appealed. The Court ofAppeals, Gajarsa, Circuit Judge, 508 F.3d 659, dis-missed appeal for lack of jurisdiction. Certiorariwas granted. The Supreme Court, --- U.S. ----, 129S.Ct. 1862, 173 L.Ed.2d 843, reversed and re-manded.

Holdings: The Court of Appeals, Gajarsa, CircuitJudge, held that:

(1) district court may not determine true inventor ofinvention disclosed in pending patent application;(2) patent law was essential to slander of title causeof action, but no claim was stated; and(3) patent law was not essential to remaining causesof action.

Reversed and remanded.

West Headnotes

[1] Federal Courts 170B 813

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334 Removal of Cases334VII Remand or Dismissal of Case

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170B Federal Courts170BVIII Courts of Appeals

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Whether district court possessed jurisdiction isquestion of law that Court of Appeals reviewswithout deference.

[4] Federal Courts 170B 243

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Federal patent jurisdiction extends only tothose cases in which well-pleaded complaint estab-lishes either that federal patent law creates cause ofaction or that plaintiff's right to relief necessarilydepends on resolution of substantial question offederal patent law, in that patent law is necessaryelement of well-pleaded claims. 28 U.S.C.A. §1338(a).

[5] Federal Courts 170B 209.1

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170Bk209 Patent Laws170Bk209.1 k. In general. Most Cited

CasesIssue of true inventors of competing patent ap-

plications did not present issue of state law, butrather, issue of federal patent law subject to federalpatent jurisdiction. 28 U.S.C.A. § 1338(a).

[6] Patents 291 90(1)

291 Patents

291III Persons Entitled to Patents291k90 Original Inventors and Priority

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Question of who invented invention disclosedin pending patent applications was exclusively forPatent and Trademark Office. 35 U.S.C.A. §§ 116,135(a).

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Statute authorizing Director of Patent andTrademark Office to take certain actions concern-ing pending patent applications does not provideprivate right of action to challenge inventorship ofpending patent application, but once patent issues,statute authorizing Director to correct named in-ventor provides private right of action to challengeinventorship, within original jurisdiction of federaldistrict court. 28 U.S.C.A. § 1338(a); 35 U.S.C.A.§§ 116, 256.

[8] Libel and Slander 237 130

237 Libel and Slander

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237V Slander of Property or Title237k130 k. Nature and elements in general.

Most Cited CasesUnder California common law, elements of

slander of title are: publication, falsity, absence ofprivilege, and disparagement of another's titlewhich is relied upon by third party and which res-ults in pecuniary loss.

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to invention and claim of inventorship/discovery ofsame by their false statements of inventorship toPatent and Trademark Office (PTO) arose underpatent law, and was subject to federal patent juris-diction. 28 U.S.C.A. § 1338(a).

[10] Conversion and Civil Theft 97C 100

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(Formerly 389k1 Trover and Conversion)Under California law, elements of conversion

are: (1) ownership or right to possession of prop-erty, (2) wrongful disposition of the property rightof another, and (3) damages.

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Patent law was not essential to claim for con-version of invention, and therefore, claim could notform basis for federal patent jurisdiction; underCalifornia law, plaintiffs could establish conversionthrough alternative, non-patent theory, by referenceto defendants' alleged misappropriation of“experiments, pre-publication experimental data,and nonpublic, pre-publication drafts of papers.” 28U.S.C.A. § 1338(a).

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CasesPatent law was not essential to claims for inten-

tional interference with contractual relations andprospective economic advantage or negligent inter-ference with contractual relations and prospectiveeconomic advantage arising out of invention, andtherefore, claims could not form basis for federalpatent jurisdiction; while relevant, determination ofinventorship was not essential to any of element ofthose claims under California law, because the in-tentional acts on part of defendants could consist oftheir alleged misappropriation of “experiments, pre-publication experimental data, and non-public, pre-publication drafts of papers.” 28 U.S.C.A. §1338(a).

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fraud, and unfair competition and fraudulent busi-ness practices arising out of invention, and there-fore, claims could not form basis for federal patentjurisdiction; non-patent allegations that defendantsmade continued promises of collaboration which in-duced plaintiffs into providing non-public and valu-able research data to defendants could be sufficientto establish those claims under California law. 28U.S.C.A. § 1338(a); West's Ann.Cal.Bus. &Prof.Code § 17200.

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Patent law was not essential to breach of im-plied contract claim arising out of invention, andtherefore, claim could not form basis for federalpatent jurisdiction; under California law, claimcould be resolved by reference to defendants' al-leged failure to keep their promises not to misap-propriate or commercialize the invention. 28U.S.C.A. § 1338(a).

[16] Federal Courts 170B 209.1

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170Bk209 Patent Laws170Bk209.1 k. In general. Most Cited

CasesPatent law was not essential to claim of owner-

ship of invention, and therefore, claim could notform basis for federal patent jurisdiction; allegationthat defendants' conduct gave rise to implied con-tract between parties could form basis for resolvingownership dispute because that implied contractcould dictate which party owned the invention. 28U.S.C.A. § 1338(a).

[17] Federal Courts 170B 209.1

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CasesPatent law was not essential to claim for unjust

enrichment-constructive trust, arising out of inven-tion, and therefore, claim could not form basis forfederal patent jurisdiction; although inventorshipdetermination could have been relevant, there wasalternative, non-patent theory in which the misap-propriated “property and assets” consisted ofplaintiffs' “experiments, pre-publication experi-mental data, and non-public, pre-publication draftsof papers.” 28 U.S.C.A. § 1338(a).

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*1350 Bub-Joo S. Lee, Lee Anav Chung, LLP, ofLos Angeles, CA, for plaintiffs-appellees.

Glenn W. Rhodes, Howrey LLP, of San Francisco,CA, for defendant-appellant. With him on the briefwere Julie S. Gabler, Stephanie M. Byerly andJesse D. Mulholland, of Los Angeles, CA; andRichard L. Stanley, of Houston, TX.

Before MICHEL, Chief Judge, GAJARSA, CircuitJudge, and HOLDERMAN, Chief District Judge.FN*

FN* The Honorable James F. Holderman,Chief Judge, United States District Courtfor the Northern District of Illinois, sittingby designation.

GAJARSA, Circuit Judge.This case is before this court on remand from

the Supreme Court of the United States. In our ori-ginal decision, HIF Bio, Inc. v. Yung Shin Pharms.Indus. Co., Ltd., 508 F.3d 659 (Fed.Cir.2007), weheld that the Federal Circuit lacked appellate juris-diction to review a district court's remand order thatwas based upon the district court's decision not toexercise supplemental jurisdiction. See id. at 667.The Supreme Court subsequently reversed our de-cision, and remanded the case back to us for furtherproceedings. See Carlsbad Tech., Inc. v. HIF Bio,Inc., --- U.S. ----, 129 S.Ct. 1862, 1867, 173L.Ed.2d 843 (2009). The sole remaining issue iswhether the district court abused its discretion inremanding plaintiffs' amended complaint to Califor-nia state court. For the reasons set forth below, wehold that the district court did abuse its discretionbecause two of the remanded causes of action“arise under” 28 U.S.C. 1338(a), but the districtcourt should have dismissed these purported causesof action for failure to state a claim for which reliefcan be granted.

I.A.

We accept as true the facts alleged in plaintiffs'first amended complaint (“FAC”). See Wells v.United States, 420 F.3d 1343, 1348 (Fed.Cir.2005).These facts have previously been described andneed not be recited in full again. See HIF Bio, Inc.,508 F.3d at 660-62; see also HIF Bio, Inc. v. YungShin Pharms. Indus. Co., Ltd, No. CV 05-07976,2006 WL 6086295, at *1-2 (C.D.Cal. June 09,2006). A brief summary of the operative facts,however, is appropriate.

In late 1999, Professors Jong-Wan Park(“Park”) and Yang-Sook Chun (“Chun”) began in-vestigating the effect of a chemical, YC-1, on aprotein complex known as HIF1. A component ofHIF-1 is expressed in human tumors and stimulatesthe growth of blood vessels within a tumor mass.Park and Chun hypothesized that YC-1 “could beused to inhibit the activity of HIF-1, which wouldhave the effect of suppressing ... the growth ofblood vessels into animal tumors, and therebykill[ing] the tumor by starving it of oxygen and nu-trients.” FAC ¶¶ 19-21.

Between 1999 and 2002, Park and Chun con-ducted laboratory experiments to confirm their hy-pothesis and submitted research papers disclosingtheir discovery to academic journals. See id. ¶¶22-26. On April 7, 2003, Park and Chun filed aUnited States patent application titled “Method forInhibiting Tumor Angiogenesis and Tumor Growth,” which “disclos[ed] their anti-angiogenic, anti-cancer application of YC-1.” Id. ¶ 27. In July 2003,Park and Chun assigned their rights concerningYC-1 to Plaintiff BizBiotech Co., Ltd., which sub-sequently assigned the rights to Plaintiff *1351 HIFBio, Inc. in February 2005. See id. ¶¶ 28-29.

While Park and Chun conducted their research,they also discussed their hypothesis with anotherscientist, Defendant Che-Ming Teng (“Teng”), whoagreed to provide Park and Chun with the YC-1 ne-cessary for their experiments. See id. ¶¶ 34-38. Asan academic courtesy, Park and Chun providedTeng with information concerning their research in-cluding pre-publication drafts of academic papers

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disclosing the results of their laboratory experi-ments. See id.

Unbeknownst to Park and Chun, Teng dis-closed the results of Park and Chun's research toDefendant Yung Shin Pharmaceuticals (“YungShin”), a Taiwanese drug manufacturer. Id. ¶¶40-45. On March 29, 2002, without the consent orknowledge of Park and Chun, Teng filed a U.S.Provisional Patent application titled “AngiogenesisInhibitors.” Id. ¶ 57. The provisional identifiedTeng and Defendant Fang-Yu Lee (“Lee”), thepresident of Yung Shin, “as the inventor[s] of thenovel anti-angiogenic, anticancer properties of YC-1.” In March 2003, Yung Shin filed a PCT applica-tion claiming priority to the U.S. provisional ap-plication. See id. ¶ 86.

B.In September 2005, after discovering Teng,

Lee, and Yung Shin's actions, HIF Bio and BizBi-otech filed suit in Los Angeles Superior Court. Inaddition to Teng, Lee, and Yung Shin, the suitnamed Carlsbad Technology, Inc. (“CTI”), a Cali-fornia corporation engaged by Yung Shin to com-mercialize the use of YC-1 as an antiangiogenic,anti-cancer drug in the United States. See id. ¶ 47.The suit also named Yung Shin's patent counsel, Y.Rocky Tsao and Fish and Richardson, P.C., and analleged Taiwanese co-conspirator, Yung Zip Chem-ical Co., Ltd. See id. In November 2005, CTI re-moved the action to the United States District Courtfor the Central District of California. In March2006, the plaintiffs filed their first amended com-plaint with the district court, asserting twelvecauses of action.FN1

FN1. The first and second causes of actionseek a declaratory judgment for ownershipand inventorship, respectively, of “the IN-VENTION.” FAC ¶¶ 104-110. The thirdcause of action asserts violations of theRacketeer Influenced and Corrupt Organiz-ations Act (“RICO”), 18 U.S.C. §§ 1961-68. FAC ¶¶ 112-71. The remaining causesof action are based respectively on slander

of title, conversion, actual and constructivefraud, intentional interference with con-tractual relations and prospective economicadvantage, negligent interference with con-tractual relations and prospective economicadvantage, breach of implied contract, un-fair competition and fraudulent businesspractices, unjust enrichment-constructivetrust, and permanent injunction. Id. ¶¶172-219.

Among other motions, CTI filed a motion todismiss the complaint pursuant to Federal Rule ofCivil Procedure 12(b)(1) and 12(b)(6). The districtcourt granted CTI's motion, dismissed plaintiffs'RICO cause of action, and remanded the case tostate court. See HIF Bio, Inc., 2006 WL 6086295,at *6. In remanding the case, the district court heldthat the first and second causes of action claimed“rights of inventorship and ownership of inventions[which] are valid state law claims.” Id. at *4. It thendeclined to exercise supplemental jurisdiction andremanded those claims along with the remainingnine “state law claims” to California state court. Id.

CTI appealed the remand order to this court.This panel held that 28 U.S.C. § 1447(d) barred ap-pellate review of a remand order based on decliningsupplemental jurisdiction and dismissed the appealfor lack of jurisdiction. See HIF Bio, Inc., 508 F.3dat 667. The Supreme Court subsequently reversedand remanded, holding that § 1447(d) did not barappellate review *1352 in such circumstances.Carlsbad Tech., Inc., 129 S.Ct. at 1867.

II.[1][2] We review for abuse of discretion the

district court's decision not to exercise supplement-al jurisdiction. See Mars, Inc. v. Kabushiki-KaishaNippon Conlux, 24 F.3d 1368, 1374 (Fed.Cir.1994)(“[T]he exercise of supplemental jurisdiction iswithin the discretion of the district court.”). Whilethe district court has discretion not to exercise sup-plemental jurisdiction over state law claims, it hasno discretion to remand claims arising under federallaw. See Hunter Douglas, Inc. v. Harmonic Design,

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Inc., 153 F.3d 1318, 1328 (Fed.Cir.1998) overruledin part on separate grounds in Midwest Indus., Inc.v. Karavan Trailers, Inc., 175 F.3d 1356(Fed.Cir.1999); Gaming Corp. of Am. v. Dorsey &Whitney, 88 F.3d 536, 542 (8th Cir.1996) (“A dis-trict court has no discretion to remand a claim thatstates a federal question.”); Borough of W. Mifflinv. Lancaster, 45 F.3d 780, 787 (3d Cir.1995)(same); Brockman v. Merabank, 40 F.3d 1013,1017 (9th Cir.1994) (same).

[3][4] Whether the district court possessed jur-isdiction is a question of law that this court reviewswithout deference. See Teva Pharms. USA, Inc. v.Novartis Pharms. Corp., 482 F.3d 1330, 1335(Fed.Cir.2007); Pennington Seed, Inc. v. ProduceExch. No. 299, 457 F.3d 1334, 1338 (Fed.Cir.2006). The district court's jurisdiction under § 1338(a)“extend [s] only to those cases in which a well-pleaded complaint establishes either that federalpatent law creates the cause of action or that theplaintiff's right to relief necessarily depends on theresolution of a substantial question of federal patentlaw, in that patent law is a necessary element of thewell-pleaded claims.” Christianson v. Colt Indus.Operating Corp., 486 U.S. 800, 808-09, 108 S.Ct.2166, 100 L.Ed.2d 811 (1988).

A. The Declaratory Judgment for InventorshipThe plaintiffs' second cause of action seeks a

declaratory judgment that Park and Chun “were andare the first and true inventors/discoverers of theINVENTION.” FAC ¶ 111. The amended com-plaint defines “INVENTION” as the discovery that“YC-1 had the potential to become the first anti-angiogenic, anti-cancer agent to HIF-1.” Id. ¶ 22.According to plaintiffs, “an actual controversy hasarisen” because the defendants “have made anopen, public, and adverse claim that [Lee and Teng]are the inventors/discoverers of the INVENTION.”Id. ¶ 109. The only open, public, and adverseclaims to the INVENTION identified in theamended complaint are the defendants' multiplepending patent applications which named Lee andTeng as inventors. See id. ¶ 89; see also id. ¶¶

47(c), 56-59, 61-62, 73-75.

[5] In remanding the second cause of action,the district court noted that “Plaintiffs aver thatthey are not contesting patents or patent applica-tions, but are instead seeking declaratory judgmenton the issue of inventorship under state commonlaw.” FN2 HIF Bio, Inc., 2006 WL 6086295, at *4.The district court then cited to a 1944 New JerseyDistrict Court case, Bohlman v. Am. Paper Goods,53 F.Supp. 794 (D.N.J.1944), and concluded that aright of inventorship is a “valid state law claim[ ].”HIF Bio, Inc., 2006 WL 6086295, at *4.

FN2. Despite their averments to the con-trary, the plaintiffs' complaint states:“PLAINTIFFS also allege, in the alternat-ive, that jurisdiction with respect to theFirst and Second Claims of Relief is alsoproper under 28 U.S.C. § 2201(a) and 28U.S.C. § 1338.” FAC ¶ 2.

The district court erred in concluding that thesecond cause of action presented a *1353 validstate law claim. This court has held that “the fieldof federal patent law preempts any state law thatpurports to define rights based on inventorship.”Univ. of Colo. Found. v. Am. Cyanamid Co., 196F.3d 1366, 1372 (Fed.Cir.1999). In so holding, thecourt stated:

An independent inventorship standard under statelaw would likely have different requirements andgive rise to different remedies than federal patentlaw. A different state inventorship standard mightgrant property rights to an individual who wouldnot qualify as an inventor under federal patentlaw, or might grant greater relief to inventorsthan is afforded by federal patent law. Either situ-ation might frustrate the dual federal objectivesof rewarding inventors and supplying uniform na-tional patent law standards.

Id.; see also Bd. of Regents, Univ. of Tex. Sys.v. Nippon Tel. & Tel., 414 F.3d 1358, 1363(Fed.Cir.2005) (“[T]his court has held that issues of

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inventorship, infringement, validity and enforceab-ility present sufficiently substantial questions offederal patent law to support jurisdiction under sec-tion 1338(a).”).

The amended complaint defines the“INVENTION” solely in terms of the pending pat-ent applications. See, e.g., FAC ¶ 86 (listing de-fendants' multiple patent applications that “falselyand fraudulently claim that [Lee and Teng] are theinventors/discovers of the INVENTION”); id. ¶ 89(same). Therefore, the only possible theory uponwhich relief could be granted to the plaintiffs wouldbe one in which determining the true inventor(s) ofcompeting patent applications is essential. Becauseinventorship is a unique question of patent law, thecause of action arises under § 1338(a). See Christi-anson, 486 U.S. at 809, 108 S.Ct. 2166 (holdingthat § 1338(a) jurisdiction extends to a cause of ac-tion in which “patent law is a necessary element”);Bd. of Regents, Univ. of Tex. Sys., 414 F.3d at 1363.The district court's contrary finding is erroneous.

[6] However, because this dispute involvespending patent applications, the plaintiffs' reques-ted relief-a declaration of the “true” inventor-is tan-tamount to a request for either a modification of in-ventorship on pending patent applications or an in-terference proceeding. See, e.g., Larson v. CorrectCraft, Inc., 569 F.3d 1319, 1325 (Fed.Cir.2009)(“We have treated requests for declaratory relief re-lating to inventorship as functional equivalents ofactions formally brought pursuant to [35 U.S.C.] §256.”); Consol. World Housewares, Inc. v. Finkle,831 F.2d 261, 263-65 (Fed.Cir.1987) (equating acomplaint which asked the district court “to declarethe true inventor or inventors” to a request for aninterference). Plaintiffs' requested relief can only begranted by the Director of the United States Patentand Trademark Office. See 35 U.S.C. §§ 116,135(a). Section 116 authorizes the Director of thePatent and Trademark Office to take certain actionsconcerning pending patent applications, but“plainly does not create a cause of action in the dis-trict courts to modify inventorship on pending pat-

ent applications.” Eli Lilly & Co. v. Aradigm Corp.,376 F.3d 1352, 1356 n. 1 (Fed.Cir.2004). Similarly,§ 135(a) provides the PTO with the exclusive rightto conduct an interference proceeding. See Consol.World Housewares, Inc., 831 F.2d at 265. Whilethe question of who invented an invention disclosedin pending patent applications is a question of fed-eral patent law, Congress, through §§ 116 and135(a), has limited the avenues by which such in-ventorship can be contested.

Despite the statute's language, some districtcourts have held that § 116 provides a private rightof action to challenge inventorship of a pendingpatent application. See, e.g., *1354Kosower v.Gutowitz, No. 00 CIV. 9011, 2001 WL 1488440, at*7 (S.D.N.Y. Nov. 21, 2001); Heineken TechnicalServs. v. Darby, 103 F.Supp.2d 476, 479(D.Mass.2000). Other district courts, following ourdecision in Eli Lilly, have interpreted § 116 as fore-closing private actions in district court. See, e.g.,Stevens v. Broad Reach Cos., L.L.C., 2006 WL1556313, *4-*8 (W.D.Mo.2006); Sagoma Plastics,Inc. v. Gelardi, 366 F.Supp.2d 185, 190(D.Me.2005) (holding that a cause of action under §116 invokes § 1338(a) jurisdiction, but is insuffi-cient to state a claim under Rule 12(b)(6)).

[7] To the extent Eli Lilly failed to resolve thisissue, we expressly hold that § 116 does notprovide a private right of action to challenge in-ventorship of a pending patent application. Once apatent issues, however, 35 U.S.C. § 256 provides aprivate right of action to challenge inventorship,and such a challenge arises under § 1338(a). Lar-son, 569 F.3d at 1324-25 (“There is no doubt that §256 supplies such a valid basis for federal jurisdic-tion: an action to correct inventorship under § 256‘aris[es] under’ the patent laws for the purpose of §1338(a).” (alterations in original)).

Given their proper import, §§ 116 and 135(a)preclude the district court from granting plaintiffs'requested relief-a declaration of the “true” inventorof a pending patent application. Accordingly, whilethe district court has jurisdiction over the cause of

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action, it should have dismissed the claim underRule 12(b)(6) because no private right of action ex-ists. See Litecubes, LLC v. N. Light Prods., Inc.,523 F.3d 1353, 1361 (Fed.Cir.2008) (“[If] the com-plaint fails to allege a cause of action upon whichrelief can be granted, this ‘failure to state a propercause of action calls for a judgment on the meritsand not for a dismissal for want of jurisdiction.’ ”(quoting Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct.773, 90 L.Ed. 939 (1946))).

B. The Remaining Causes of ActionThe question remains, however, whether the re-

maining nine causes of action arise under the patentlaws. Because these causes of action are not directcreatures of patent law, the district court had juris-diction only if plaintiffs' “right to relief necessarilydepends on the resolution of a substantial questionof federal patent law, in that patent law is a neces-sary element of the well-pleaded claims.” Christi-anson, 486 U.S. at 808-09, 108 S.Ct. 2166.Moreover, “[i]f on the face of a well-pleaded com-plaint there are ... reasons completely unrelated tothe provisions and purposes of [the patent laws]why the [plaintiff] may or may not be entitled to therelief it seeks, then the claim does not arise underthose laws.” Id. at 810, 108 S.Ct. 2166 (alterationsin original) (citations and internal quotation marksomitted). “[A] claim supported by alternative theor-ies in the complaint may not form the basis for §1338(a) jurisdiction unless patent law is essential toeach of those theories.” Id.

CTI contends that the resolution of a patent lawissue-inventorship-is necessary to resolve the re-maining causes of action. As noted above, thiscourt has held that “the field of federal patent lawpreempts any state law that purports to define rightsbased on inventorship.” Univ. of Colo., 196 F.3d at1372. Despite this broad language, this court hasemphasized that a claim arises under the patentlaws only if the inventorship issue is essential to theresolution of the claim. Bd. of Regents, Univ. ofTex. Sys., 414 F.3d at 1363; Thompson v. MicrosoftCorp., 471 F.3d 1288, 1291-92 (Fed.Cir.2006).

Moreover, the appearance of “an alternative, non-patent theory” which may entitle the plaintiffs totheir requested relief compels the conclusion thatthe cause of action does not arise under the patentlaws. Christianson, 486 U.S. at 813, 108 S.Ct.2166; *1355 Am. Tel. & Tel. Co. v. Integrated Net-work Corp., 972 F.2d 1321, 1324 (Fed.Cir.1992)(“Under Christianson, every theory of a claim aspled must depend on patent law if there is to be fed-eral jurisdiction.”).

[8][9] The only other cause of action in whichpatent law is essential is plaintiffs' fourth cause ofaction-slander of title. Under California commonlaw, the elements of slander of title are: publica-tion, falsity, absence of privilege, and disparage-ment of another's title which is relied upon by athird party and which results in a pecuniary loss.See Smith v. Commonwealth Land Title Ins. Co.,177 Cal.App.3d 625, 630, 223 Cal.Rptr. 339 (1986). The complaint alleges that the defendants haveslandered plaintiffs' title “to the INVENTION, andthe claim of inventorship/discovery of the same.”FAC ¶ 173. The “INVENTION” is the only prop-erty interest in which the plaintiffs allege they havetitle. Moreover, as alleged by the plaintiffs, the onlypublic disparagement defendants have made arestatements to the PTO identifying Lee and Teng asinventors of the “INVENTION.” See id. ¶¶ 86, 89.The complaint therefore sets forth only one theorywhich entitles plaintiffs to relief: plaintiffs mustdemonstrate that they invented the INVENTIONfirst and that defendants' public statements of in-ventorship are false and caused the plaintiffs' dam-age. This sole theory requires a determination ofwho invented the “INVENTION.” Because invent-orship is indisputably a question of federal patentlaw, the fourth cause of action invokes federal jur-isdiction, and the district court's decision to remandit was an abuse of discretion. See Hunter Douglas,Inc., 153 F.3d at 1328; Baker v. Kingsley, 387 F.3d649, 656-57 (7th Cir.2004) (“It is an abuse of dis-cretion for a district court to remand a federal claimthat is properly before it.”). Yet, as discussed inSection II.A., § 116 precludes the district court

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from determining the true inventor of an inventiondisclosed in a pending patent application. Accord-ingly, while the cause of action invokes federal jur-isdiction and should not have been remanded, thedistrict court should dismiss it under Rule 12(b)(6)for failure to state a claim for which relief may begranted. See Litecubes, LLC, 523 F.3d at 1361.

Finally, patent law is not essential to plaintiffs'remaining causes of action for declaration of own-ership, conversion, actual and constructive fraud,intentional interference with contractual relationsand prospective economic advantage, negligent in-terference with contractual relations and prospect-ive economic advantage, breach of implied con-tract, and unfair competition and fraudulent busi-ness practices because each cause of action couldbe resolved without reliance on the patent laws.FN3

FN3. The amended complaint also includesa cause of action for “Permanent Injunc-tion.” FAC ¶¶ 215-19. While written as aseparate cause of action, it is more prop-erly understood as a request for injunctiverelief to remedy one of the other causes ofaction. Accordingly, it cannot serve as abasis for jurisdiction.

[10][11] For example, patent law is not essen-tial to plaintiffs' cause of action for conversion. Un-der California law, the elements of conversion are“(1) ownership or right to possession of property,(2) wrongful disposition of the property right of an-other, and (3) damages.” Don King Prods./ Kingvi-sion v. Lovato, 911 F.Supp. 419, 423(N.D.Cal.1995). Because plaintiffs could establishconversion by reference to the defendants' allegedmisappropriation of “experiments, pre-publicationexperimental data, and nonpublic, pre-publicationdrafts of papers,” an alternative, non-patent theoryexists which entitles plaintiffs to relief. See FAC ¶149. Accordingly, the cause of action for conver-sion*1356 does not arise under § 1338(a). SeeChristianson, 486 U.S. at 813, 108 S.Ct. 2166; Am.Tel. & Tel. Co., 972 F.2d at 1324.

[12][13] The cause of action for intentional in-terference with contractual relations and prospect-ive economic advantage also does not arise under §1338(a). Intentional interference with contractualrelations and prospective economic advantage re-quires proof of “(1) an economic relationshipbetween the plaintiff and some third person con-taining the probability of future economic benefit tothe plaintiff; (2) knowledge by the defendant of theexistence of the relationship; (3) intentional acts onthe part of the defendant designed to disrupt the re-lationship; (4) actual disruption of the relationship;and (5) proximately caused damages.” Don KingProds./ Kingvision, 911 F.Supp. at 423-24. Whilerelevant, a determination of inventorship is not es-sential to any of the five elements of intentional in-terference with contractual relations and prospect-ive economic advantage because the “intentionalacts on the part of the defendant[s]” could consistof their alleged misappropriation of “experiments,pre-publication experimental data, and non-public,pre-publication drafts of papers.” See, e.g., Bd. ofRegents, Univ. of Tex. Sys., 414 F.3d at 1363-64(holding that patent law was not essential to a claimfor tortious interference); FAC ¶ 149. The same istrue for the closely related cause of action for negli-gent interference with contractual relations and pro-spective economic advantage. See J'Aire Corp. v.Gregory, 24 Cal.3d 799, 806, 157 Cal.Rptr. 407,598 P.2d 60 (1979).

[14][15][16] Inventorship is likewise not essen-tial to the causes of action for fraud, unfair compet-ition, breach of implied contract, or ownership.With respect to fraud, plaintiffs' complaint allegesthat the defendants made continued promises ofcollaboration which induced plaintiffs into provid-ing non-public and valuable research data to de-fendants. FAC ¶¶ 40-50, 181-84. As pled, thesenon-patent related facts could be sufficient to estab-lish fraud. See Small v. Fritz Cos., Inc., 30 Cal.4th167, 132 Cal.Rptr.2d 490, 65 P.3d 1255, 1258(2003) (“The elements of fraud, which gives rise tothe tort action for deceit, are (a) misrepresentation(false representation, concealment, or nondisclos-

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ure); (b) knowledge of falsity (or scienter); (c) in-tent to defraud, i.e., to induce reliance; (d) justifi-able reliance; and (e) resulting damage.” (citationsand internal quotations marks omitted)). Similarly,plaintiffs' claim for unfair competition and fraudu-lent business practices could be resolved solely onthis theory of fraud which does not require relianceon patent law. See Cal. Bus. & Prof.Code § 17200(West 2008) (defining unfair competition as includ-ing “any unlawful, unfair or fraudulent business actor practice”). Next, plaintiffs' cause of action forbreach of implied contract does not arise under §1338(a) because it could be resolved by referenceto the defendants' alleged failure to keep theirpromises not to misappropriate or commercializethe INVENTION. See FAC ¶ 38; Uroplasty, Inc. v.Advanced Uroscience, Inc., 239 F.3d 1277, 1280(Fed.Cir.2001) (holding that breach of contractclaims did not arise under § 1338 because theclaims could be adjudicated “without resolving asubstantial patent issue”); Aronson v. Quick PointPencil Co., 440 U.S. 257, 262, 99 S.Ct. 1096, 59L.Ed.2d 296 (1979) (“State law is not displacedmerely because the contract relates to intellectualproperty which may or may not be patentable....”).Finally, the ownership dispute could be resolvedwithout a determination of who invented the IN-VENTION. The amended complaint's allegationthat the defendants' conduct gave rise to an impliedcontract between the parties could form the basisfor resolving the ownership dispute*1357 becausethat implied contract could dictate which partyowns the INVENTION. See Consol. World House-wares, Inc., 831 F.2d at 265 (“That a contract ac-tion may involve a determination of the true invent-or does not convert that action into one ‘arising un-der’ the patent laws.”). Accordingly, the request fora declaration of ownership does not arise under §1338(a).

[17] Plaintiffs' eleventh cause of action-“UnjustEnrichment-Constructive Trust”-deserves specificanalysis to avoid creating any confusion in our pre-cedent. In University of Colorado, this court foundthe issue of inventorship to be essential to a cause

of action for unjust enrichment. See 196 F.3d at1372. In that case, which did not address § 1338(a)jurisdiction, the plaintiff did not allege any alternat-ive, non-patent facts which would entitle it to relief.See id. (“[T]he University's fraudulent nondisclos-ure and unjust enrichment claims depend on theDoctor's status as inventors.”). Here, conversely,the amended complaint broadly alleges that the de-fendants' “unauthorized taking and use of propertyand assets rightfully belonging to Plaintiffs” consti-tuted unjust enrichment. FAC ¶ 211. Again, an in-ventorship determination could be relevant to thecause of action, but, unlike in University of Color-ado, an alternative, non-patent theory in which themisappropriated “property and assets” consist ofplaintiffs' “experiments, pre-publication experi-mental data, and non-public, pre-publication draftsof papers” exists. See Christianson, 486 U.S. at810, 108 S.Ct. 2166; Thompson v. Microsoft Corp.,471 F.3d 1288, 1291-92 (Fed.Cir.2006) (holdingthat a claim for unjust enrichment did not arise un-der the patent laws because resolution of an invent-orship issue was not essential to the claim). There-fore, plaintiffs' eleventh cause of action also doesnot arise under § 1338(a).

C. Abuse of DiscretionBecause the second and fourth causes of action

arise under § 1338(a), the district court abused itsdiscretion in remanding the First Amened Com-plaint to state court. See Hunter Douglas, Inc., 153F.3d at 1328; Baker, 387 F.3d at 656-57. However,on remand the district court should dismiss thesecond and fourth causes of action under Rule12(b)(6) because plaintiffs have failed to state aclaim upon which relief can be granted. Pursuant to28 U.S.C. § 1367(c), the district court has discre-tion to decide on remand whether to exercise sup-plemental jurisdiction over the remaining causes ofaction.

CONCLUSIONFor the foregoing reasons, we reverse the dis-

trict court's remand of the First Amended Com-plaint, and remand for further proceedings consist-

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ent with this opinion.

REVERSED AND REMANDED

Each party shall bear its own costs for this ap-peal.

C.A.Fed. (Cal.),2010.HIF Bio, Inc. v. Yung Shin Pharmaceuticals Indus.Co., Ltd.600 F.3d 1347, 94 U.S.P.Q.2d 1286

Briefs and Other Related Documents (Back to top)

• 2010 WL 1975803 (Appellate Petition, Motion orFiling) Defendant-Appellant's Petition for Rehear-ing and Rehearing En Banc (Apr. 29, 2010) Origin-al Image of this Document with Appendix (PDF)• 2009 WL 2356570 (Appellate Brief) Defendant-Appellant's Initial Supplemental Brief On Remandfrom the U.S. Supreme Court (Jul. 8, 2009) Origin-al Image of this Document (PDF)• 2007 WL 4676154 (Appellate Petition, Motion orFiling) Defendant-Appellant's Petition for Rehear-ing and Rehearing En Banc (Dec. 11, 2007)• 2007 WL 869882 (Appellate Brief) Reply Brief ofDefendant-Appellant Carlsbad Technology, Inc.(Mar. 7, 2007)• 2007 WL 869881 (Appellate Brief) Brief ofPlaintiffs-Appellees (Feb. 23, 2007)• 2006 WL 3937984 (Appellate Brief) Brief of De-fendant-Appellant Carlsbad Technology, Inc. (Dec.13, 2006) Original Image of this Document withAppendix (PDF)

Judges and Attorneys(Back to top)

Judges | Attorneys

Judges

• Gajarsa, Hon. Arthur J.United States Court of Appeals, Federal CircuitWashington, District of Columbia 20439Litigation History Report | Judicial Reversal Report

| Profiler

• Holderman, Hon. James Franklin Jr.United States District Court, Northern IllinoisChicago, Illinois 60604Litigation History Report | Judicial Motion Report |Judicial Reversal Report | Judicial Expert ChallengeReport | Profiler

• Michel, Hon. Paul RedmondUnited States Court of Appeals, Federal CircuitWashington, District of Columbia 20439Litigation History Report | Judicial Reversal Report| Profiler

• Pregerson, Hon. Dean D.United States District Court, Central CaliforniaLos Angeles, California 90012Litigation History Report | Judicial Motion Report |Judicial Reversal Report | Judicial Expert ChallengeReport | Profiler

Attorneys

Attorneys for Defendant• Byerly, Stephanie M.Irvine, California 92614Litigation History Report | Profiler

• Gabler, Julie S.Los Angeles, California 90071Litigation History Report | Profiler

• Mulholland, Jesse D.Irvine, California 92614Litigation History Report | Profiler

• Rhodes, Glenn W.Taipei, Unknown StateLitigation History Report | Profiler

• Stanley, Richard L.Houston, Texas 77002Litigation History Report | Profiler

Attorneys for Plaintiff

Page 12600 F.3d 1347, 94 U.S.P.Q.2d 1286(Cite as: 600 F.3d 1347)

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• Lee, Bub-Joo S.Los Angeles, California 90071Litigation History Report | Profiler

END OF DOCUMENT

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