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U.S. District Court Lacked Supplemental Jurisdiction Under 28 U.S.C. § 1367 over Infringement Claims Based on Foreign Patents

February 01, 2007

Decision icon Decision

Last Month at the Federal Circuit - March 2007

Judges: Newman (dissenting), Gajarsa (author), Prost

[Appealed from: W.D. Okla., Judge Leonard]

In Voda v. Cordis Corp., No. 05-1238 (Fed. Cir. Feb. 1, 2007), the Federal Circuit, on interlocutory appeal, held that the district court had erred in granting supplemental subject matter jurisdiction under 28 U.S.C. § 1367 over foreign patent infringement claims.

All the patents at issue relate generally to angioplasty guide catheters. All three U.S. patents, U.S. Patent Nos. 5,445,625 (“the ’625 patent”), 6,083,213 (“the ’213 patent”), and 6,475,195 (“the ’195 patent”), stemmed from a common CIP application. The foreign patents issued from a common PCT application.

Jan K. Voda, M.D. sued Cordis Corporation (“Cordis”) alleging infringement of Voda’s three U.S. patents. Cordis pleaded noninfringement and invalidity of the U.S. patents. Voda then moved to amend his complaint to add claims from the European, British, Canadian, French, and German patents that issued from the PCT application, asserting that the catheter covered by the U.S. patents is also covered by the foreign patents. Cordis opposed Voda’s attempt to amend his complaint and asserted that the district court lacked subject matter jurisdiction over such claims. The parties briefed the issue as to whether the court had jurisdiction over foreign patent infringement claims under 28 U.S.C. § 1367(a) and its discretion to exercise supplemental jurisdiction under § 1367(c). The district court granted Voda’s motion based on two circuit court cases, determining that Ortman v. Stanray, 371 F.2d 154 (7th Cir. 1967) (finding jurisdiction), had more similarity to the facts at hand than Mars, Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368 (Fed. Cir. 1994) (finding no jurisdiction). Cordis appealed.

The Federal Circuit held that a proper exercise of subject matter jurisdiction under § 1367 requires not just the presence of jurisdiction under subsection (a), but also an appropriate decision to exercise that jurisdiction under subsection (c), and concluded that the district court had erred under subsection (c). However, the Federal Circuit stated that “the critical disputed issue is whether there is any statutory basis for such subject matter jurisdiction.” Slip op. at 7. Because Voda’s assertion of the district court’s jurisdiction was based solely on 28 U.S.C. § 1367, the Federal Circuit did not consider other rationales for judicial authority to apply foreign law.

The Federal Circuit briefly discussed the four limits on the reach of § 1367(a) and concluded that the only § 1367(a) issue was whether Voda’s claims of foreign patent infringement are part of the same case or controversy under Article III. The Court then conducted a legal analysis of the requirements for a “common nucleus of operative fact” under the standard first set forth in United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966), as elucidated by the Federal Circuit’s case in Mars. However, because the district court’s order failed to articulate any findings regarding the Mars factors, and because the Federal Circuit held that the district court abused its discretion under § 1367(c), the Court deemed it “to be the more prudent course not to decide this ‘common nucleus of operative fact’ question in the first instance.” Slip op. at 13. The Court also discussed that some ambiguity exists as to whether § 1367(a) also requires a determination that the district court would “ordinarily be expected to try [domestic and foreign patent infringement claims] all in one proceeding.” Id. (alteration in original). Once again, the Court did not reach this issue, citing the district court’s abuse of discretion under § 1367(c).

The Federal Circuit reviewed the district court’s decision not to decline supplemental jurisdiction under an abuse of discretion standard. The Federal Circuit relied on the Supreme Court’s statement that “a federal court should consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity.” Id. at 17 (citation omitted). Finding that the district court’s order contained no § 1367(c) analysis, the Federal Circuit held that the district court abused its discretion by assuming jurisdiction. The Court then analyzed the legal values enumerated by the Supreme Court, including having “treaties as the supreme law of the land.” Thus, the Federal Circuit held that (a) not one of the Paris Convention, the Patent Cooperation Treaty (PCT), or the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) contemplates or allows one jurisdiction to adjudicate patents of another; (b) the purpose underlying comity would not be furthered, and would be potentially hindered, by the adjudication of the foreign claims; (c) lack of institutional competence and likelihood of jury confusion weighed heavily against judicial economy; (d) convenience, like judicial economy, was not discussed in the district court’s order, further showing abuse of discretion; and (e) the act of state doctrine may render the exercise of supplemental jurisdiction over foreign patent infringement claims fundamentally unfair, and none of the parties have shown that the grant of a patent by a sovereign is not an act of state.

Accordingly, the Federal Circuit held that several reasons would have compelled the district court to decline jurisdiction if it had undergone the proper analysis, and that the district court abused its discretion in exercising supplemental jurisdiction.

Judge Newman dissented, stating that the majority essentially held that the district court did not have discretion to accept supplemental jurisdiction because the subject matter involved foreign patents. She pointed out that U.S. courts routinely decide issues of foreign law, and that it was inappropriate for the Federal Circuit to carve out a “unique exception to the authority of American courts to resolve controversies that require the application of foreign law.” Dissent at 3. Judge Newman further argued that 28 U.S.C. § 1367 pertains to the relationship between federal and state law, and does not affect judicial authority to decide matters of foreign law. Finally, in Judge Newman’s view, the majority did not properly apply the abuse of discretion standard, and that the majority’s reliance on the rules of supplemental jurisdiction did not support its holding.