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Mere “Presence of Patent” in Alleged Facts Not Sufficient to Invoke Federal Jurisdiction for Complaint Not Grounded in Patent Law

February 08, 2001

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Last Month at the Federal Circuit - March 2001

Judges: Mayer (author), Michel, and Dyk

In Uroplasty, Inc. v. Advanced UroScience, Inc., No. 00-1185 (Fed. Cir. Feb. 8, 2001), the Federal Circuit vacated and remanded a decision from the U.S District Court for the District of Minnesota with instructions to dismiss for lack of jurisdiction.

This case arises from research conducted by Uroplasty, Inc. (“Uroplasty”) and its subsidiary Bioplasty, Inc. (“Bioplasty”) to create bulking agents for urinary incontinence. Uroplasty took issue with actions by Timothy Lawin, a former employee of Bioplasty, when he filed a patent application as coinventor for pyrolitic carbon-coated microparticles that later issued as U.S. Patent No. 5,451,406 (“the ‘406 patent”). While working at Bioplasty, Lawin had executed many agreements in connection with his employment that restricted his use and disclosure of Bioplasty trade secrets. These agreements also contained noncompetition provisions. At the time he filed his application, Lawin was CEO and Chairman of Brennan Medical (“Brennan”) and Chairman of Advanced UroScience, Inc. (“UroScience”).

In 1994, Lawin sued Bioplasty seeking indemnification for a 1991 lawsuit against Lawin and Bioplasty. As a settlement, Bioplasty released Lawin and Brennan “from all actions which Bioplasty or its creditors may then or in the future have ‘arising out of or in connection with, the prior actions of the parties to the agreement.’”

In this case, Uroplasty originally sued Lawin, UroScience, and Brennan in Minnesota state court, alleging trade secret misappropriation, breach of fiduciary duty, and breach of contract. As part of their defense, UroScience and Lawin removed the case to federal district court, citing an interference filed by Uroplasty against the ‘406 patent that allegedly called into question whether the application and patent are in any way based upon confidential information and trade secrets.

The district court granted SJ, finding no trade secret misappropriation and finding that UroScience did not breach its contracts with or fiduciary duties to Uroplasty because those claims relied on proof of trade secret misappropriation. Uroplasty appealed.

The issue before the Federal Circuit was whether the asserted claims can invoke federal jurisdiction. The Court stated the familiar rule on removal: “A case may only be removed from state to federal court if it originally could have been brought in federal court.” 28 U.S.C. § 1441 (1994). Citing AT&T Co. v. Integrated Network Corp., 972 F.2d 1321 (Fed. Cir. 1992), the Court ruled that the mere existence of a patent that resulted from misappropriation of trade secrets, breach of fiduciary duty, or breach of contract was not sufficient to invoke federal jurisdiction. Those claims and elements can be decided without requir - ing the resolution of a substantial issue of patent law. Thus, the district court did not have jurisdiction, and the Court remanded with instructions to dismiss.