Using Patent As Evidence to Support State Law Claims Does Not Invoke Federal Jurisdiction

In Intellisoft, Ltd. v. Acer America Corp., No. 2019-1522 (Fed. Cir. Apr. 3, 2020), the Federal Circuit held that Intellisoft’s state law claim accusing Acer of disclosing trade secrets did not arise under federal patent law and should not have been removed to federal district court.

Intellisoft and Bruce Bierman filed suit against Acer in California state court, claiming that Acer had violated a non-disclosure agreement by including Intellisoft’s trade secrets in Acer’s patent application. Intellisoft’s expert also concluded that Bierman should have at least been named a co-inventor on the patent. Shortly before trial, Acer filed a cross-complaint seeking a declaratory judgment that Bierman was not an inventor on the patent. Acer then removed the action to federal court in the Northern District of California, asserting that Intellisoft’s trade secret claim arose under federal patent laws for correction of inventorship. Intellisoft moved the district court to remand, which was denied. The district court then granted summary judgment for Acer. Intellisoft appealed.

On appeal, the Federal Circuit held that removal to district court was improper because the claim did not require resolution of patent law issues. Rather, Intellisoft only needed to establish ownership of its trade secrets under California state law—not inventorship under patent law. Intellisoft’s presentation of the Acer patent as evidence similarly did not invoke federal law, because Intellisoft needed to prove only that Acer misappropriated its trade secrets under state law. The court thus held that Intellisoft’s claim did not raise federal patent law issues.

The court also rejected Acer’s argument that removal was proper because Acer’s counterclaim asserted a federal issue. The Federal Circuit held that Acer’s cross-complaint, filed after the due date for filing without leave of court, was not legally operative and therefore did not create federal jurisdiction.

The Federal Circuit thus vacated, reversed, and remanded the district court’s judgment with instructions to remand the action to California state court.