Camsoft Data Systems, Inc. v. Southern Electronics Supply, Inc.

Case: 15-30133 Document: 00513201376 Page: 1 Date Filed: 09/21/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 15-30133 September 21, 2015
Lyle W. Cayce
CAMSOFT DATA SYSTEMS, INCORPORATED, Clerk
Plaintiff–Appellant,
v.
SOUTHERN ELECTRONICS SUPPLY, INCORPORATED; ACTIVE
SOLUTIONS, L.L.C.; BRIAN FITZPATRICK; HENRY J. BURKHARDT;
IGNACE PERRIN; DELL, INCORPORATED; NETMETHODS, L.L.C.;
MARK ST. PIERRE; CIBER, INCORPORATED; MARK KURT,
Defendants–Appellees.
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:09-CV-1047
Before KING, DENNIS, and OWEN, Circuit Judges.
PER CURIAM:*
CamSoft Data Systems, Inc. (CamSoft) filed a motion to remand to state
court for lack of subject-matter jurisdiction. 1 In a previous appeal, we held
that the district court erred by denying the motion for remand. 2 CamSoft
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1 Camsoft Data Sys., Inc. v. S. Elec. Supply, Inc., 756 F.3d 327, 340 (5th Cir. 2014).
2 Id.Case: 15-30133 Document: 00513201376 Page: 2 Date Filed: 09/21/2015
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subsequently moved for costs and attorney’s fees under 28 U.S.C. § 1447(c),
which the district court denied. We affirm.
I
When determining subject-matter jurisdiction, we accept as true the
allegations stated in the complaint. 3 Because the availability of attorney’s fees
and costs under § 1447(c) turns on whether the removing party had an
“objectively reasonable basis” for believing the district court had subject-
matter jurisdiction, 4 our recitation of the facts also relies on the allegations set
forth in CamSoft’s state-court petition.
CamSoft became a licensed provider of a wireless internet system owned
by Tropos Networks, Inc. (Tropos), which allowed for seamless wireless
internet access on a city-wide scale. After successfully deploying free wireless
internet access in downtown Baton Rouge, CamSoft’s owner, Carlo MacDonald,
learned that New Orleans was interested in implementing a city-wide video
surveillance system. CamSoft began working with Active Solutions, LLC
(Active) and Southern Electronics Supply, Inc. (Southern) to develop such a
system. CamSoft was responsible for, inter alia, integrating the wireless
internet technology into the system.
CamSoft, Active, and Southern deployed the surveillance system in a
successful pilot project in New Orleans. The three entities then “formed a joint
venture for the future sale of said wireless surveillance system” and submitted
proposals to install the system in Baton Rouge and on a larger scale in New
Orleans.
Shortly before the New Orleans proposal was submitted, Dell, Inc. (Dell)
arranged a meeting with Active, Southern, and New Orleans officials without
3Crane v. Johnson, 783 F.3d 244, 250-51 (5th Cir. 2015) (citing Choice Inc. of Tex. v.
Greenstein, 691 F.3d 710, 714 (5th Cir. 2012)).
4 Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).
2
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CamSoft’s knowledge. Dell had an existing contract to provide technology to
the State of Louisiana and could use that contract to circumvent bidding
requirements for public projects. Dell allegedly sought to replace CamSoft in
the joint venture and provide cameras and the Tropos wireless internet
technology for the surveillance system. Southern and Active executed non-
disclosure agreements with Dell and provided Dell with proprietary
information belonging to CamSoft.
Former New Orleans officials who had worked on the pilot project formed
NetMethods, LLC (NetMethods). NetMethods eventually joined forces with
Dell and Tropos to market a wireless surveillance system, allegedly using
intellectual property that belonged to Southern, Active, and CamSoft. In other
words, after attempting to cut CamSoft out of the joint venture, Southern and
Active were themselves cut out of their arrangement with Dell and replaced by
NetMethods.
Active and Southern filed suit against Dell. CamSoft alleges that Active
and Southern’s complaint “erroneously failed to acknowledge the ownership
rights of CamSoft to the wireless video surveillance system.”
After unsuccessfully attempting to intervene in the suit against Dell, 5
CamSoft filed suit against Active and Southern in Louisiana state court,
seeking to have its ownership rights in the surveillance system declared and
seeking a share of the proceeds of Active and Southern’s suit against Dell.
CamSoft’s state-court petition also alleged that Active and Southern filed a
patent application for the wireless surveillance system, which failed to
acknowledge CamSoft or MacDonald as an inventor of the system. The petition
did not seek relief under any cause of action provided by the federal patent
laws. Rather, CamSoft relied on various statutory causes of action in
5 Camsoft, 756 F.3d at 330-31.
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Louisiana state law as well as breach of fiduciary duty and breach of contract.
CamSoft later filed an amended petition, adding several defendants including
Dell, Tropos, and NetMethods. No party contends that the claims added in the
amended petition are relevant in the present appeal.
On December 14, 2009, the defendants removed CamSoft’s suit to federal
district court. They alleged that the dispute over the ownership of the
surveillance system necessarily required the resolution of a substantial
question of federal patent law—inventorship of the surveillance system.
CamSoft timely filed a motion to remand for lack of federal subject-
matter jurisdiction. The magistrate judge entered a report that recommended
denial of the motion for remand. The magistrate concluded that CamSoft’s
claim of ownership of the surveillance system, while grounded in Louisiana
state law, necessarily required resolution of the question of inventorship under
federal patent law. The magistrate further concluded that CamSoft did not
allege any alternative theories of ownership. The district court accepted the
magistrate’s analysis without comment and denied the motion for remand.
Pursuant to 28 U.S.C. § 1292(b), CamSoft moved for permission to file
an interlocutory appeal of the order denying its motion to remand. The district
court denied this motion.
CamSoft contends that because it was unable to obtain interlocutory
review, it feared it would have had to spend several years litigating the case to
final judgment in the district court, only to have that judgment vacated on
appeal for lack of subject-matter jurisdiction. Therefore, to ensure that the
district court had subject-matter jurisdiction, CamSoft filed an amended
complaint adding claims under federal antitrust laws and the federal RICO
statute. CamSoft’s amended complaint also alleged an alternative basis for
ownership of the surveillance system. Although the CamSoft’s state court
petition alleged that it had formed a joint venture with Southern and Active,
4
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the amended federal complaint expressly maintained that the joint venture
also gave CamSoft an ownership interest in the surveillance system.
The district court dismissed CamSoft’s claims based on a joint venture
as well as the RICO and federal antitrust claims. The district court initially
concluded that the remaining claims still required resolution of a substantial
question of patent law. But the court later asked the parties to outline their
remaining claims. After reviewing the parties’ outlines, the district court
concluded that although it originally had federal question jurisdiction, all of
the federal causes of action had been dismissed. The court then sua sponte
declined to exercise supplemental jurisdiction over the remaining state-law
claims, pursuant to 28 U.S.C. § 1367(c), and remanded the case to state court.
The disposition of the purported question of patent law that was initially
critical to the district court’s jurisdiction is not clear from the record.
The parties then filed cross appeals in the Federal Circuit. CamSoft
sought to appeal, inter alia, the district court’s order denying its motion for
remand for lack of subject-matter jurisdiction. Although the district court had
remanded pursuant to § 1367(c), the § 1367(c) remand would have left
undisturbed the district court’s orders dismissing several of CamSoft’s claims,
whereas these unfavorable orders would be vacated if the district court lacked
subject-matter jurisdiction. 6 The defendants appealed the district court’s order
remanding pursuant to § 1367(c). The Federal Circuit concluded that it lacked
subject-matter jurisdiction over the appeals under 28 U.S.C. § 1295(a)(1) 7 and
transferred the appeals to our court.
6 See id. at 340.
728 U.S.C. § 1295(a)(1) (“The United States Court of Appeals for the Federal Circuit
shall have exclusive jurisdiction . . . of an appeal from a final decision of a district court of
the United States . . . in any civil action arising under . . . any Act of Congress relating to
patents.”).
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We held that the district court erred by denying CamSoft’s motion to
remand. 8 We explained that federal jurisdiction at removal turned only on “an
inventorship assertion implicit in Cam[S]oft’s ownership claim.” 9 We
concluded that we need not determine whether CamSoft made an implicit
inventorship assertion because 35 U.S.C. § 116, which addresses inventorship
of pending patent applications, does not provide the federal district courts with
jurisdiction. 10 Rather, we held that only the Patent and Trademark Office has
the power to adjudicate § 116 claims. 11 We therefore concluded that CamSoft’s
motion to remand should have been granted, upheld the district court’s remand
order, and vacated all of the district court’s orders other than the remand
order. 12
CamSoft then moved in the district court for costs and attorney’s fees
pursuant to 28 U.S.C. § 1447(c). The district court denied CamSoft’s motion
on two grounds. First, the district court concluded that the defendants “did
not lack an objectively reasonable basis for removal.” Second, the district court
explained that by adding the RICO and federal antitrust claims, CamSoft
“played a significant role in prolonging the suit’s stay in federal court.”
CamSoft timely appealed.
8 Camsoft, 756 F.3d at 333-37.
9 Id. at 333.
10 Id. at 333-36.
11 Id. at 334.
12 Id. at 336, 340.
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II
We review the district court’s decision not to award costs and attorney’s
fees under § 1447(c) for abuse of discretion. 13 Under an abuse of discretion
standard, we review a district court’s legal conclusions de novo. 14
As noted above, the district court provided two bases for denying
CamSoft costs and attorney’s fees. The parties dispute whether the first
basis—whether the defendants had an “objectively reasonable basis for
removal”—is a question of law subject to de novo review. CamSoft argues that
because this ground requires “legal analysis” of “patent jurisdiction law” at the
time of removal, our review must be de novo.
This argument cannot be squared with our decision in Admiral
Insurance Co. v. Abshire. 15 In Abshire, the district court granted the plaintiffs’
motion to remand but denied the plaintiffs’ motion for attorney fees under
§ 1447(c) because removal was not “objectively unreasonable.” 16 We concluded
that remand was proper because the district court lacked subject-matter
jurisdiction. 17 On the question of attorney’s fees, we noted that the defendants
only had a single case from our court that spoke to the relevant jurisdictional
issue, and that case “expressly withheld judgment on at least one . . .
dispositive” issue regarding subject-matter jurisdiction. 18 We then explained
that although the defendant’s legal position in support of removal “may have
Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000) (citing Avitts v.
13
Amoco Prod. Co., 111 F.3d 30, 32 (5th Cir. 1997)).
14 See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990) (“A district court
would necessarily abuse its discretion if it based its ruling on an erroneous view of the
law . . . .”).
15 574 F.3d 267 (5th Cir. 2009).
16 Id. at 272.
17 Id. at 279.
18 Id. at 280.
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been ‘objectively unreasonable,’” we could not conclude that the district court
abused its discretion in “reaching the opposite conclusion,” and we affirmed the
district court’s denial of attorney’s fees. 19 Abshire establishes that although
we must determine the state of the law at the time of removal to assess whether
an “objectively reasonable basis” existed for removal, 20 objective
reasonableness is not a question of law reviewed de novo. Therefore, we review
the district court’s determination of objective reasonableness only for abuse of
discretion.
III
“If . . . it appears that the district court lacks subject matter jurisdiction”
prior to final judgment, the district court must remand the case to state court. 21
28 U.S.C. § 1447(c) provides: “An order remanding the case may require
payment of just costs and any actual expenses, including attorney fees,
incurred as a result of the removal.” 22
In Martin v. Franklin Capital Corp., the Supreme Court held that costs
and attorney fees under § 1447(c) should not be awarded automatically upon
remand. 23 Rather, “[a]bsent unusual circumstances, courts may award
attorney’s fees under § 1447(c) only where the removing party lacked an
objectively reasonable basis for seeking removal.” 24 This standard does not
require a showing that the decision to remove was “frivolous” or “without
19Id. at 280-81; see also Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 293 (5th Cir.
2000) (declining to express an opinion on the meaning of Texas state court cases cited by the
defendant in favor of removal beyond the fact that the defendant’s position on these cases
“was not an unreasonable one”).
20 574 F.3d at 280 (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005)).
21 28 U.S.C. § 1447(c).
22 Id.23 546 U.S. at 136.
24 Id. at 141.
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foundation.” 25 To determine objective reasonableness, we must examine, inter
alia, the relevant case law on subject-matter jurisdiction “at the time of
removal.” 26
The defendants filed the notice of removal on December 14, 2009,
asserting that the district court had subject-matter jurisdiction under 28
U.S.C. § 1338(a). Section 1338(a) grants district courts jurisdiction over “any
civil action arising under any Act of Congress relating to patents.” 27 The notice
of removal argued that CamSoft had asserted claims dependent “on the
resolution of substantial questions of federal patent law” regarding
inventorship of the surveillance system.
A
35 U.S.C. § 116 addresses inventorship regarding “application[s] for
patent[s],” 28 whereas 35 U.S.C. § 256 addresses inventorship of “issued
patent[s].” 29 At the time of removal, CamSoft’s petition alleged that the
25 See id. at 138-39.
26 Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 293-94 (5th Cir. 2000); see also
Admiral Ins. Co. v. Abshire, 574 F.3d 267, 280-81 (5th Cir. 2009)
27 28 U.S.C. § 1338(a).
28 Section 116 provides, in relevant part:
Whenever through error a person is named in an application for patent as the
inventor, or through error an inventor is not named in an application, the Director [of
the United States Patent and Trademark Office] may permit the application to be
amended accordingly, under such terms as he prescribes.
29 Section 256 provides:
(a) Whenever through error a person is named in an issued patent as the inventor, or
through error an inventor is not named in an issued patent, the Director may, on
application of all the parties and assignees, with proof of the facts and such other
requirements as may be imposed, issue a certificate correcting such error.
(b) . . . The court before which such matter is called in question may order correction
of the patent on notice and hearing of all parties concerned and the Director shall
issue a certificate accordingly.
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surveillance system was the subject of a patent application that had yet to
issue.
In 2003, the Sixth Circuit had held that § 116 gives discretion solely to
the Director of the U.S. Patent and Trademark Office to correct inventorship
errors regarding pending applications, unlike § 256, which expressly empowers
federal courts to correct inventorship errors relating to issued patents. 30 The
Sixth Circuit therefore concluded that federal district courts lack jurisdiction
to review the inventorship of unissued patents under § 116. 31
In March 2010, the Federal Circuit reached the opposite conclusion in
HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co., holding that
district courts do have jurisdiction over claims under § 116. 32 Although HIF
Bio issued over four months after the defendants filed the notice of removal,
CamSoft acknowledges that several district courts reached the same
conclusion as the Federal Circuit on the jurisdictional question before this case
was removed. 33 Because district court jurisdiction under § 116 was clearly
unsettled at the time this case was removed to federal court, CamSoft relies on
three narrower arguments in support of its motion for costs and attorney’s fees.
B
CamSoft first points to an additional holding in HIF Bio. Although the
Federal Circuit concluded that district courts have jurisdiction over claims
30 E.I. Du Pont de Nemours & Co. v. Okuley, 344 F.3d 578, 583-84 (6th Cir. 2003).
31 Id. at 584.
600 F.3d 1347, 1354 (Fed. Cir. 2010) (“[W]hile the district court has jurisdiction over
32
the cause of action, it should have dismissed the claim under Rule 12(b)(6) because no private
right of action exists.”).
See, e.g., Brown v. Toscano, 254 F.R.D. 690, 695 (S.D. Fla. 2008); Concrete Washout
33
Sys., Inc. v. Minegar Envtl. Sys., Inc., No. CIVS041005WBSDAD, 2005 WL 1683930, at * 3-4
(C.D. Cal. July 12, 2005); Post Performance, LLC v. Renaissance Imports, Inc., 333 F. Supp.
2d 834, 840 (E.D. Mo. 2004); Mieling v. Norkar Techs., Inc., 176 F. Supp. 2d 817, 819 (N.D.
Ill. 2001); Heineken Tech. Servs., B.V. v. Darby, 103 F. Supp. 2d 476, 479 (D. Mass. 2000).
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under § 116, it also concluded that § 116 does not create a private right of
action, such that § 116 claims should be dismissed under Rule 12(b)(6) for
failure to state a claim. 34 CamSoft asserts that in HIF Bio, once the Federal
Circuit determined that the § 116 claim should be dismissed, “remand” to state
court “was warranted for lack [of] ongoing federal subject matter jurisdiction.”
Here, although dismissal on Rule 12(b)(6) grounds would have permitted
the district court to retain jurisdiction over remaining state law claims or
remand them at its discretion, 35 thus depriving CamSoft of the jurisdictional
deficiency necessary to support an award of attorney’s fees under § 1447(c), 36
this court previously concluded that the § 116 claim should have been
dismissed under Rule 12(b)(1), 37 not Rule 12(b)(6), and that the case should
have been remanded pursuant to § 1447(c). 38 CamSoft thus could succeed here
if it were able to show that there was no “objectively reasonable basis” for
removal.
34 HIF Bio, 600 F.3d at 1354.
35 See 28 U.S.C. § 1367(c)(3) (“The district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if . . . (3) the district court has dismissed all
claims over which it has original jurisdiction . . . [.]”).
36 See Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 641 (2009) (holding that
when all federal claims conferring original jurisdiction have been dismissed, the remand
order declining to exercise supplemental jurisdiction pursuant to § 1367(c) “is not based on a
lack of subject matter jurisdiction for purposes of §§ 1447(c) and (d)” (internal quotation
marks omitted)); see also 28 U.S.C. § 1367 (silent on the questions of attorney’s fees or costs);
Fox v. Vice, 131 S. Ct. 2205, 2213 (2011) (“Congress has authorized courts to deviate from
[the default rule requiring each party to bear his own litigation expenses] in certain types of
cases . . . .”); cf. id. at 2211, 2213-17 (addressing the propriety of attorney’s fees pursuant to
42 U.S.C. § 1988 for a prevailing defendant following the district court’s dismissal of a
plaintiff’s federal civil rights claims and the district court’s decision “declin[ing] to exercise
supplemental jurisdiction over the remaining state-law claims”).
37Camsoft Data Sys., Inc. v. S. Elec. Supply, Inc., 756 F.3d 327, 336 (5th Cir. 2014);
FED. R. CIV. P. 12(b)(1) (“lack of subject-matter jurisdiction”).
Camsoft, 756 F.3d at 337-39; 28 U.S.C. § 1447(c) (“If at any time before final
38
judgment it appears that the district court lacks subject matter jurisdiction, the case shall be
remanded.”).
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We note that the district court order on attorney’s fees left open the
possibility that CamSoft could recoup costs under Rule 54, so Rule 54 has no
bearing on our analysis. 39
C
CamSoft next argues that even if the defendants were objectively
reasonable in believing that the district court had jurisdiction over § 116 claims
and that § 116 conferred a private right of action, the question of inventorship,
as a matter of law, is irrelevant to the question of patent ownership.
CamSoft initially points to the fact that, as a corporation, it could neither
invent nor be declared an inventor under the federal patent laws because only
natural persons can be inventors. 40 CamSoft also relies on the distinction
between inventorship and ownership. CamSoft quotes a portion of the Federal
Circuit’s decision in Beech Aircraft Corp. v. EDO Corp., which explains:
It is elementary that inventorship and ownership are
separate issues. . . . Thus, inventorship is a question of who
actually invented the subject matter claimed in a patent.
Ownership, however, is a question of who owns legal title to the
subject matter claimed in a patent, patents having the attributes
of personal property.
. . . . However, who ultimately possesses ownership rights in
that subject matter has no bearing whatsoever on the question of
who actually invented that subject matter. 41
The question of ownership of patents is “generally a matter of state law.” 42
39 FED. R. CIV. P. 54(d)(1) (“Unless a federal statute, these rules, or a court order
provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing
party.”).
40Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248 (Fed. Cir. 1993) (citing 35
U.S.C. § 115-118).
41 Id.42Bd. of Trustees of Leland Stanford Jr. Univ. v. Roche Molecular Sys., Inc., 583 F.3d
832, 846 (Fed. Cir. 2009); cf. Becher v. Contoure Labs., Inc., 279 U.S. 388, 391 (1929).
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CamSoft argues that these tenets of patent law establish that
inventorship is irrelevant to ownership. Beech Aircraft plainly establishes that
the converse is true—i.e., ownership is irrelevant to inventorship. 43 But
CamSoft omits the preceding sentence in Beech Aircraft, which directly
contradicts its argument. The Federal Circuit explained: “At the heart of any
ownership analysis lies the question of who first invented the subject matter
at issue, because the patent right initially vests in the inventor who may then,
barring any restrictions to the contrary, transfer that right to another . . . .” 44
The Federal Circuit has made clear that an ownership claim may, in
some circumstances, turn on the question of inventorship. To be certain, there
will be disputes over ownership in which inventorship is immaterial. For
example, parties may make other arrangements, such as a contract, that result
in the automatic assignment of ownership rights to persons other than the
undisputed inventor. 45 The Federal Circuit noted in HIF Bio that
“[i]nventorship is . . . not essential to . . . causes of action for . . . ownership,” 46
but this language does not rule out the possibility that inventorship might be
relevant to ownership in some cases. The Federal Circuit further explained
43See 990 F.2d at 1248 (“[W]ho ultimately possesses ownership rights in that subject
matter has no bearing whatsoever on the question of who actually invented that subject
matter.”).
44 Id.
45 See, e.g., Leland Stanford Jr. Univ., 583 F.3d at 841-42 (addressing whether a clause
in a contract “effects a present assignment of patent rights, or an agreement to assign rights
in the future”); see also HIF Bio, Inc. v. Yung Shin Pharm. Indus. Co., 600 F.3d 1347, 1356-
57 (Fed. Cir. 2010); cf. Becher, 279 U.S. at 389-90 (undisputed inventor’s suit against
employee who secretly obtained a patent in the employee’s own name was properly resolved
in state court under state-law causes of action establishing ownership of the patent); Beech
Aircraft Corp., 990 F.2d at 1248 (“[T]he patent right initially vests in the inventor who may
then, barring any restrictions to the contrary, transfer that right to another, and so forth.”).
46 HIF Bio, 600 F.3d at 1356-57.
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that an implied agreement between the parties in HIF Bio might resolve the
question of ownership. 47
Accordingly, the legal distinction between inventorship and ownership
does not, by itself, determine whether a district court has jurisdiction over a
claim for ownership. CamSoft’s argument relying on this distinction cannot
support an award of costs and attorney’s fees.
D
Finally, CamSoft argues that even if the defendants were objectively
reasonable in their assessment of the law regarding federal patent jurisdiction,
the state court petition never actually contained a claim “arising under” § 116
that would confer subject-matter jurisdiction.
A case “aris[es] under” federal patent law for the purposes of § 1338(a)
jurisdiction only when “a well-pleaded complaint establishes either that
federal patent law creates the cause of action or that the plaintiff’s right to
relief necessarily depends on resolution of a substantial question of federal
patent law, in that patent law is a necessary element of one of the well-pleaded
claims.” 48 Under the “well-pleaded complaint rule,” the “arising under”
question is answered only by examining the “plaintiff’s statement of his own
claim,” without considering defenses raised, the plaintiff’s allegations in
anticipation of a defense being raised, 49 or counterclaims. 50 However, “merely
47 See id. (“[T]he ownership dispute could be resolved without a determination of who
invented the INVENTION. The amended complaint’s allegation that the defendants’ conduct
gave rise to an implied contract between the parties could form the basis for resolving the
ownership dispute because that implied contract could dictate which party owns the
INVENTION.”); see also Christianson v. Colt. Indus. Operating Corp., 486 U.S. 800, 810
(1988) (“[A] claim supported by alternative theories in the complaint may not form the basis
for § 1338(a) jurisdiction unless patent law is essential to each of those theories.”).
48 Christianson, 486 U.S. at 808-09.
49Id. at 809 (quoting Franchise Tax Bd. v. Constr. Laborers Vacation Tr., 463 U.S. 1,
10 (1983)).
50 Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 830 (2002).
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because a claim makes no reference to federal patent law does not necessarily
mean the claim does not ‘arise under’ patent law.” 51 “[A] plaintiff may not
defeat § 1338(a) jurisdiction by omitting to plead necessary federal patent-law
questions.” 52 Finally, even if a “well-pleaded claim alleges [one] theory under
which resolution of a patent-law question is essential[,] . . . . a claim supported
by alternative theories in the complaint may not form the basis for § 1338(a)
jurisdiction unless patent law is essential to each of those theories.” 53
At this juncture, it merits repeating that our inquiry is not whether
CamSoft’s petition stated a claim that would ultimately satisfy the
jurisdictional standard articulated above. Additionally, we must put aside, for
the moment, the various barriers that impede the federal courts from
adjudicating claims under § 116. Because we have already determined that
federal jurisdiction over § 116 claims was unsettled at the time of removal, and
thus that there was an objectively reasonable basis to believe that such a claim
could raise a federal question, the subsequent analysis assumes arguendo that
the federal courts may adjudicate § 116 claims. We must determine whether
the defendants had an “objectively reasonable basis” 54 to conclude that
CamSoft’s petition contained a claim that “necessarily depend[ed] on
resolution of a substantial question” of inventorship under § 116. 55
1
Before turning to the petition itself, the parties argue that the Federal
Circuit and this court construed the petition in the first appeal in ways that
51 Christianson, 486 U.S. at 809 n.3.
52 Id.53 Id. at 810.
54 Admiral Ins. Co. v. Abshire, 574 F.3d 267, 280 (5th Cir. 2009) (quoting Martin v.
Franklin Capital Corp., 546 U.S. 132, 136 (2005)).
55 Christianson, 486 U.S. at 808-10.
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bear on the § 1447(c) analysis. CamSoft contends that the Federal Circuit’s
order concluding it had no jurisdiction under 28 U.S.C. § 1295(a)(1) 56 and
transferring the appeal to the Fifth Circuit implicitly established that the
petition did not contain any legal theory of ownership “arising under” § 116.
In contrast, the defendants argue that this court determined in the first appeal
that the petition contained a claim “arising under” § 116. Both parties’
arguments miss the mark.
It is not clear whether the Federal Circuit concluded that the petition’s
state-law ownership claim did not require a determination of inventorship
under § 116. The Federal Circuit’s transfer order did not explain why it lacked
jurisdiction, but the court cited HIF Bio, discussed earlier, to support its
conclusion.
But even if the Federal Circuit implicitly concluded that the state-law
ownership claim did not require the determination of inventorship under § 116,
the Federal Circuit did not answer the question presently before us—whether
the defendants had an “objectively reasonable basis” for concluding that the
petition required such a determination.
In this court’s prior opinion in this case, we expressly declined to
determine whether the petition required a determination of inventorship. 57
Even if portions of our opinion, read charitably in the defendants’ favor, might
suggest that the petition stated a claim “arising under” § 116, these portions
of our opinion were not necessary to the holding. By concluding that federal
56 28 U.S.C. § 1295(a)(1) (“The United States Court of Appeals for the Federal Circuit
shall have exclusive jurisdiction . . . of an appeal from a final decision of a district court of
the United States . . . in any civil action arising under . . . any Act of Congress relating to
patents . . . .”).
57Camsoft Data Sys., Inc. v. S. Elec. Supply, Inc., 756 F.3d 327, 333 (5th Cir. 2014)
(“[R]egardless of whether Camsoft asserted a theory of inventorship, removal was improper
because district courts have no jurisdiction over an inventorship dispute until the disputed
patent has issued.”).
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district courts lack jurisdiction over § 116 claims, we did not need to determine
whether the complaint contained a claim “arising under” § 116.
2
CamSoft’s state-court petition mentioned a pending patent application
in two instances. CamSoft alleged:
Southern [and] Active . . . never notified CamSoft or MacDonald of
their purported ownership rights to the System, nor did they notify
CamSoft of a patent application for said System. CamSoft did not
learn about the patent application until reading about [the
application in a motion filed in the Dell suit in September 2009].
Moreover, CamSoft did not learn the extent [of the] claim [by
Active’s owner] as the inventor of said System until reading his
depositions for the first time in September of 2009.
CamSoft also alleged:
Moreover, it was not until CamSoft filed its [petition to
intervene in the Dell suit] that CamSoft even learned of a
purported pending patent application relevant to the wireless
video surveillance system. Upon information and belief, [Active
and Southern] allege sole inventorship in this invention. [Active
and Southern’s] failure to ever notify . . . CamSoft or MacDonald
that [Active and Southern] filed a patent application further
constitutes a breach of fiduciary duty and fair dealings.
As we noted in the first appeal, the petition “clearly alleged that [Active or
Southern] had tried to patent the surveillance technology and had falsely
claimed sole inventorship.” 58
CamSoft correctly notes that the prayer for relief in its state-court
petition rested entirely on state-law causes of action. Therefore, the
appropriate question is whether CamSoft’s ownership claim “necessarily
depends on [the] resolution of a substantial question of federal patent law.” 59
58 Id. at 334.
59 Christianson, 486 U.S. at 808-09.
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Several parts of CamSoft’s prayer for relief touch on ownership but do
not address who owned the intellectual property at issue; rather, they address
procedures for establishing ownership and rights related to ownership. 60
The magistrate judge’s report, later adopted without comment by the
district court, concluded that CamSoft’s claim for ownership was not based on
a contract. We agree. Although CamSoft brought a claim for breach of
contract, this claim is based on Southern and Active’s violation of a non-
disclosure provision. The petition does not allege that any specific contractual
provision establishes ownership rights in the security camera system. 61
The magistrate then turned to CamSoft’s claim for ownership under
articles 513 and 514 of the Louisiana Civil Code. These provisions establish
ownership rights over a “thing” made with the “materials and workmanship”
of two or more persons. 62 The magistrate observed that CamSoft “has not
shown that there is any meaningful way to distinguish among creation,
ownership, and inventorship in this case.” The magistrate acknowledged that
there may be some distinction between state law and federal patent law on this
issue, but that CamSoft’s efforts to differentiate between state-law “creation”
and federal-law “invention” were unpersuasive. The magistrate thus
concluded that ownership could not be established without addressing
inventorship under federal patent law.
60See LA. CIV. CODE art. 526 (establishing an owner’s right to recover his property and
obtain judgment recognizing his ownership; id. art. 798 (recognizing a right to a
proportionate share of products and fruits from co-owned property); id. art 803 (addressing
the rights of co-owners to use and manage property); id. art. 813 (addressing partitions in
kind).
61Cf. HIF Bio, Inc. v. Yung Shin Pharm. Indus. Co., 600 F.3d 1347, 1356-57 (Fed. Cir.
2010) (concluding that there was no § 1138(a) jurisdiction when the complaint alleged that
ownership could be established via an implied contract between the parties).
62 LA. CIV. CODE art. 513; see also id. art. 514 (providing further rules on this issue).
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Assuming arguendo that the magistrate’s analysis on this point was
incorrect, we cannot overturn the district court’s denial of costs and attorney’s
fees on this ground. As the Supreme Court has recognized, “merely because a
claim makes no reference to federal patent law does not necessarily mean the
claim does not ‘arise under’ patent law.” 63 The Court has also noted that
Congress did not “confer a right to remove” with the intention of “discouraging
its exercise in all but obvious cases.” 64 The Federal Circuit has held that “the
field of federal patent law preempts any state law that purports to define rights
based on inventorship.” 65 The concepts of “creation” and “invention” are
similar enough to raise a meaningful question of whether the claim under the
Louisiana statutes required the resolution of inventorship under federal
patent law. We cannot conclude that the district court abused its discretion in
denying costs and attorney’s fees based on CamSoft’s claim under articles 513
and 514.
Finally, the magistrate concluded that CamSoft’s “claim of ownership is
not based on any alleged alternative legal theory.” CamSoft argues that its
petition “clearly outlined joint venture law as a basis for asserting its . . .
ownership rights.”
CamSoft’s state-court petition states that it formed a joint venture with
Active and Southern. But the petition alleges that CamSoft, Active, and
Southern “formed a joint venture for the sale of the wireless video surveillance
system designed, developed, and created during the pilot project.” In other
words, as the heading of the section alleging the joint venture puts it, the joint
venture was formed “After Designing the New Wireless Video Surveillance
63 Christianson, 486 U.S. at 809 n.3.
64 Martin v. Franklin Capital Corp., 546 U.S. 132, 140 (2005).
65 Univ. of Colo. Found., Inc. v. Am. Cyanamid Co., 196 F.3d 1366, 1372 (Fed. Cir.
1999).
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System.” The joint venture appears to be alleged for the purpose of
establishing Active’s and Southern’s fiduciary duties to CamSoft. To be sure,
the petition alleges that Active and Southern breached their fiduciary duties
by filing a patent application stating that they were the sole inventors of the
surveillance system without informing CamSoft. This allegation might be read
as implicitly suggesting that the joint venture established ownership of the
surveillance system. But the petition leaves it far from clear whether the joint
venture agreement, which established the relationship between the parties
only after the surveillance system was designed, addressed ownership of the
system.
The state-court petition stands in marked contrast to CamSoft’s
amended complaint, filed after removal to the district court. CamSoft’s
amended federal complaint expressly asserts “an ownership interest in the
wireless video surveillance system by virtue of its status as an alleged co-joint
venturer.” Although this degree of clarity is not necessary to allege ownership
based on a joint venture, 66 it shows the tall task that the defendants would
have had in discerning that the state-court petition alleged ownership arising
out of the joint venture. Therefore, the defendants had an objectively
reasonable basis to conclude that CamSoft’s complaint did not allege a legal
theory of ownership alternative to the one alleged under articles 513 and 514
of Louisiana’s Civil Code.
E
In sum, we conclude that the district court did not abuse its discretion
when it concluded that the defendants were objectively reasonable when they
removed the case to federal court. At the time of removal, it was uncertain
66Cf. FED. R. CIV. P. 8(a)(2) (“A pleading that states a claim for relief must contain a
short and plain statement of the claim showing that the pleader is entitled to relief . . . .”).
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whether the district court had jurisdiction over claims “arising under” § 116,
and it was clear that in some cases, the question of inventorship under § 116
determines ownership. Furthermore, it was reasonable for the defendants to
conclude that CamSoft’s claim of ownership necessarily and substantially
depended on a determination of inventorship under the federal patent laws,
based on the allegations in CamSoft’s petition.
IV
Because we can resolve the question of costs and attorney’s fees on the
question of objective reasonableness, we need not address the district court’s
alternative ground for denying CamSoft’s motion under § 1447(c): that
CamSoft “played a significant role in prolonging the suit’s stay in federal
court.”
* * *
For the foregoing reasons, we AFFIRM the judgment of the district court.
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