District Court Lacks Discretion to Remand Claims Arising Under Federal Patent Law to State Court

Author:Ms Mayssam Ali
Profession:Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

Judges: Michel, Gajarsa (author), Holderman (Chief District Judge sitting by designation) [Appealed from C.D. Cal., Judge Pregerson]

In HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co., No. 06-1522 (Fed. Cir. Mar. 31, 2010), the Federal Circuit held that the district court abused its discretion in remanding the amended complaint filed by HIF Bio, Inc. ("HIF") to California state court because two of the asserted causes of action arose under 28 U.S.C. § 1338(a). Although it found that the district court had jurisdiction over those causes of action, the Federal Circuit held that the district court could not provide a remedy for those causes of action under federal patent law, and that it therefore should have dismissed those causes of action for failure to state a claim upon which relief can be granted.

HIF is the assignee of a patent application claiming anticancer applications of the compound YC-1 and naming Professors Jong-Wan Park and Yang-Sook Chun as inventors. While engaged in the research underlying that application, Park and Chun obtained YC-1 for their experiments from defendant Che-Ming Teng. Park and Chun also discussed their findings with Teng and provided him with copies of their unpublished draft manuscripts relating to the anticancer properties of YC-1. Unbeknownst to Park and Chun, Teng disclosed their findings to Yung Shin Pharmaceuticals ("Yung Shin") and filed a provisional application directed to the same subject matter, naming himself and Fang-Yu Lee, the president of Yung Shin, as inventors. Park and Chun filed their application the following year.

HIF brought suit against Teng, Lee, Yung Shin, Carlsbad Technology, Inc. ("CTI"), Yung Shin's patent counsel, and an alleged Taiwanese co-conspirator in California state court. After CTI removed the action to federal court, HIF filed an amended complaint asserting twelve causes of action, including claims for DJ of ownership of "the INVENTION," DJ of inventorship of "the INVENTION," and violations of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"). CTI then moved to dismiss the suit under Fed. R. Civ. P. 12(b)(1) and 12(b)(6). The district court dismissed HIF's RICO claim and declined to exercise supplemental jurisdiction over the remaining claims, including those for DJ of ownership and inventorship, which it concluded were state law claims. CTI then appealed the remand order to the Federal Circuit, which held that 28 U.S.C. § 1447(d) barred...

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