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February 05, 2007

Federal Courts Can't Use Supplemental Jurisdiction To Hear Claims Under Foreign Patents

Dr. Jan Voda held American and foreign patents on his angioplasty catheter technology.  He sued Cordis (a subsidiary of Johnson & Johnson) in the Western District of Oklahoma for infringing his U.S. patent, and then tried to use the supplemental jurisdiction statute (28 U.S.C. § 1367) to get the court to hear claims that Cordis infringed his foreign patents also.  The district court held Dr. Voda could do this, but in Voda v. Cordis Corp., 2007 WL 269431, decided earlier this month, the U.S. Court of Appeals for the Federal Circuit reversed on a certified interlocutory appeal.

There were two issues in the case, of which the Court of Appeals decided only one.  Section 1367(c) provides for discretionary abstention; the Court held there were “compelling reasons to decline jurisdiction” and that the district court had abused its discretion by not doing so.  Treaties such as the Paris Convention, the Patent Cooperation Treaty and the TRIPS Agreement provide for foreign states to adjudicate issues under their own patents, and permitting U.S. district courts to do so “would require us to define the legal boundaries of a property right granted by another sovereign and then determine whether there has been a trespass to that right.”  This could “undermine” American treaty obligations.  Voda had not shown that British, Canadian, French, or German courts would not protect his foreign patent rights.  The territorial limitation on patent laws makes a foreign patent claim, like a real property dispute, subject to the local action doctrine, to be tried where the right arises.  And “considerations of comity, judicial economy, convenience, fairness, and other exceptional circumstances” also made it improper for the district court to assume jurisdiction over the foreign patent claims.

The other question was whether the foreign patent controversy qualified under § 1367(a), which provides jurisdiction over supplemental claims “so related to claims in the action within … original jurisdiction that they form part of the same case or controversy.”  The Supreme Court has held that the claims “must derive from a common nucleus of operative fact,” but that if a plaintiff's claims “are such that he would ordinarily be expected to try them all in one judicial proceeding” then the district court may “hear the whole.”  United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966).  Because it was able to decide the case under subsection (c) rather than (a) of the supplemental jurisdiction statute, the Court of Appeals deliberately avoided reaching the relationship between the two tests, or whether the foreign and domestic patents provided a common nucleus of operative fact.

Judge Gajarsa wrote the majority opinion, joined by Judge Prost.  Judge Newman dissented, holding it “inappropriate for the Federal Circuit to create this unique exception to the authority of American courts to resolve controversies that require the application of foreign law.”  And it is true that the decision blocks the practical exercise of federal jurisdiction over foreign patent issues without rejecting the theoretical basis for jurisdiction.  The issue in Voda is an important one for intellectual property litigation generally, but authority is sparse and conflicting.  The presence of a dissent shows that reasonable judges can differ on the question, but the Federal Circuit’s decision that it was within its exclusive competence means further circuit development is unlikely.  These factors make Voda a plausible candidate for certiorari – we will report further developments in this space.  For the text of the opinions see www.fedcir.gov/opinions/05-1238.pdf.  For an image of the catheter, see www.patentlyo.com/patent/2005/06/will_us_courts_.html.

Today's Blogger:  Nan Joesten

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