Prophet Productions, LLC v. Acacia Research Group, LLC

Filing 24

MINUTES of Motion Hearing by Judge George H. Wu: Proceedings: Plaintiff's 8 MOTION to Remand to Los Angeles Superior Court. The Tentative circulated and attached hereto, is adopted as the Court's Final Ruling. Plaintiff Prophet Productions' Motion is GRANTED. The above-entitled action is remanded to Superior Court of California, Los Angeles BC561469. MD JS-6. Case Terminated. Court Reporter: Katie Thibodeaux. (mg)

REMAND/JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 16-659-GW(AFMx)

Title

Prophet Productions, LLC v. Acacia Research Group, LLC

Present: The Honorable

Date

March 31, 2016

GEORGE H. WU, UNITED STATES DISTRICT JUDGE

Javier Gonzalez

Katie Thibodeaux

Deputy Clerk

Court Reporter I Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Justin Spearman
Brian S. Kabateck

Travis P. Brennan

PROCEEDINGS:

PLAINTIFF'S MOTION TO REMAND TO LOS ANGELES
SUPERIOR COURT [8]

Court hears oral argument. The Tentative circulated and attached hereto, is adopted as the Court's Final
Ruling. Plaintiff Prophet Productions' motion is GRANTED. The above-entitled action is remanded to
state court (BC56 l 469).

12
Initials of Preparer
CV-90 (06/04)

CIVIL MINUTES - GENERAL

JG
Page I of I

.,,

Prophet Prods. v. Acacia Patent Acquisition, LLC, Case No. CV 16-659 GW (AFMx)
Tentative Ruling on Motion to Remand to Los Angeles Superior Court

Plaintiff Prophet Productions ("Plaintiff') moves to remand this matter to the
Superior Court for the County of Los Angeles, arguing that this Court does not have
subject matter jurisdiction over this action and that removal was not timely effected. 1
As the party asserting federal jurisdiction, defendant Acacia Research Group,
LLC ("Defendant") bears the burden of demonstrating jurisdictional facts. See Miguel v.
Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir. 2002); Kanter v. Warner-Lambert
It asserts only that the Court has federal

Co., 265 F.3d 853, 857 (9th Cir. 2001).

question-based subject matter jurisdiction over this action. Despite the First Amended
Complaint ("FAC"), see Docket No. 1-27, presenting only claims based upon state law,
Defendant's theory is that the Court has jurisdiction by way of its jurisdiction over patent
matters. As a result, the Supreme Court's opinion in Christianson v. Colt Industries
Operating Corp., 486 U.S. 800 (1988), is implicated.
Christianson ruled that federal jurisdiction pursuant to 28 U.S.C. § 1338(a)2

"extend[s] only to those cases in which a well-pleaded complaint establishes either that
federal patent law creates the cause of action or that the plaintiffs 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." Id. at 808-09. As
in Christianson, federal patent law does not create Plaintiffs claims here. In order for
this case to "arise under" federal law within the meaning of section 1338(a), therefore,
one or more of Plaintiffs state-law claims must "necessarily depend[] on resolution of a
substantial question of federal patent law, in that patent law is a necessary element of one
1
The Court grants Defendant Acacia Research Group, LLC's ex parte request to file a Sur-Reply brief to
the extent that brief addresses Plaintiff's arguments concerning discovery it provided to Defendant in May
2015, but not to the extent that it offers further argument based on the decision in Alexsam, Inc. v. Green
DOT Corp., No. 2:15-cv-05742-CAS (PLAx), 2015 U.S. Dist. LEXIS 134689 (C.D. Cal. Sept. 28, 2015).
The Court denies Plaintiff's request- made in response to that ex parte application-to file a Sur-SurReply brief. The additional argument the Court has allowed has not affected the Court's analysis.
2

Section 1338(a) provides, in pertinent part, as follows: "The district courts shall have original jurisdiction
of any civil action arising under any Act of Congress relating to patents .... No State court shall have
jurisdiction over any claim for relief arising under any Act of Congress relating to patents .... " 28 U.S.C.
§ 1338(a).

1

of the well-pleaded claims." Id; see also Holmes Grp., Inc. v. Vornado Air Circulation
Sys., Inc., 535 U.S. 826, 830 (2002); Duncan v. Stuetzle, 76 F.3d 1480, 1486 (9th Cir.
1996) ("Stated another way, if a single state-law based theory of relief can be offered for
each of the three causes of action in the complaint, then the exercise of removal
'G

jurisdiction was proper.").
"Under the well-pleaded complaint rule, as appropriately adapted to § 1338(a),
whether a claim 'arises under' patent law 'must be determined from what necessarily
appears in the plaintiffs statement of his own claim in the bill or declaration."
Christianson, 486 U.S. at 809 (quoting Franchise Tax Bd of Cal. v. Construction
Laborers Vacation Trust, 463 U.S. 1, 10 (1983)). "[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." Id at 810 (emphasis added); see also id at
811 ("[J]ust because an element that is essential to a particular theory might be governed
by federal patent law does not mean that the entire monopolization claim 'arises under'
patent law.").

In other words, "[i]f 'on the face of a well-pleaded complaint there

are ... reasons completely unrelated to the provisions and purposes of [the patent laws]
why the [plaintiff] may or may not be entitled to the relief it seeks,' then the claim does
not 'arise under' those laws."

Id. at 810 (quoting Franchise Tax Bd of Cal. v.

Construction Laborers Vacation Trust, 463 U.S. 1, 26 & n.29 (1983)).

However,

"merely because a claim makes no reference to federal patent law does not necessarily
mean the claim does not 'arise under' patent law." Id at 809 n.3.
Here, as alleged in the FAC, one of the alternative theories upon which Plaintiffs
claims can be resolved involves Defendant's licensing of Plaintiffs patents to third
parties without remuneration. See FAC
39, 41, 44-46, 53, 56-57, 59, 61-64.

~~

1-3, 14-15, 17, 19-20, 22-24, 32-33, 35-37,

Indeed, by Defendant's own admission, the

agreement between Plaintiff and Defendant included licensing rights and obligations. See
Docket No. 15, at 3: 16-24, 4:3-6. This is quite apart from those allegations in the FAC
involving Defendant's failure to pursue infringement contentions or enforcement
litigation on Plaintiffs behalf, another subject of the parties' agreement.

Thus, a

demonstration of infringement would not be necessary or essential for Plaintiff to prevail
on its claims under that licensing-related theory. Instead, the question is simply did they

2

or did they not license without remuneration?
Defendant has explained its removal via its focus on the fact that, in January
2016, Plaintiff identified, in response to certain interrogatories, particular third parties
that it believed had actually infringed Plaintiffs patents. While that may be so, those
responses did not in any way indicate that this - proof of patent infringement - was the
only way Plaintiff could prevail on its state-law claims such that those claims would

"necessarily depend" on a substantial question of federal patent law or that patent law
was "essential" to each of its theories ofrecovery. See Christianson, 486 U.S. at 808-10. 3
Defendant has not cited the Court to any case which is, in this regard, like this
one, and that found removal proper. US. Valves, Inc. v. Dray, 212 F.3d 1368 (Fed. Cir.
2000), found removal proper because the plaintiff there had to show that the defendant
sold valves that were covered by the licensed patents. See id. at 1372. Similarly, in
Alexsam, Inc. v. Green DOT Corp., No. 2:15-cv-05742-CAS (PLAx), 2015 U.S. Dist.

LEXIS 134689 (C.D. Cal. Sept. 28, 2015), the district court was required to interpret
patents to determine if products infringed them in order to assess the breach of contract
claim. See id. at *9. Even were the Court to consider Kohl's Department Stores, Inc. v.
Escalate, Inc., No. 13-C-1113, 2014 U.S. Dist. LEXIS 43527 (E.D. Wis. Mar. 28, 2014),
but see Footnote 1, supra, that case involved claims for equitable indemnity and

contribution, necessarily requiring resolution of the patent infringement contentions

'"

raised in an already-settled third-party lawsuit against the plaintiff. See id. at *8-10.
For the reasons set forth above, the Court cannot conclude that subject matter
jurisdiction is appropriate here under the Christianson standard. There is no reason,
therefore, to address Plaintiffs argument that there was a procedural defect in
Defendant's removal because, according to Plaintiff, the removal occurred outside the
allowable 30-day window. However, were the Court forced to address it for purposes of

3

Unless the Court misunderstands Defendant's position, it appears to be as follows: in a September 2015
meet-and-confer discussion, Plaintiffs counsel indicated (according to Defendant's characterization) that
an infringement contention was - consistent with Plaintiffs allegations in the Complaint and FAC - not
necessary to Plaintiffs causes of action and claims for damages, but when later asked, via interrogatory, for
infringement-related evidence, Plaintiff actually offered such evidence, along with specifications regarding
whom it believed had infringed its patents. See, e.g., Notice of Removal~~ 2, 4-5. The problem with this
approach is that the interrogatories did not ask whether- and Plaintiffs responses did not suggest thatthese infringement contentions were necessary to Plaintiffs claims in this case. In other words, all Plaintiff
appears to have offered was evidence related to one of its potential theories in this case.

3

assessing the possibility of a fee award under 28 U.S.C. § 1447(c), it would note that
Defendant based its removal not on the face of the Complaint (or the FAC), but on
Plaintiffs representations in its discovery responses, and that removal occurred within 30
days of the particular responses Defendant identified. While, in light of Christianson, the
Court does not find those discovery responses sufficient to demonstrate a basis for federal
subject matter jurisdiction, it does not necessarily find that the timing of Defendant's
removal was so plainly inappropriate as to provide a basis for fees.

See Martin v.

Franklin Capital Corp., 546 U.S. 132, 141 (2005) ("Absent unusual circumstances,
courts may award attorney's fees under§ 1447(c) only where the removing party lacked
an objectively reasonable basis for seeking removal."); Lussier v. Dollar Tree Stores,
Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). This is especially so considering Plaintiffs
prior representations concerning any infringement contentions.
However, it is a closer question whether a fee award is appropriate here because
of Defendant's failure to explain why Plaintiffs licensing-related allegations do not make
it clear that any infringement contentions Plaintiff also made were not necessary to the
success of their claims. It is perhaps this issue that the parties should focus upon at oral
argument. Plaintiff requests $3,000 in fees.

4