ViaSat, Inc. v. Acacia Communications, Inc. et al

Filing 197

ORDER Remanding Case [Doc. No 75 83 86 89 93 95 98 ] (Copy Mailed to Superior Court of California, San Diego). Signed by Judge Roger T. Benitez on 9/28/2018.(anh)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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VIASAT, INC., a Delaware
corporation,
Plaintiff and Counter-Defendant,

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vs.

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ACACIA COMMUNICATIONS,
INC., a Delaware Corporation

CASE NO. 3:16-cv-00463-BEN-KSC
ORDER REMANDING CASE
[Doc. No. 75, 83, 86, 89, 93, 95, 98]

Defendant and Counter-Claimant.

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INTRODUCTION

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Now before the Court is Plaintiff’s motion1 in which it asserts this court lacks
federal jurisdiction and asks it to remand to the case to the state court from which it
was removed. The motion is granted.
This case was originally filed in the Superior Court of California. Plaintiff
asserted there three simple state law claims. Defendant removed the case from the
state court under 28 U.S.C. §1338 and §1454. Specifically, Defendant noted that
the complaint did not assert any patent-related counts on its face. However, it
asserted that Plaintiff’s right to relief “necessarily depend[ed] on resolution of a
substantial question of federal patent law, in that patent law is a necessary element

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Motion for Summary Judgment (filed 2/2/18). Defendant has had an
28 opportunity to respond (and has responded) to the assertion that removal was improper.
See Opposition to Motion for Summary Judgment (filed 2/16/18).
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1 of the well-pleaded claims.” Notice of Removal, at ¶5. More specifically,
2 Defendant specified that what is actually disputed is “the federal issue of patent
3 misappropriation.” Id. at ¶6 (emphasis added). On the same day the case was
4 removed, Defendant filed its Answer and included a counterclaim for patent
5 misappropriation alleging an equitable ownership interest in one or more of
6 Plaintiff’s patents together with several state law claims.
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DISCUSSION
A great deal of time and discovery effort has passed since removal.

9 Nevertheless, a district court may inquire into its own jurisdiction at any time.
10 Herklotz v. Parkinson, 848 F.3d 894, 897 (9th Cir. 2017). A court is not required at
11 any particular time to sua sponte consider whether it is proper to assert continuing
12 federal jurisdiction over state law claims when federal claims are eliminated. Acri
13 v. Varian Assoc., Inc., 114 F.3d 999, 1000 (9th Cir. 1997) (en banc) (“[W]hile a
14 district court must be sure that it has federal jurisdiction under § 1367(a), once it is
15 satisfied that the power to resolve state law claims exists, the court is not required to
16 make a § 1367(c) analysis unless asked to do so by a party.”). That changes,
17 however, when a party raises the issue, as Plaintiff has now done. Id. at 1001.
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Plaintiff argues three grounds for remand. First, it asserts that the original

19 removal was improper. Second, it asserts that the counterclaims do not raise federal
20 jurisdiction. Third, it suggests that this is a typical case in which the discretionary
21 exercise of supplemental jurisdiction should usually be declined.
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Courts strictly construe the removal statute against removal jurisdiction, and

23 the defendant always has the burden of establishing that removal is proper. Gaus v.
24 Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). Prop. Inv'rs 2016,
25 LLC v. Yep, No. 2:18-CV-02527-TLN-AC, 2018 WL 4610556, at *1 (E.D. Cal.
26 Sept. 21, 2018). Doubts are resolved against the exercise of jurisdiction.
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In typical cases, the well-pleaded complaint rule requires that jurisdiction be

28 analyzed on the sole basis of the complaint. Here, since Plaintiff is the master of the
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1 complaint and chose to assert only state law claims, it would typically be a simple
2 question and answer. Recent changes to the law relating to patents has changed that
3 typical approach.2 Section 1454 permits federal patent jurisdiction to be asserted
4 upon a counterclaim as well as a complaint. Vermont v. MPHJ Tech. Invs., LLC,
5 803 F.3d 635, 644 (Fed. Cir. 2015). Thus the original jurisdiction calculus focuses
6 in this case on Defendant’s counterclaim for patent misappropriation.3
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Defendant asserts in its counterclaim that it has an equitable interest in

8 Plaintiff’s patents. “Acacia thereby has an equitable interest in the ViaSat Patent
9 Family.” Answer and Counterclaim at ¶39. It further claims that Plaintiff has
10 “misappropriated the ViaSat Patent Family.” Id. at ¶43. It asks for relief in various
11 forms including an accounting, a trust, rescission of the ownership and transfer of
12 ownership of the patent family, and an injunction from continuing misappropriation.
13 Id. at ¶¶ 44-47. It is significant that Defendant does not claim inventorship; only
14 ownership.
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Ownership of a patent, whether legal or equitable is a property law question.

16 As such, it is not a patent law question. Thus, in Arachnid, Inc., v. Merit Industries,
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The Act also amended 28 U.S.C. §1338(a), the statute conferring on district
courts “original jurisdiction of any civil action arising under any Act of Congress
relating to patents,” to provide that “[n]o State court shall have jurisdiction over any
claim for relief under any Act of Congress relating to patents[.]” 28 U.S.C. § 1338(a).
Together with the amendment to 28 U.S.C. § 1295(a)(1), which extended the Federal
Circuit’s jurisdiction to “compulsory counterclaim[s] arising under ... any Act of
Congress relating to patents,” these patent-related changes are commonly known as the
“Holmes Group fix.” Joe Matal, A Guide to the Legislative History of the America
Invents Act: Part II of II, 21 Fed. Cir. B.J. 539, 539 (2012). This “fix” was adopted in
response to an earlier decision by the Supreme Court, which held that a counterclaim
by a defendant cannot serve as the basis for “ ‘arising under’ jurisdiction” under 28
U.S.C. § 1295(a)(1). See Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535
U.S. 826, 831 (2002). Rejecting Holmes, the three statutes “provide[d] federal courts
... with a broader range of jurisdiction; that is, with jurisdiction over claims arising
under the patent laws even when asserted in counterclaims.” Vermont v. MPHJ Tech.
Invs., LLC (“MPHJ”), 803 F.3d 635, 644 (Fed. Cir. 2015). Apollo Enter. Sols., Inc. v.
Lantern Credit, LLC, No. CV 17-02331-AB (JCX), 2018 WL 437472, at *5 (C.D. Cal.
Jan. 16, 2018).
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There is no diversity of citizenship between the parties as they are both citizens
of Delaware where they are both incorporated.
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1 Inc., 939 F.2d 1547 (Fed. Cir. 1991), a distinction was made between claims of
2 patent ownership which belong in state court and claims of infringement which are
3 patently federal patent claims. “A patent is a creature of statute, as is the right of a
4 patentee to have a remedy for infringement of his patent. Suit must be brought on
5 the patent, as ownership only of the invention gives no right to exclude, which is
6 obtained only from the patent grant.” Id. at 1578-79. “Although an agreement to
7 assign in the future inventions . . . may vest the promisee with equitable rights in
8 those inventions once made, such an agreement does not by itself vest legal title to
9 patents on the inventions in the promisee.” Id. at 1581. Here, Defendant does not
10 have legal title to any patents in question. It asserts that this court should award it
11 some fraction of ownership as a matter of equity. That is a state law issue of
12 ownership. It is not an issue of construction of a patent, or infringement of a patent,
13 or inventorship of a patent. It is tangentially related to patents owned by Plaintiff.
14 Thus, it is a close question whether the tangential relationship is sufficiently
15 “related” to support federal jurisdiction under §1454.
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Courts resolve doubts about a federal court’s limited jurisdiction against the

17 exercise of jurisdiction. Luther v. Countrywide Home Loans Servicing LP, 533 F.3d
18 1031, 1034 (9th Cir. 2008) (“A defendant seeking removal has the burden to
19 establish that removal is proper and any doubt is resolved against removability.”)
20 (citation omitted). That is the proper course here. Therefore, the removal of the
21 case was improper. Likewise, the counterclaim filed in this case does not provide
22 federal claim jurisdiction. The state law claims provide no basis for jurisdiction
23 because of a lack of diversity of citizenship between the parties. Because federal
24 jurisdiction was lacking from the outset, there is no discretion to exercise
25 continuing jurisdiction over the state law claims as when a federal claim is later
26 dismissed. E.g., Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009);
27 Reynolds v. County of San Diego, 84 F.3d 1162, 1171 (9th Cir. 1996) (“[A]fter
28 granting summary judgment on the civil rights claim, the court should have
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1 dismissed the state law claims without prejudice.”). Here there never was a valid
2 federal-law claim. The Court is aware that much discovery and motion practice has
3 been lavished on this case while in federal court. Much of the effort need not go to
4 waste as discovery obtained will also assist in state court and dispositive motions on
5 the state law claims will still rely on state law. The possibility of forum shopping is
6 always a concern when motions to remand are made after time passes. However,
7 there is no direct evidence of that animating the motion to remand in this case.
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CONCLUSION

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This case is remanded to the Superior Court of San Diego. Any pending

10 motions are denied as moot to be reasserted in the state court. Each side shall bear
11 their own costs and attorney fees incurred as a result of the removal. 28 U.S.C.
12 § 1447(c).
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14 DATED: September 28, 2018
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Hon. Roger T. Benitez
United States District Judge

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