Caldera Pharmaceuticals, Inc. v. Regents of the University of California et al

Filing 98

MEMORANDUM Opinion and Order, Signed by the Honorable Elaine E. Bucklo on 5/11/2012. (ea, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CALDERA PHARMACEUTICALS, INC.,

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Plaintiff,
v.
THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA; LOS ALAMOS NATIONAL
SECURITY, LLC; and DOES 1 through
50,
Defendants.

No. 11 C 7259

MEMORANDUM OPINION AND ORDER
In September 2005, plaintiff Caldera Pharmaceuticals,
Inc. (“Caldera”) entered into a patent licensing agreement
(“License Agreement”) with the Regents of the University of
California (“Regents”), which later assigned the License
Agreement

to

defendant

Los

Alamos

National

Security

LLC

(“LANS”). Currently before me is Caldera’s motion to remand.
For all the reasons that follow, that motion is granted.
Caldera

alleges

that

the

License

Agreement

granted

Caldera an exclusive license to multiple patent rights related
to technology, apparatuses and methods for detecting binding
using micro x-ray fluorescence.

On or around April 25, 2006,

the Regents assigned the License Agreement, and all of the
rights, duties and obligations associated with it, to LANS.

Prior to executing the License Agreement, Caldera relied upon
multiple representations that defendants were the lawful
owners of the subject patent rights.

However, according to

Caldera, defendants did not own the rights that were sold to
Caldera pursuant to the License Agreement, a fact that Caldera
did not discover until it had invested millions of dollars in
the technology, and paid defendants millions of dollars in
fees,

royalties

rights.

and

Further,

equity
as

a

payments

result,

for

these

Caldera

was

exclusive
unable

to

consummate certain lucrative contractual relationships, one of
which was valued by defendants at over $600 million.

In

addition, defendants have worked with Caldera’s competitors to
improperly utilize and profit from the technology that was
exclusively licensed to Caldera.
This case was filed in state court in the Circuit Court
of Cook County.

Caldera explains that it filed this action

“in order to preserve its cause of action against The Regents,
which historically have taken great advantage of its Eleventh
Amendment immunity in federal court.”

Mem. at 1.

Shortly

thereafter, LANS removed this case to federal court.

The

Regents communicated to LANS that it refused to join the
removal.

Caldera now seeks remand based both on procedural

and subject matter jurisdiction grounds.
2

I address each in

turn.
Procedural Arguments
Caldera argues that removal was procedurally improper
because the Regents did not join in the removal.

LANS

responds by arguing that Caldera’s argument is untimely, as
Caldera waited more than 30 days to raise this argument.

In

reply, Caldera maintains that I should exercise estoppel and
order remand on procedural grounds.
Motions for remand, based on procedural grounds, must be
filed within thirty days of removal.

28 U.S.C. § 1447(c) (“A

motion to remand the case on the basis of any defect other
than subject matter jurisdiction must be made within 30 days
after the filing of the notice of removal.”). The 30-day time
limit for motions to remand is strictly enforced to prevent
“shuttling of cases between state and federal court” and
“extended litigation that does no more than determine where
litigation shall proceed.”

In the Matter of Continental

Casualty Co., 29 F.3d 292, 295 (7th Cir. 1994).
Here, LANS filed its Notice of Removal on October 13,
2011, setting November 12, 2011 as the deadline to file a
motion to remand.

Caldera, however, did not file its motion

until February 3, 2012.

Caldera argues that, in the interim,

there was a “confused slew of subsequent motions.”
3

In

addition to a motion to dismiss, LANS filed a motion to stay
this action pending a decision from the California Court of
Appeals.

Judge Norgle, who presided over the case at that

time, set a briefing schedule on the motion to stay. On
November 11, 2011, one day before the remand deadline, the
parties stipulated to a stay pending a ruling on LANS’ motion
to stay.

LANS’ motion to stay was thereafter denied on

December 22, 2011. This decision terminated the effect of the
parties’ stipulation.

Thus, Caldera’s motion to remand was

due one day later, on December 23, 2011.

Caldera waited

another 42 days to file its motion.
In the interim, on November 29, 2011, LANS filed a motion
to disqualify Caldera’s counsel.

In addition, the Regents

also filed a motion to dismiss.

Caldera asserts that on

December

12,

2011,

while

appearing

for

the

Regents’

presentment of its motion to dismiss, counsel for Caldera was
told by a clerk of the court that the court did not wish to
address substantive motions until after the disqualification
issue was resolved.
Recognizing

that

it

did

not

meet

the

30-day

time

limitation, Caldera argues that the critical date for purposes
of § 1447 is not the date of the filing of the motion, but
rather the date that Caldera “communicated” its objections to
4

the removal to the court and LANS.

Caldera argues that it

should be permitted to seek remand because it alerted the
defendants and the court that it intended to seek remand.
Caldera points to various statements it made in documents (its
11/7/11 opposition to LANS’ motion to reassign, the parties’
11/11/11

stipulation,

and

two

December

2011

letters

defendants’ counsel) that it intended to seek remand.

to
In

addition, on December 20, 2011, Caldera filed a “Statement”
with the court in response to the Regents’ presentment of its
motion to dismiss. Caldera’s main argument in the “Statement”
was that the parties had agreed to a stay pending the court’s
ruling on LANS’ motion to stay (related to the California
Appellate

Court’s

opinion),

and

that

the

Regents

were

violating that stipulation by seeking a briefing schedule on
its motion to dismiss.

Caldera went on to request that the

court set a briefing schedule for Caldera’s motion to remand.
I am not convinced by Caldera’s reliance on Northern
California District Council of Laborers v. Pittsburg-Des
Moines Steel Co., 69 F.3d 1034, 1038 (9th Cir. 1995). In that
case, the party filed a timely motion to remand, but raised a
new argument in its reply brief.

The court held that the

argument raised in reply was not timely because it was raised
after the 30-day deadline had passed.
5

That case does not

support Caldera’s novel position here that they should be
deemed to have met the 30-day deadline because they indicated
a desire to remand prior to the expiration of the deadline.
The only way for a party to properly preserve its right to
seek remand is to actually file a motion for remand.
Caldera had until December 23, 2011 to do so.

Here,

When Caldera

did not receive a response from the court to its request in
the December 20, 2011 “Statement,” Caldera should have simply
filed its motion for remand at that time.
Finally, I reject Caldera’s assertion that equitable
tolling is appropriate here.

I have reviewed the cases cited

by Caldera, none of which are from this circuit, and find them
quite distinguishable from the facts here.

Most of the cases

cited by Caldera involve scenarios where a party timely filed
a motion to remand, but had trouble with the court’s internal
computer docketing system.

In those cases, the court deemed

the motion filed on the day the party attempted to file the
motion, even though the motion was not docketed until shortly
thereafter.

Caldera has not put forward any cases which

support the exercise of equitable tolling here.1

1

I likewise reject Caldera’s assertion that it was the
court’s wish that it not file a motion to remand. Nothing
that Caldera points to provides evidence of this.
6

Subject Matter Jurisdiction
28 U.S.C. § 1338(a) provides that federal district courts
have exclusive jurisdiction over actions “arising under any
Act of Congress relating to patents.”

The Supreme Court set

forth the test for determining whether a district court has
jurisdiction pursuant to § 1338(a) in Christianson v. Colt
Indus. Operating Corp., 486 U.S. 800 (1988).

Jurisdiction

extends to those cases “in which 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.”
09.

Christianson, 486 U.S. at 808-

If the well-pleaded complaint presents multiple theories

supporting a claim, that claim “may not form the basis for
§ 1338(a) jurisdiction unless patent law is essential to each
of those theories.”

Id. at 810.2

2

If there are “reasons

I reject Caldera’s assertion that the Federal Circuit
has gone against the clear holding in Christianson. The two
cases LANS cites to – Davis v. Brouse McDowell, L.P.A., 596
F.3d 1355 (Fed. Cir. 2010) and Warrior Sports, Inc. v.
Dickinson Wright, P.L.L.C., 631 F.3d 1367 (Fed Cir. 2011) – do
not support this assertion at all. As LANS rightly points
out, the cases cited by Caldera merely stand for the
proposition that a district court may exercise supplemental
jurisdiction over related claims if one claim is indisputably
patent in nature.
7

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.

The U.S. Supreme Court later

rephrased the Christianson test as a determination of whether
“a state-law claim necessarily raise[s] a stated federal
issue, actually disputed and substantial, which a federal
forum may entertain without disturbing any congressionally
approved

balance

responsibilities.”

of

federal

and

state

judicial

Grable & Sons Metal Prods., Inc. v. Darue

Eng’g & Mfg., 545 U.S. 308, 314 (2005).
Caldera brings four causes of action, all based on state
law, against LANS and the Regents: (1) breach of contract;
(2) fraud; (3) breach of implied covenant of good faith and
fair dealing; and (4) fraudulent inducement.

These causes of

action all rest on the same three grounds: (1) the alleged
abandonment of patent applications and failure to notify
Caldera of the abandonment; (2) the alleged failure to file
timely foreign patent applications; and (3) the disclosure of
the licensed technology.

The parties dispute whether each

basis asserted by Caldera requires resolution of substantial
questions of federal patent law.
Here, Caldera argues that it has multiple independent
8

theories for each claim which do not require resolution of any
question of federal patent law.

Because I agree that the

allegations concerning LANS’s failure to file foreign patent
applications, which underlay all of plaintiff’s causes of
action, do not require resolution of any question of U.S.
federal patent law, this case must be remanded to state court.
Defendants’

failure

Cooperation

Treaty

concealment

of

to

(“PCT”)

that

make

the

filings,

failure,

is

an

necessary

and

the

subsequent

independent

supporting each of its four causes of action.

Patent

ground

In its motion

to remand, Caldera asserts that defendants’ failure to file
these PCT filings does not require resolution of any question
of U.S. federal patent law. Conversely, defendants argue that
the issue of the foreign patent rights would, in fact, require
analysis of U.S. patent law.
Caldera relies on Davis v. Brouse McDowell, L.P.A., 596
F.3d 1355, 1360 (Fed. Cir. 2010), for its argument that
because matters relating to the PCT involve issues of foreign
patent law, resolution of such issues do not “arise under”
federal patent law.

In Davis, an inventor brought an action

against her attorney alleging he committed malpractice by
failing to timely file a foreign patent application under the
PCT.

In particular, the inventor alleged that her attorney
9

failed to file three PCT applications, and also negligently
prepared and filed her U.S. patent application.
1359.

596 F.3d at

In discussing the attorney’s failure to file the

foreign patent applications, the court noted that it was
“undisputed” that the inventor’s “allegations relating to the
PCT application do not raise any issue of U.S. patent law.”
Id. at 1360. Caldera notes the similarities between Davis and
this case, and argues that defendants’ failure to file the PCT
applications in this case also “do not raise any issue of U.S.
patent law.”
Having considered this case in light of Caldera’s “well
pleaded complaint,” I conclude that defendants’ failure to
timely file foreign patent applications under the PCT does not
raise a substantial question of U.S. patent laws. “[T]he fact
that patent issues are relevant under state contract law to
the resolution of a contract dispute “cannot possibly convert
a suit for breach of contract into one ‘arising under’ the
patent laws as required to render the jurisdiction of the
district court based on section 1338.”

Speedco, Inc. v.

Estes, 853 F.2d 909 (Fed. Cir. 1988) (quoting Ballard Medical
Products v. Wright, 823 F.2d 527, 530 (Fed. Cir. 1987));
Scheiber v. Dolby Laboratories, Inc., 293 F.3d 1014 (7th Cir.
2002) (“[A] suit to enforce a patent licensing agreement does
10

not arise under federal patent law.”).

Resolving the state

law claims based on this theory will require a court to
resolve state law claims based on a contract in which patent
issues are only peripherally implicated.

While defendants

point to every conceivable way in which the U.S. patent laws
could

possibly

presented

in

be
the

implicated
complaint,

here,
is

Caldera’s

rather

claim,

as

straightforward:

defendants represented that they had secured certain foreign
rights, Caldera relied on these representations, and Caldera
was damaged when it turned out defendants had not secured the
foreign

patent

rights.

Many

of

the

arguments

made

by

defendants are based on arguments/issues not found in the
complaint.3

See Opp. at 20-21 (noting where there were

disputed issues between the parties).

While defendants argue

that Caldera would have to prove that the foreign rights would
have ultimately issued, that question itself does not raise a
“substantial” question of U.S. patent law, focusing as it does

3

Nor am I persuaded by defendants’ attempt to focus the
inquiry on their alleged failure to “timely” file the foreign
patent applications by listing off the sections of federal
patent law which determine whether a foreign patent
application is, in fact, timely.
The issue here is not
whether an admitted filing was, or was not, timely. Rather,
the issue is defendant’s failure to file the foreign patent
applications at all.
To the extent a court would have to
consult the U.S. patent laws on this issue, such an inquiry
would only be secondary to the main state law issues.
11

on foreign law, with any questions concerning U.S. patent law
secondary to the issues of foreign law.

Further, Caldera has

at least one theory of reliance damages which does not
requires a showing that the patents would have actually
issued.4

See Complaint ¶¶ 76, 88, 102, 112.5

In addition, there are a number of additional reasons why
this case should proceed in state court.

First, any inquiry

implicating patent law is specific to the facts of this case.
Even if Caldera had to show that the foreign patents would
have

issued,

a

court’s

analysis

will

be

based

hypothetical situation with no precedential effect.

on

a

Further,

4

Given the fact that Caldera has at least one theory of
damages which would not require it to prove that the patents
would have actually issued, I reject LANS’ reliance on
Landmark Screens, LLC v. Morgan, Lewis, Bockius, LLP, __ F.3d
__, 2012 WL 1382855 (Fed. Cir. Apr. 23, 2012) and USPPA, Ltd.
v. Avery Dennison Corp., __ F.3d. __, 2012 WL 1292886 (Fed.
Cir. Apr. 17, 2012).
5

Defendants provide a single sentence about Helfgott &
Karas, P.C. v. Dickenson, 209 F.3d 1328, 1334-35 (Fed. Cir.
2000), which they claim stands for the proposition that
“determinations made pursuant to the PCT confer jurisdiction
under 1338(a).” Despite the fact that defendants failed to
present any discussion or analysis of this case, I reviewed
the case and find it factually distinguishable from the
instant case.
Unlike the distinct facts of this case,
Dickenson involved claims against the Commissioner of the
Patent and Trademark Office under the Administrative Procedure
Act, wherein the inventor alleged that the PTO Commissioner
“acted arbitrarily and capriciously” when he failed to allow
certain errors to be corrected in a patent application. 209
F.3d at 1335.
12

such a ruling will not serve to cause an invention to be
patented or strip a method or invention of its patent.
Because the potential federal issues require only application
of federal law to the specific facts of this case, the
resolution of those issues will not be controlling in numerous
other cases.
The final reason why jurisdiction cannot be predicated on
§ 1338 is the removal statute’s strict presumption against
removal.

The removal statutes are “to be strictly construed

against removal and all doubts should be resolved in favor or
remand.”

Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d

Cir. 1990). Despite defendants’ suggestion that a state court
judge could not handle the issues raised in this case, I
disagree. It is well-settled that state courts may adjudicate
patent law issues provided that they collaterally arise under
a cause of action over which the state court has subject
matter jurisdiction. Pratt v. Paris Gas Light & Coke Co., 168
U.S. 255, 259 (1897). In addition, the resolution of tort and
contract disputes have been traditionally under the purview of
the state courts.

If this court were to extend federal

jurisdiction to matters which only tangentially implicate
patent laws the traditional balance between federal and state
jurisdiction would be disrupted.
13

In the end, because each of Caldera’s causes of action
can potentially be established by defendants’ failure to
secure foreign patent rights, each of Caldera’s claims has an
alternate theory that does not require a resolution of federal
patent law.

Thus, under Christianson, remand is appropriate

in this matter.
Finally, I note that my decision to order remand in this
case is consistent with the recent opinion of the California
Appellate Court in Caldera Pharmaceuticals, Inc. v. Regents of
the University of California, et al., Case No. A129727, dated
4/24/12. In that case, which mirrors this one with respect to
the parties and the legal theories involved, the appellate
court reversed the lower court’s ruling and concluded that
there were no substantial issues of federal patent law in the
dispute between Caldera and the Regents/LANS.
In conclusion, Caldera’s motion to remand [70] is
granted.

LANS’ request for further briefing is denied.

All

other pending motions [8, 18, 66] are denied as moot.
ENTER ORDER:

____________________________
Elaine E. Bucklo
United States District Judge
Dated:

May 11, 2012
14