Court Opinion

ID: 814683
Source: CourtListenerOpinion
Date Created: 2013-01-03 20:08:22+00
Date Added: 2024-06-11T15:40:13.013774
License: Public Domain

Case: 12-1401    Document: 30     Page: 1   Filed: 01/03/2013

           NOTE: This order is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                __________________________

                   JOHN L. DEROSA,
                    Plaintiff-Appellee,
                             v.
  J.P. WALSH & J.L. MARMO ENTERPRISES, INC.,
               Defendant-Appellant.
                __________________________

                        2012-1401
                __________________________

    Appeal from the United States District Court for the
 Eastern District of Virginia in case no. 10-CV-0287, Judge
 Claude M. Hilton.

     Before BRYSON, LINN and REYNA, Circuit Judges.
 LINN, Circuit Judge.
                        ORDER
     J.P. Walsh & J.L. Marmo Enterprises, Inc. (“Marmo”)
 responds to the court’s order requiring it to show cause
 why this appeal should not be transferred to the United
 States Court of Appeals for the Fourth Circuit.
     The November 1998 agreement at the center of this
 dispute assigned John L. Derosa’s patent rights in his
 router chuck invention exclusively to Marmo, and, in
 exchange, Marmo agreed to manufacture and sell the
Case: 12-1401      Document: 30    Page: 2    Filed: 01/03/2013

 JOHN DEROSA    v. J.P. WALSH                               2

 router chuck from which DeRosa would receive a certain
 percentage of the sales.
     In March 2010, apparently unsatisfied with Marmo’s
 efforts to manufacture and sell his invention, DeRosa filed
 the underlying complaint in Virginia state court. The
 thrust of that complaint was as follows:
       [T]he failure by [Marmo] to abide by its con-
       tractual and financial obligations under the
       contract have denied [DeRosa] the bargained
       for benefit thereof, that is steady flow of
       manufacturing business and the timely
       payment for the product by [Marmo] which
       may be remedied only by rescission or cancel-
       lation of the contract and the restoration of
       ownership of the patent rights in [DeRosa’s]
       intellectual property, his invention, the
       DeRosa Chuck.
     The action was removed to the United States District
 Court for the Eastern District of Virginia and subse-
 quently referred to an arbitrator. The arbitrator found
 Marmo in breach of the assignment contract and awarded
 damages to DeRosa but declined to rescind the contract.
 The decision was ultimately confirmed by the district
 court, and this appeal followed.
       This court is a court of limited jurisdiction. See
 28 U.S.C. § 1295. The Supreme Court has explained that
 in order for this court to have appellate jurisdiction over a
 patent infringement case, the case must have arisen
 under the patent laws such that the plaintiff's well-
 pleaded complaint must “establis[h] either that federal
 patent law creates the cause of action or that the plain-
 tiff's right to relief necessarily depends on resolution of a
 substantial question of federal patent law....” Holmes
 Group, Inc. v. Vornado Air Circulation Systems, Inc., 535
Case: 12-1401    Document: 30     Page: 3    Filed: 01/03/2013

 3                                 JOHN DEROSA   v. J.P. WALSH

 U.S. 826, 830 (2002); see also 28 U.S.C. §§ 1295(a)(1) and
 1338.
     Causes of action based on contractual rights in a pat-
 ent assignment or license agreement as a general rule do
 not arise under the patent laws. See Luckett v. Delpark,
 Inc., 270 U.S. 496, 502-03 (1926); New Marshall Engine
 Co. v. Marshall Engine Co., 223 U.S. 473 (1912). Marmo
 nonetheless argues that the appeal is properly before this
 court because the complaint specifically requests a resto-
 ration of ownership in patent rights.
     That DeRosa’s complaint ultimately sought to restore
 ownership in the invention is of no great significance.
 The focus of the jurisdictional inquiry is whether the
 plaintiff “set up some right, title or interest under patent
 laws, or at least makes it appear that some right or
 privilege will be defeated by one construction, or sus-
 tained by the opposite construction of these laws.”
 Christianson v. Colt Industries Operating Corp., 486 U.S.
800, 807-08 (1988).
     The complaint in this case did not turn on such a
 claim. The alleged harm stated was Marmo’s failure to
 abide by its “contractual and financial obligations under
 the contract” resulting in DeRosa not having received the
 “bargained for benefit” of “a steady flow of manufacturing
 business and the timely payment for the product.” Al-
 though a restoration of patent ownership is sought in the
 complaint, such relief is entirely premised on the claim
 that Marmo’s failure to fulfill its obligations under the
 contract warrants a remedy of rescission. As such, this
 case does not arise under the patent laws, and we do not
 have jurisdiction.
     In Jim Arnold Corp. v. Hydrotech Systems, Inc., 109
F.3d 1567 (Fed. Cir. 1997), a case very similar to this one,
 this court held that a plaintiff seeking rescission of a
 patent assignment agreement in order to restore owner-
Case: 12-1401         Document: 30   Page: 4   Filed: 01/03/2013

 JOHN DEROSA    v. J.P. WALSH                                4

 ship rights in a patent could not meet the jurisdictional
 test set forth in Christianson. As in the present case, the
 plaintiff in Jim Arnold had no rights in the patent with-
 out judicial intervention and was thus left only to argue
 that ownership of the patents should be restored based
 upon a breach of contract claim. Because a plaintiff under
 such circumstances could at best only present a frivolous
 allegation of ownership of the patents at issue sufficient
 to confer jurisdiction under section 1338, we transferred
 the case to the regional circuit. Since the same outcome is
 warranted here, pursuant to 28 U.S.C. § 1631, we transfer
 the case to the Fourth Circuit.
       Accordingly,
       IT IS ORDERED THAT:
     The     appeal    is    transferred   pursuant      to
 28 U.S.C. § 1631 to the United States Court of Appeals for
 the Fourth Circuit.

                                       FOR THE COURT

                                       /s/ Jan Horbaly
                                       Jan Horbaly
                                       Clerk
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