Court Opinion

ID: 2991430
Source: CourtListenerOpinion
Date Created: 2015-09-23 03:56:32.588261+00
Date Added: 2024-06-11T11:38:36.460637
License: Public Domain

Petition for Writ of Mandamus Denied and Memorandum Opinion filed October 4,
2011.

                                         In The

                      Fourteenth Court of Appeals

                                   NO. 14-11-00796-CV

 IN RE DOW AGROSCIENCES LLC AND THE DOW CHEMICAL COMPANY,
                           Relators

                            ORIGINAL PROCEEDING
                              WRIT OF MANDAMUS
                                 11th District Court
                                Harris County, Texas
                          Trial Court Cause No. 2010-29975

                        MEMORANDUM OPINION

      On September 14, 2011, relators Dow Agrosciences LLC and The Dow Chemical
Company (collectively referred to as ―Dow‖) filed a petition for writ of mandamus in this
court. See Tex. Gov’t Code Ann. §22.221; see also Tex. R. App. P. 52. In the petition,
Dow asks this court to compel the Honorable Mike Miller, presiding judge of the 11th
District Court of Harris County to vacate his September 12, 2011 order denying Dow’s
plea to the jurisdiction. Dow contends that Cooper’s state-law tortious interference claim
pending against it in the 11th District Court is subject to exclusive federal jurisdiction and
should be dismissed because that claim implicates federal patent law.

                                        Background

       Cooper Industries and ABB signed a Settlement and License Agreement on
October 7, 2005, which resolved a 2003 lawsuit in which Cooper alleged that ABB’s
BIOTEMP product infringed several patents owned by Cooper. BIOTEMP is a vegetable
oil-based dielectric fluid used to electrically insulate and thermally protect electrical
distribution and power equipment such as transformers. Cooper holds the patents on
BIOTEMP.

       Since 2009, Dow has been producing BIOTEMP. Cooper alleged that ABB has
the right to produce BIOTEMP under the Settlement and License Agreement, but does
not have the right to license production to Dow. At least three disputes have arisen
concerning the Settlement and License Agreement, and the production of BIOTEMP.
The disputes include (1) competing declaratory judgment actions filed in state and federal
court; (2) a breach of contract action filed in the 334th District Court in Harris County,
currently pending in state court; and (3) a tortious interference action filed in the 11th
District Court in Harris County. The tortious interference action is the underlying action
in this mandamus.

       Declaratory Judgment Actions

       On July 29, 2009, ABB sued Cooper in the United States District Court for the
Southern District of Texas seeking a declaration that its activities are authorized under
the Settlement and License Agreement.         In September 2009, Cooper filed its own
declaratory judgment action in state district court seeking a declaration that the agreement
did not allow Dow to manufacture BIOTEMP for ABB, and that ABB’s actions exceeded
its rights under the agreement. ABB, Inc. and ABB Holdings, Inc. v. Cooper Industries,

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LLC and Cooper Power Systems, Inc., 635 F.3d 1345, 1346 (Fed. Cir. 2011).                On
November 16, 2009, ABB amended its complaint in federal district court; as amended,
the complaint seeks a declaration that ABB ―does not infringe, and has not infringed
directly, willfully or otherwise, any valid enforceable claim‖ of the Cooper patents. Id.
The Federal Circuit held that federal jurisdiction exists for this dispute because the
controversy in the declaratory judgment action focuses on patent infringement. Id. at
1350.

        Breach of Contract Action

        On September 8, 2009, Cooper sued ABB in the 334th District Court in Harris
County seeking a declaration that the Settlement and License Agreement did not allow a
third party to manufacture BIOTEMP. ABB filed notice of removal to the United States
District Court for the Southern District of Texas. The federal district court remanded the
case after concluding that ―Cooper has not artfully pleaded a contract claim around a
necessarily federal patent dispute.‖ Cooper Industries, L.L.C., et. al. v. ABB Holdings,
Inc., et. al., No. H-09-3534; 2010 WL 173547 at *3 (S.D. Tex. Jan. 19 2010) (not
reported in F.Supp.2d). In so doing, the federal district court stated that Cooper’s action
against ABB ―does not center on whether BIOTEMP falls within the Cooper patents –
that is undisputed.‖ Id. at ___. ―It is a question of whether the license agreement allows
ABB to manufacture BIOTEMP via a third party.‖ Id. ―Such a determination rests on
contract interpretation, not patent law.‖ Id. ―Remand, therefore, is appropriate.‖ Id.

        On March 11, 2010, Cooper amended its suit in the 334th District Court to include
a breach of contract claim and demand for actual damages and injunctive relief. On
March 3, 2011, ABB removed the suit in the 334th District Court for a second time.

        ABB predicated its second removal on a footnote in the Federal Circuit’s 2011
opinion addressing the separate federal action in which ABB sought a declaration of non-

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infringement. The federal district court again remanded the case because: (1) ABB’s
notice of removal was untimely, and (2) the Federal Circuit ―did not issue a holding
impacting this case‖ in its 2011 opinion Cooper Industries, L.L.C. and Cooper Power
Systems, Inc. v. ABB Holdings Inc. and ABB Inc., No. H-11-791 (S.D. Tex. May 25,
2011) (not reported in F.Supp.2d) (original emphasis).

       ABB subsequently filed a plea to the jurisdiction in the 334th District Court
requesting dismissal of Cooper’s breach of contract action based on federal jurisdiction
over patent disputes. The 334th District Court denied ABB’s plea on August 11, 2011.

       Tortious Interference Action

       On May 12, 2010, Cooper filed the underlying action in the 11th District Court in
Harris County. In that suit, Cooper asserted claims for tortious interference and civil
conspiracy against Dow. Cooper alleged that Dow interfered with the Settlement and
License Agreement between Cooper and ABB by (1) manufacturing BIOTEMP for ABB,
and (2) receiving assistance from ABB in a suit Dow filed against Cooper in Indiana
federal court.

       On March 3, 2011, Dow removed the tortious interference action to the United
States District Court for the Southern District of Texas. On July 15, 2011, the federal
district court remanded the case.

       On August 19, 2011 — eight days after the 334th District Court ruled on ABB’s
plea to the jurisdiction in the breach of contract action between Cooper and ABB — Dow
filed a plea to the jurisdiction in the 11th District Court. In its plea, Dow argued that
footnote 3 of the Federal Circuit’s 2011 opinion ―confirmed that an essential element of
one of plaintiffs’ tortious interference claims in this case raises a substantial question of
federal patent law, conferring exclusive federal jurisdiction over this claim[.]‖        On

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September 12, 2011, the respondent denied Dow’s plea to the jurisdiction in the tortious
interference action. This petition for writ of mandamus followed.

                                   Mandamus Standard

       Mandamus relief is appropriate only if a trial court abuses its discretion and no
adequate appellate remedy exists. In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003).
Mandamus relief is available if the trial court abuses its discretion, either in resolving
factual issues or in determining legal principles, when there is no other adequate remedy
at law. See Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992). A trial court abuses
its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear
and prejudicial error of law, or if it clearly fails to analyze or apply the law correctly. In
re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005).

                                          Analysis

       Dow invokes footnote 3 of the Federal Circuit’s 2011 opinion to argue that a
substantial question of federal patent law is presented by Cooper’s tortious interference
action in the 11th District court.. Footnote 3states:

       Even if [Cooper] did [seek damages under a contract theory], such a claim
       would be within federal subject matter jurisdiction because Cooper’s ―right
       to relief [would] necessarily depend [ ] on resolution of a substantial
       question of federal law,‖ i.e. whether ABB had, in fact, infringed the
       patents. See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800,
       808, 108 S. Ct. 2166, 100 L. Ed. 2d 811 (1988) (quoting Franchise Tax Bd.
       of Cal. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27–28, 103 S. Ct.
2841, 77 L. Ed. 2d 420 (1983)).

ABB, Inc., 635 F.3d at 1348, n. 3. Dow relies on this footnote in contending that
Cooper’s claim predicated on Dow’s alleged tortious interference with the Settlement and
License Agreement between Cooper and ABB depends on the resolution of a substantial
question of patent law..

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       In addressing the nature of Cooper’s claim against ABB for breaching the
Settlement and Licensing Agreement following the second removal, ABB, the federal
district court held that the Federal Circuit’s footnote 3 discussion of removability (1) was
not essential to its ruling with respect to federal jurisdiction over ABB’s separate action
seeking a declaration of non-infringement following Cooper’s threat to enforce its patent
rights; and (2) did not constitute a binding ruling. Cooper Industries, L.L.C. and Cooper
Power Systems, Inc. v. ABB Holdings Inc. and ABB Inc., slip op. at p. 7.

       The federal district court held:

       The Federal Circuit’s assertion that a claim it did not believe Cooper to be
       making would be removable if it were raised is clearly not essential to that
       court’s ruling that ABB’s separate declaratory judgment action is within the
       subject matter jurisdiction of the federal courts. It is, in fact, classic dictum.

                                              *****

       [T]he Federal Circuit has not issued a ruling on the issue of removability in
       this case — and certainly did not do so by making a passing mention of its
       unsolicited view on removal in the hypothetical it propounded. While it is
       essential to the Federal Circuit’s ruling to note what it perceives to be a lack
       of available remedies under state law so as to support its conclusion that
       Cooper must ultimately resort to a patent infringement suit, it is entirely
       unnecessary to that ruling to determine whether any particular state law
       claim Cooper has or has not made is or would be removable. Therefore,
       there is no ―binding ruling‖ issued in this case by the Federal Circuit, and,
       accordingly, no basis for removal arising therefrom.

Id. (original emphasis).

       ABB invoked footnote 3 again after the second remand by way of a plea to the
jurisdiction in the breach of contract action pending in the 334th District Court; that court
also denied the plea to the jurisdiction. .

        Following an unsuccessful effort to remove the tortious interference claim against
it, Dow also filed a plea to the jurisdiction in the 11th District Court invoking footnote 3
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of the 2011 Federal Circuit opinion. This is the same argument ABB relied upon in
ABB’s failed second removal of the breach of contract action. The result is the same.

       We agree with the federal district court’s analysis regarding the absence of a
cognizable holding in footnote 3 of the 2011 Federal Circuit opinion with respect to
removability or the federal nature of claims other than the specific claim being resolved
in that appeal — namely, ABB’s requested declaration of non-infringement.

       We also agree with the federal district court’s analysis of Cooper’s reliance upon
the Settlement and License Agreement as a basis for pursuing state-court claims. As the
federal district court recognized, Cooper’s contract-based claim against ABB does not
focus on whether BIOTEMP falls within the Cooper patents. It does. Instead, Cooper’s
contract-based claim against ABB focuses on ―whether the license agreement allows
ABB to manufacture BIOTEMP via a third party‖ and ―rests on contract interpretation,
not federal patent law.‖     Dow — the ―third party‖ hired by ABB to manufacture
BIOTEMP – is being sued in the 11th District Court for tortiously interfering with the
Settlement and License Agreement. That dispute too focuses on whether the license
agreement allows BIOTEMP to be manufactured by someone other than ABB and rests
on the contract rather than federal patent law.

       Under these circumstances we cannot say the trial court reached a decision so
arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or that its
decision clearly fails to analyze or apply the law correctly.        Finding no abuse of
discretion, we deny Dow’s petition for writ of mandamus.

                                                  PER CURIAM

Panel consists of Justices Anderson, Seymore, and Boyce.

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