Court Opinion

ID: 867989
Source: CourtListenerOpinion
Date Created: 2013-05-16 15:43:29.927132+00
Date Added: 2024-06-11T09:06:52.175538
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

FORRESTER ENVIRONMENTAL SERVICES, INC.,
        AND KEITH E. FORRESTER,
            Plaintiffs-Appellants,

                           v.

     WHEELABRATOR TECHNOLOGIES, INC.,
              Defendant-Appellee.
            ______________________

                      2012-1686
                ______________________

    Appeal from the United States District Court for the
District of New Hampshire in No. 10-CV-0154, Judge
Joseph N. Laplante.
                ______________________

                Decided: May 16, 2013
                ______________________

   SIBLEY P. REPPERT, Pearl Cohen Zedek Latzer LLP, of
Boston, Massachusetts, argued for plaintiffs-appellants.

   STEVEN E. GRILL, Devine, Millimet & Branch, P.A., of
Manchester, New Hampshire, argued for defendant-
appellee.
               ______________________
2        FORRESTER ENVIRONMENTAL    v. WHEELABRATOR TECH.
    Before NEWMAN, BRYSON, and DYK, Circuit Judges.
DYK, Circuit Judge.
    Plaintiffs Forrester Environmental Services, Inc. and
Keith E. Forrester (collectively “Forrester”) appeal from a
final judgment of the United States District Court for the
District of New Hampshire. The district court granted
summary judgment for defendant Wheelabrator Technol-
ogies, Inc. (“Wheelabrator”) regarding Forrester’s busi-
ness tort claims based on New Hampshire law. Forrester
contends that the district court lacked subject-matter
jurisdiction over its state law claims and, in the alterna-
tive, that the district court erred on the merits.
    We conclude that the district court lacked subject-
matter jurisdiction over Forrester’s claims. We therefore
vacate the district court judgment and remand to the
district court with instructions to remand the case to New
Hampshire state court.
                       BACKGROUND
     Forrester and Wheelabrator are competitors in the
market for phosphate-based treatment systems for stabi-
lizing heavy metals in municipal and industrial waste
such as incinerator ash. These treatments prevent the
heavy metals from potentially leaching into sources of
drinking water. Wheelabrator calls its treatment system
“WES-PHix” and has obtained several related U.S. pa-
tents, including U.S. Patent Nos. 4,737,356 (“the ’356
patent”), 5,430,233 (“the ’233 patent”), and 5,245,114 (“the
’114 patent”). Forrester calls its system “FESI-BOND”
and it too has obtained U.S. patents on its waste treat-
ment system.
    In 2001, Wheelabrator entered into a license agree-
ment with a Taiwanese company called Bio Max Envi-
ronmental Engineering (“Bio Max”). The license stated
that Wheelabrator “owns certain technical information
and patents relating to the service of WES-PHix®” and
 FORRESTER ENVIRONMENTAL    v. WHEELABRATOR TECH.       3
that Wheelabrator “is willing to grant[] the right and
license to commercially provide the service of WES-PHix®
under said patents . . . in Taiwan.” J.A. 328. The terms
of the license granted Bio Max “the exclusive license and
right to utilize and sublicense WES-PHix® . . . anywhere
in Taiwan.” J.A. 331. Bio Max then sublicensed WES-
PHix to Kobin Environmental Enterprise Co., Ltd.
(“Kobin”). 1 Kobin used WES-PHix to treat incinerator ash
at its plant in Taipei, Taiwan. The sublicense required
Kobin to pay royalties either to Bio Max or Wheelabrator,
depending on the status of the Bio Max/Wheelabrator
license.
    In 2004, Forrester learned that Kobin was dissatisfied
with WES-PHix due to the odor it generated. Forrester
developed a variation on its FESI-BOND system using
dicalcium phosphate dihydrate powder (“DCPDHP”) to
address the odor problem and persuaded Kobin to license
FESI-BOND for use at Kobin’s Taipei plant. In April
2005, Kobin began regularly purchasing DCPDHP from
Forrester.
    On March 17, 2006, Wheelabrator sent Kobin a letter
asserting that Kobin was in breach of its WES-PHix
sublicense agreement for failure to pay royalties. The
letter stated that “Wheelabrator understands that Kobin
is using a phosphate-based process to treat municipal
waste combustion ash . . . at Kobin’s [a]sh processing
facility in Taiwan” and that “[t]he Sublicense Agreement
obligates Kobin to pay Bio Max or Wheelabrator . . . for
each tonne of [a]sh stabilized by phosphate at its [a]sh
processing facility.” J.A. 1451. The letter also threatened
legal action in Taiwan to enforce the sublicense agree-
ment.

   1    Kobin was previously known as Kuo-Bin Ceramic,
Inc. As the name change is immaterial, for the sake of
simplicity we refer to both entities simply as “Kobin.”
4        FORRESTER ENVIRONMENTAL     v. WHEELABRATOR TECH.
    In November 2006, Kobin stopped purchasing
DCPDHP from Forrester and entered into a new WES-
PHix sublicense with Wheelabrator. The license defined
WES-PHix as “the patented . . . and proprietary process of
immobilization of metals, such as lead and cadmium, in
solid residues . . . using any solid, liquid or chemical form
of phosphate and/or lime.” J.A. 1281–82. The agreement
specifically referenced the ’356, ’233, and ’114 patents,
and granted “the right and license to utilize . . . WES-
PHix® under said patents . . . in Taiwan.” J.A. 1279. The
agreement did not explain how U.S. patents could be
licensed for activities in Taiwan.
    On February 23, 2010, Forrester filed suit against
Wheelabrator in the Superior Court of the State of New
Hampshire, Belknap County. Forrester’s second amended
complaint alleged four causes of action, all based on New
Hampshire state law: (1) a violation of the New Hamp-
shire Consumer Protection Act, see N.H. Rev. Stat. Ann.
§ 358-A:2; (2) tortious interference with a contractual
relationship; (3) tortious interference with Forrester’s
prospective advantage; and (4) trade secret misappropria-
tion, see N.H. Rev. Stat. Ann. § 350-B. Forrester alleged
that “Kobin met with [Wheelabrator] in Hampton, New
Hampshire” in June 2007, and that “at said meeting,
[Wheelabrator] stated to Kobin that [Wheelabrator’s]
patents and WES-PHix® technology covered DCPDHP
provided to Kobin by [Forrester].” J.A. 204. This claim of
U.S. patent coverage was allegedly false.        Forrester
further contended that “Kobin terminated its business
with [Forrester] by reason of [Wheelabrator’s] false
statements and representations as above alleged.” Id.
    Wheelabrator removed the case to the United States
District Court for the District of New Hampshire on April
21, 2010. Forrester filed a motion to remand to state
court on May 3, 2010, arguing that the district court
lacked subject-matter jurisdiction. In response, Wheela-
brator argued that there was federal jurisdiction under
 FORRESTER ENVIRONMENTAL    v. WHEELABRATOR TECH.        5
Christianson v. Colt Industries Operating Corp., 486 U.S.
800 (1988), because Forrester could only recover if it
prevailed on a substantial question of U.S. patent law.
    The district court denied Forrester’s remand motion
without written order on July 16, 2010. The district court
then granted summary judgment for Wheelabrator in
three separate orders. First, the district court granted
summary judgment on Forrester’s trade secret misappro-
priation claim, concluding that Forrester had provided no
evidence of misappropriation. Forrester Envtl. Servs., Inc.
v. Wheelabrator Techs., Inc., No. 10-cv-154, 2011 WL
6300536 (D.N.H. Dec. 16, 2011). Second, the district court
granted summary judgment that Forrester’s remaining
claims were barred by the applicable statute of limitations
“except to the extent they are premised upon alleged
misrepresentations made to representatives of Kobin . . .
by Wheelabrator on or around June 14, 2007.” Forrester
Envtl. Servs., Inc. v. Wheelabrator Techs., Inc., No. 10-cv-
154, 2012 WL 3420185, at *12 (D.N.H. Aug. 15, 2012).
Finally, the district court granted summary judgment in
favor of Wheelabrator on Forrester’s remaining claims as
to alleged misrepresentations made on or around June 14,
2007. Forrester Envtl. Servs., Inc. v. Wheelabrator Techs.,
Inc., No. 10-cv-154, 2012 WL 3420487 (D.N.H. Aug. 15,
2012). The district court reasoned that Forrester had “not
produced any admissible evidence that [it] suffered injury
as a result of Wheelabrator’s conduct on June 14, 2007,”
and that “injury is an essential element of each of [For-
rester’s] claims.” Id. at *1. Forrester timely appealed.
                       DISCUSSION
    This case requires us to address at the outset the ju-
risdiction of the district court. “We review issues of
jurisdiction de novo.” Prasco, LLC v. Medicis Pharm.
Corp., 537 F.3d 1329, 1335 (Fed. Cir. 2008).
6        FORRESTER ENVIRONMENTAL     v. WHEELABRATOR TECH.
                              I
    Under 28 U.S.C. § 1441(a), a defendant may remove
to federal district court “any civil action brought in a
State court of which the district courts of the United
States have original jurisdiction.” 28 U.S.C. § 1441(a). As
we stated in Jim Arnold Corp. v. Hydrotech System, Inc.:
    The question we must answer . . . is whether fed-
    eral subject-matter jurisdiction would exist over
    this case had it originally been filed in federal
    court. If the answer is yes, then removal was
    proper, and the matter is before us on the merits;
    if the answer is no, then removal was improper
    and federal courts are without jurisdiction to de-
    termine the cause.
109 F.3d 1567, 1571 (Fed. Cir. 1997).
    The question here is whether the district court would
have had original jurisdiction under 28 U.S.C § 1338,
which gives federal district courts original jurisdiction
over “any civil action arising under any Act of Congress
relating to patents.” 28 U.S.C. § 1338(a). In Christianson
v. Colt Industries Operating Corp., the Supreme Court
held that a claim may “aris[e] under” the patent laws
even where patent law did not create the cause of action,
provided that the “well-pleaded complaint establishes . . .
that the plaintiff’s right to relief necessarily depends on
resolution of a substantial question of federal patent law.”
486 U.S. 800, 808–09 (1988). Thus, even a cause of action
created by state law may “aris[e] under” federal patent
law within the meaning of 28 U.S.C. § 1338 if it involves a
patent law issue that is “(1) necessarily raised, (2) actual-
ly disputed, (3) substantial, and (4) capable of resolution
in federal court without disrupting the federal-state
 FORRESTER ENVIRONMENTAL    v. WHEELABRATOR TECH.        7
balance approved by Congress.” Gunn v. Minton, 568
U.S. ___, ___, 133 S. Ct. 1059, 1065 (2013). 2
    In its recent decision in Gunn v. Minton, the Supreme
Court made clear that state law legal malpractice claims
will “rarely, if ever, arise under federal patent law,” even
if they require resolution of a substantive question of
federal patent law. 568 U.S. at ___, 133 S. Ct. at 1065,
1067. The Court reasoned that while such claims may
“necessarily raise disputed questions of patent law,” those
questions are “not substantial in the relevant sense.” Id.
at 1065–66. The Court emphasized that “[b]ecause of the
backward-looking nature of a legal malpractice claim, the
question is posed in a merely hypothetical sense” and that
“[n]o matter how the state courts resolve that hypothet-
ical ‘case within a case,’ it will not change the real-world
result of the prior federal patent litigation.” Id. at 1066–
67. Because the malpractice claim portended no forward-
looking consequences and created no real possibility of
inconsistent judgments between state and federal courts,
and in view of the “‘especially great’” state interest in
regulating lawyers, the Court concluded that the patent

   2     The language of section 1338 parallels that of sec-
tion 1331, which gives district courts original jurisdiction
over cases “arising under the Constitution, laws, or trea-
ties of the United States.” 28 U.S.C. § 1331. With respect
to district courts’ general “federal question jurisdiction”
under section 1331, the Supreme Court has long held that
state law claims may sometimes “aris[e] under” federal
law for the purposes of district court jurisdiction. See
Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg.,
545 U.S. 308, 312–14 (2005). And in Christianson and
Gunn, the Supreme Court made clear that the same test
applies whether the district court’s potential jurisdiction
is premised on section 1331 or section 1338. Christian-
son, 486 U.S. at 808–09; Gunn, 568 U.S. at ___, 133 S. Ct.
at 1064.
8         FORRESTER ENVIRONMENTAL      v. WHEELABRATOR TECH.
law issues were not sufficiently “substantial” to create
federal jurisdiction. See id. at 1066–68 (quoting Goldfarb
v. Va. State Bar, 421 U.S. 773, 792 (1975)).
                               II
    Wheelabrator argues that Forrester’s claims neces-
sarily raise a substantial issue of patent law because
Forrester “seeks relief based upon allegations that [Whee-
labrator] has made a false statement about a United
States patent” and “such allegations necessarily require
the trial court to construe the claims of the patent in
order to determine whether the alleged statements were,
indeed, false.” Appellee’s Br. 30.
    In the past, we have concluded that similar state law
claims premised on allegedly false statements about
patents raised a substantial question of federal patent
law. For example, in Additive Controls & Measurement
Systems, Inc. v. Flowdata, Inc., we concluded that the
plaintiff’s state law business disparagement claims arose
under patent law for the purposes of 28 U.S.C. § 1338.
986 F.2d 476, 478 (Fed. Cir. 1993). We noted that under
state law, “a business disparagement claim requires [the]
plaintiff to prove . . . the falsity of [the] defendant’s alleg-
edly disparaging statements.” Id. There, the allegedly
disparaging statement was an accusation of patent in-
fringement; thus, we concluded that in order to prove the
falsity of that statement, the plaintiff would have to
“show that its product does not infringe the . . . patent.”
Id. Reasoning that the infringement issue presented a
substantial question of patent law, we concluded that the
claims arose under federal patent law for the purposes of
§ 1338. Id. at 478–79. Similarly in Hunter Douglas, Inc.
v. Harmonic Design, Inc., the plaintiff asserted a claim for
“injurious falsehood” on the theory that the defendant
falsely claimed to “hold exclusive rights to make or sell
window shades covered by one or more” patents. 153 F.3d
1318, 1329 (Fed. Cir. 1998) (quotation marks omitted),
 FORRESTER ENVIRONMENTAL    v. WHEELABRATOR TECH.        9
overruled on other grounds by Midwest Indus., Inc. v.
Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir. 1999) (en
banc). We concluded that the plaintiff’s claim arose under
federal patent law because the question of falsity turned
on issues of validity and enforceability, which presented
“a substantial question of federal patent law.” Hunter
Douglas, 153 F.3d at 1329–31.
    Those cases may well have survived the Supreme
Court’s decision in Gunn. Unlike the purely “backward-
looking” legal malpractice claim in Gunn, 568 U.S. at ___,
133 S. Ct. at 1066–67, permitting state courts to adjudi-
cate disparagement cases (involving alleged false state-
ments about U.S. patent rights) could result in
inconsistent judgments between state and federal courts.
For example, a federal court could conclude that certain
conduct constituted infringement of a patent while a state
court addressing the same infringement question could
conclude that the accusation of infringement was false
and the patentee could be enjoined from making future
public claims about the full scope of its patent as con-
strued in federal court.
    But this possibility of future conflict does not arise
here. Wheelabrator’s allegedly inaccurate statements
regarding its patent rights concerned conduct taking place
entirely in Taiwan. Those statements did not concern
activities that could infringe U.S. patent rights, and it is
not entirely clear why the Taiwanese entities in this case
cared about the extent of Wheelabrator’s U.S. patent
rights. The use of a patented process outside the United
States is not an act of patent infringement. 3 While the

   3    See 35 U.S.C. § 271(a) (“[W]hoever without au-
thority makes, uses, offers to sell, or sells any patented
invention, within the United States . . . infringes the
patent.” (emphasis added)); see also Litecubes, LLC v. N.
Light Prods., Inc., 523 F.3d 1353, 1357 (Fed. Cir. 2008)
(“A plaintiff must prove that allegedly infringing activity
10       FORRESTER ENVIRONMENTAL      v. WHEELABRATOR TECH.
importation into the United States of a product produced
by a U.S. patented process can constitute infringement,
see, e.g., 35 U.S.C. § 271(g); Bayer AG v. Housey Pharm.,
Inc., 340 F.3d 1367, 1371 (Fed. Cir. 2003), there is no
suggestion here that any product was being imported into
the United States. Therefore there is no prospect of a
future U.S. infringement suit arising out of Kobin’s use of
WES-PHix or FESI-BOND in Taiwan, and accordingly no
prospect of inconsistent judgments between state and
federal courts. Moreover, the ’356, ’233, and ’114 patents
have all now expired, so there is also no prospect that
future conduct in the U.S. could lead to an infringement
suit regarding those patents. Here, as in Gunn, the
potential conflict is purely “hypothetical.” See 568 U.S. at
___, 133 S. Ct. at 1067.
    Wheelabrator argues that this case nevertheless rais-
es a substantial question of federal patent law because
“resolution of the claim construction . . . issues necessarily
raised by [Forrester’s] Amended Petition would have . . .
potential preclusive effects in any future litigation involv-
ing the patents-in-issue.” Appellee’s Supp. Br. 2 (empha-
sis removed). But the Supreme Court rejected a related
argument in Gunn, concluding that any such collateral
estoppel effect “would be limited to the parties and pa-
tents that had been before the state court,” and that
“[s]uch ‘fact-bound and situation-specific’ effects are not
sufficient to establish federal arising under jurisdiction.”

took place in the United States to prevail on claims of
patent . . . infringement . . . .”); Rotec Indus., Inc. v.
Mitsubishi Corp., 215 F.3d 1246, 1251 (Fed. Cir. 2000)
(“‘[T]he right conferred by a patent under our law is
confined to the United States and its territories, and
infringement of this right cannot be predicated of acts
wholly done in a foreign country.’” (quoting Dowagiac
Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641, 650
(1915)).
 FORRESTER ENVIRONMENTAL     v. WHEELABRATOR TECH.       11
568 U.S. at ___, 133 S. Ct. at 1067–68 (quoting Empire
HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677,
701 (2006)). 4 Wheelabrator further argues that there is
federal jurisdiction because Forrester seeks remedies that
might be preempted by federal patent law. However,
“[f]ederal pre-emption is ordinarily . . . a defense to the
plaintiff’s suit,” and “[a]s a defense, it does not appear on
the face of a well-pleaded complaint, and, therefore, does
not authorize removal to federal court.” Metro. Life Ins.
Co. v. Taylor, 481 U.S. 58, 63 (1987). Wheelabrator’s
jurisdictional arguments are therefore without merit. 5

    4   Forrester states that “[s]ince there is no claim of
infringement, and there is no federal jurisdiction under
the patent laws, any [claim] construction by the state
court could have no precedential or binding effect on a
subsequent patent infringement . . . action in federal
court.” Appellant’s Supp. Br. 2. We have no occasion here
to decide what collateral estoppel effect such a state court
adjudication would have in future infringement litigation.
    5   Wheelabrator also asserts that Forrester’s claim
of “misappropriation of proprietary method,” which was
withdrawn when Forrester filed its second amended
complaint, provides a separate basis for federal jurisdic-
tion because it “required construction of patent claims.”
Appellee’s Br. 28–29. With respect to that claim, Forrest-
er accused Wheelabrator of “licens[ing] to Kobin” a meth-
od that “would constitute infringement” of several patents
owned by Forrester if performed in the United States.
J.A. 149. As Forrester’s amended petition concedes,
however, “Kobin’s extraterritorial practice of the . . .
method is not protected by U.S. [p]atent [l]aw.” J.A. 149.
Forrester’s “misappropriation of proprietary method”
claim therefore provides no better foothold for federal
jurisdiction than Forrester’s other claims regarding
wholly extraterritorial conduct.
12        FORRESTER ENVIRONMENTAL    v. WHEELABRATOR TECH.
    In sum, we conclude that even if the allegations con-
tained in Forrester’s complaint necessarily raise a ques-
tion of patent law, the patent law issues are not
“substantial in the relevant sense” under Gunn. See 568
U.S. at ___, 133 S. Ct. at 1066. 6 Because the district court
lacked subject-matter jurisdiction over Forrester’s claims,
we vacate the district court’s judgment and remand to the
district court. On remand from this court, the district
court shall remand the case to New Hampshire state
court.
                 VACATED and REMANDED
                           COSTS
     No costs.

     6   Forrester also contends that the patent law issues
in this case are not “necessarily raised” because “there are
reasons unrelated to the provisions and purposes of the
patent laws why [Forrester] may or may not be entitled to
the relief [it] seek[s].” Appellant’s Br. 2; see also Chris-
tianson, 486 U.S. at 810 (citing Franchise Tax Bd. of State
of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463
U.S. 1, 26 (1983)). Because we find that the patent law
issue here is not substantial under Gunn, we do not reach
that issue.