Court Opinion

ID: 4302759
Source: CourtListenerOpinion
Date Created: 2018-08-10 15:00:55.705316+00
Date Added: 2024-06-11T14:30:56.652162
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

             MICHAEL PAPPALARDO,
                Plaintiff-Appellant

                           v.

               SAMANTHA STEVINS,
                  Defendant-Appellee
                ______________________

                      2018-1237
                ______________________

   Appeal from the United States District Court for the
Middle District of Florida in No. 2:17-cv-00346-SPC-CM,
Judge Sheri Polster Chappell.
                 ______________________

               Decided: August 10, 2018
                ______________________

    JOHN H. FARO, Faro & Associates, Miami, FL, for
plaintiff-appellant.

   SAMANTHA STEVINS, Samantha Stevins, Attorney At
Law, Naples, FL, for defendant-appellee.
                ______________________

Before LOURIE, O’MALLEY, and WALLACH, Circuit Judges.
2                                    PAPPALARDO v. STEVINS

WALLACH, Circuit Judge.
    Appellant Michael Pappalardo sued Appellee Saman-
tha Stevins in the U.S. District Court for the Middle
District of Florida (“District Court”), asserting state law
claims of fraud and negligent representation and seeking
a declaratory judgment naming him the sole inventor of
U.S. Patent Application SN 15/275,597 (“the ’597 applica-
tion”). The District Court issued an opinion and order
granting Ms. Stevins’s motion to dismiss Mr. Pappalardo’s
amended complaint for lack of subject matter jurisdiction.
See Pappalardo v. Stevins, No. 2:17-cv-346-FtM-38CM,
2017 WL 4553919, at *3 (M.D. Fla. Oct. 12, 2017).
    Mr. Pappalardo appeals. We have jurisdiction pursu-
ant to 28 U.S.C. § 1295(a)(1) (2012). We affirm-in-part,
vacate-in-part, and remand with instructions to dismiss
the declaratory judgment claim with prejudice.
                       BACKGROUND
    As alleged in the Amended Complaint, Mr. Pappalar-
do met Ms. Stevins at a pharmaceutical products trade
show and disclosed to her a concept for a new product.
See J.A. 55; see also Appellant’s Br. 13 (specifying product
was related to liquid and solid cannabis delivery systems).
The Amended Complaint alleges Ms. Stevins falsely
stated that she had access to funding from a network of
investors for the product, and entered into a business
relationship with Mr. Pappalardo to commercialize the
product. See J.A. 55−56. Ms. Stevins recommended filing
the ’597 application, which named Ms. Stevins as a joint
inventor. See J.A. 56. The ’597 application remains
pending. See J.A. 56.
    According to Mr. Pappalardo, Ms. Stevins “attempted
to independently . . . exploit” his technology. J.A. 59. Mr.
Pappalardo then sued Ms. Stevins, asserting claims of
fraud and negligent representation (Counts I and II), and
seeking declaratory judgment of sole inventorship (Count
PAPPALARDO v. STEVINS                                         3

III). 1 See J.A. 56−61. The District Court dismissed the
declaratory judgment claim on the grounds that it lacked
jurisdiction to hear claims for correction of inventorship
for a pending patent application, Pappalardo, 2017 WL
4553919, at *2 (citing 35 U.S.C. § 256 (2012) (“Whenever
through error a person is named in an issued patent as
the inventor . . . [, a] court . . . may order correction of the
patent . . . .” (emphasis added))), and the state law claims
for fraud and negligent representation on the grounds
that, inter alia, they were also “contingent on” the U.S.
Patent and Trademark Office’s (“USPTO”) determination
on the ’597 application, id. at *3. The District Court also
held that, “[e]ven setting aside this jurisdictional defect,”
it was “hard-pressed” to find that the state law claims
were pleaded with sufficiency pursuant to Federal Rule of
Civil Procedure 12(b)(6). Id.
                         DISCUSSION
                    I. Standard of Review
    We apply the law of the regional circuit when review-
ing procedural questions not related to patent law, such
as a district court’s grant of a motion to dismiss. See
CoreBrace LLC v. Star Seismic LLC, 566 F.3d 1069, 1072
(Fed. Cir. 2009). The Eleventh Circuit reviews decisions
on motions to dismiss de novo, accepting as true the
complaint’s factual allegations and construing them in the
light most favorable to the non-moving party.          See
McElmurray v. Consol. Gov’t of Augusta-Richmond Cty.,
501 F.3d 1244, 1250 (11th Cir. 2007) (lack of subject
matter jurisdiction); Speaker v. U.S. Dep’t of Health &

    1     Although the Amended Complaint refers to the
declaratory judgment claim as a second Count II, see
J.A. 59, Mr. Pappalardo on appeal identifies this as Count
III, e.g., Appellant’s Br. 19, as do we for ease of reference.
4                                    PAPPALARDO v. STEVINS

Human Servs. Ctrs. for Disease Control & Prevention, 623
F.3d 1371, 1379 (11th Cir. 2010) (failure to state a claim).
We apply Federal Circuit law to “issues of substantive
patent law,” In re Spalding Sports Worldwide, Inc., 203
F.3d 800, 803 (Fed. Cir. 2000), such as whether federal
patent law creates a cause of action for correction of
inventorship for pending patent applications, see HIF Bio,
Inc. v. Yung Shin Pharm. Indus. Co., 600 F.3d 1347, 1352
(Fed. Cir. 2010); see also Microsoft Corp. v. GeoTag, Inc.,
817 F.3d 1305, 1310 (Fed. Cir. 2016) (“Whether a civil
action arises under an act of Congress related to patents
necessarily presents an issue that is unique to patent
law.”).
     II. The District Court Did Not Err in Dismissing
                 Mr. Pappalardo’s Claims
    Mr. Pappalardo argues that the District Court erred
in dismissing his claims because the District Court has
both federal question and diversity jurisdiction over all
three claims, Appellant’s Br. 24−35, and all three claims
are pleaded with requisite specificity, id. at 22−24. We
address Mr. Pappalardo’s arguments, in turn, below.
     A. The Declaratory Judgment Claim (Count III)
    “We may affirm [a] district court’s [dismissal] on any
basis the record supports.” Fla. Wildlife Fed’n Inc. v. U.S.
Army Corps of Eng’rs, 859 F.3d 1306, 1316 (11th Cir.
2017). We agree with the District Court that Mr. Pappa-
lardo’s declaratory judgment claim should be dismissed,
though on different grounds. While the District Court
dismissed the case on grounds that it “lack[ed] subject
matter jurisdiction,” Pappalardo, 2017 WL 4553919, at
*3; see id. at *2 (reviewing the declaratory judgment
claim), effectively dismissing without prejudice, see
Stalley ex rel. United States v. Orlando Reg’l Healthcare
Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008) (“A dis-
missal for lack of subject matter jurisdiction is not a
judgment on the merits and is entered without prejudice.”
PAPPALARDO v. STEVINS                                       5

(citation omitted)); see also Fed. R. Civ. P. 41(a)(1) (stat-
ing dismissal without prejudice is one that does not
operate as an adjudication on the merits), it should have
instead dismissed the claim with prejudice for failure to
state a claim for plausible relief pursuant to Rule 12(b)(6),
see Fed. R. Civ. P. 41(b).
     The District Court had original subject matter juris-
diction over the declaratory judgment claim. A district
court’s jurisdiction extends to “any civil action arising
under any Act of Congress relating to patents.” 28 U.S.C.
§ 1338(a). The Supreme Court has clarified that this
encompasses “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 neces-
sarily depends on the resolution of a substantial question
of federal patent law.” Christianson v. Colt Indus. Oper-
ating Corp., 486 U.S. 800, 808 (1988). Here, Mr. Pappa-
lardo pleaded the request for declaratory judgment “under
[Florida] state law,” J.A. 53; see J.A. 59 (citing Fla. Stat.
§ 86.011 et seq.), arguing that Ms. Stevins falsely filed a
declaration with the USPTO that she was a “joint inven-
tor” on the ’597 application, J.A. 57, 60; see J.A. 75 (Ms.
Stevins’s declaration of inventorship), and that he should
be declared sole original inventor of the ’597 application’s
claimed invention, see J.A. 61. As an initial matter, “the
field of federal patent law preempts any state law that
purports to define rights based on inventorship.” HIF
Bio, 600 F.3d at 1352 (internal quotation marks and
citation omitted). However, because the “true nature” of
Mr. Pappalardo’s inventorship claim is for relief pursuant
to federal law, specifically 35 U.S.C. § 256, “we will accept
that [Mr. Pappalardo] pleaded an action for correction of
inventorship.” Larson v. Correct Craft, Inc., 569 F.3d
1319, 1325 (Fed. Cir. 2009); see HIF Bio, 600 F.3d at
1352−53 (characterizing claims pleaded as state law
declaratory judgments more properly as correction of
inventorship claims pursuant to § 256). Accordingly, the
6                                     PAPPALARDO v. STEVINS

District Court had subject matter jurisdiction over this
claim “[b]ecause inventorship is a unique question of
patent law.” HIF Bio, 600 F.3d at 1353; see Bd. of Re-
gents, Univ. of Tex. Sys. v. Nippon Tel. & Tel., 414 F.3d
1358, 1363 (Fed. Cir. 2005) (“[I]ssues of inventor-
ship . . . present sufficiently substantial questions of
federal patent law to support jurisdiction under [28
U.S.C. §] 1338(a).”).
     However, we agree with the District Court’s dismissal
of the declaratory judgment claim because the claim “fails
to allege a cause of action upon which relief can be grant-
ed.” Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d
1353, 1361 (Fed. Cir. 2008); see Bell v. Hood, 327 U.S.
678, 682 (1946) (“Failure to state a proper cause of action
calls for a judgment on the merits and not for a dismissal
for want of jurisdiction.”). “A § 256 claim for correction of
inventorship does not accrue until the patent issues.” Hor
v. Chu, 699 F.3d 1331, 1335 (Fed. Cir. 2012). Moreover,
there are no other private causes of action available to a
litigant to challenge inventorship of a pending patent
application. See HIF Bio, 600 F.3d at 1353−54; see also
id. at 1353 (stating “Congress . . . has limited the avenues
by which such inventorship [of a pending patent applica-
tion] can be contested” to “the Director of the [USPTO]”).
Should a patent issue from the ’597 application, nothing
prevents Mr. Pappalardo from seeking declaratory judg-
ment relief on a correction of inventorship claim at that
time. See Hor, 699 F.3d at 1335−36. At this time, howev-
er, Mr. Pappalardo’s claim must be dismissed with preju-
dice pursuant to Rule 12(b)(6). See HIF Bio, 600 F.3d at
1354 (holding claim for correction of inventorship on a
pending patent application should be dismissed under
Rule 12(b)(6)); see also Halpern v. PeriTec Bioscis., Ltd.,
383 F. App’x 943, 947 (Fed. Cir. 2010) (affirming Rule
12(b)(6) dismissal because “an inventorship claim involv-
ing pending patent applications raises a question of
federal patent law, but does not give rise to a private right
PAPPALARDO v. STEVINS                                     7

of action that can be pursued in a district court” (citation
omitted)). Accordingly, we vacate-in-part and remand
with instructions for the District Court to dismiss Count
III with prejudice.
B. The Supplemental State Law Claims (Counts I and II)
     Mr. Pappalardo’s two remaining claims, for fraud and
negligent representation, are state law claims.         See
J.A. 56−59. Compare Pulte Home Corp. v. Osmose Wood
Preserving, Inc., 60 F.3d 734, 738 n.13, 742 (11th Cir.
1995) (describing elements of a claim for fraud under
Florida law), and Osorio v. State Farm Bank, F.S.B., 746
F.3d 1242, 1259 (11th Cir. 2014) (stating similar elements
of a claim for negligent representation), with HIF Bio, 600
F.3d at 1355−56 (reciting similar elements under Califor-
nia law and holding that such claims are purely state law
claims because “each cause of action could be resolved
without reliance on the patent laws”). Mr. Pappalardo
alleged that the District Court had diversity jurisdiction
over these claims because the amount in controversy
exceeded $75,000, and there is complete diversity of
citizenship among the parties. Pappalardo, 2017 WL
4553919, at *3.
    The District Court found that it lacked diversity ju-
risdiction over Mr. Pappalardo’s state law claims. Alt-
hough Mr. Pappalardo and Ms. Stevins are citizens of
different states, the court found that Mr. Pappalardo’s
“conclusory statement that his damages exceed $75,000
based on the ‘loss of his exclusive right’ to his invention”
hinges on whether the USPTO issues the patent with Ms.
Stevins as a named inventor. Id. The District Court
concluded that the damages alleged were “speculative at
best and contingent on a matter for which the [District]
Court lacks the authority to consider.” Id. We find no
error in that conclusion.
    Despite the absence of diversity jurisdiction, because
the District Court had original jurisdiction over a federal
8                                     PAPPALARDO v. STEVINS

question in the declaratory judgment claim, see supra
Section II.A, it could have exercised supplemental juris-
diction to hear the state law claims because they were “so
related to claims in the action . . . that they form[ed] part
of the same case or controversy,” 28 U.S.C. § 1367(a); see
City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156,
165−66 (1997) (stating all that is required to satisfy
§ 1367(a) is that the state and federal claims “derive from
a common nucleus of operative fact” and the state law
claims are “judicially cognizable cause[s] of action”); see
also J.A. 55−59 (alleging, in the Amended Complaint,
cognizable state law claims and a common nucleus of
operative fact). But exercise of that authority is generally
discouraged where, as here, the court “has dismissed all
claims over which it has original jurisdiction.” 28 U.S.C.
§ 1367(c)(3); see Raney v. Allstate Ins. Co., 370 F.3d 1086,
1089 (11th Cir. 2004) (“We have encouraged district
courts to dismiss any remaining state claims when, as
here, the federal claims have been dismissed prior to
trial.” (citation omitted)). Because the District Court’s
dismissal of Mr. Pappalardo’s state law claims was with-
out prejudice, we interpret the court’s statement that it
was “hard-pressed to find that [Mr.] Pappalardo has
adequately plead[ed] damages and causation—both
elements needed to state an actionable claim for fraud
and negligent misrepresentation—with the requisite
particularity,” Pappalardo, 2017 WL 4553919, at *3, as a
decision declining to exercise supplemental jurisdiction
over those claims. Accordingly, we affirm the District
Court’s dismissal with respect to Counts I and II.
                       CONCLUSION
   We have considered Mr. Pappalardo’s remaining ar-
guments and find them unpersuasive. Accordingly, the
Opinion and Order of the U.S. District Court for the
Middle District of Florida is
PAPPALARDO v. STEVINS                      9

  AFFIRMED-IN-PART, VACATED-IN-PART, AND
                REMANDED
                        COSTS
   Costs to Appellee.