Court Opinion

ID: 4017838
Source: CourtListenerOpinion
Date Created: 2016-07-21 15:01:11.962611+00
Date Added: 2024-06-11T07:45:59.077413
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

                 ANGIOSCORE, INC.,
                   Plaintiff-Appellee

                           v.

TRIREME MEDICAL, LLC, QUATTRO VASCULAR
    PTE LTD., QT VASCULAR LTD., EITAN
              KONSTANTINO,
            Defendants-Appellants
           ______________________

                 2016-1126, 2016-1142
                ______________________

   Appeals from the United States District Court for the
Northern District of California in No. 4:12-cv-03393-YGR,
Judge Yvonne Gonzalez Rogers.
                 ______________________

                Decided: July 21, 2016
                ______________________

    ROBERT PAUL FELDMAN, Quinn Emanuel Urquhart &
Sullivan, LLP, Redwood Shores, CA, argued for plaintiff-
appellee. Also represented by WILLIAM ADAMS, PETER J.
ARMENIO, CLELAND B. WELTON, II, New York, NY.

    LISA SCHIAVO BLATT, Arnold & Porter LLP, Washing-
ton, DC, argued for defendants-appellants Trireme Medi-
cal, LLC, Quattro Vascular Pte Ltd., QT Vascular Ltd.
2                  ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC

Also represented by DAVID A. CAINE, PALO ALTO, CA;
DAVID S. STEUER, STEVEN GUGGENHEIM, DYLAN JAMES
LIDDIARD, CHERYL W. FOUNG, Wilson, Sonsini, Goodrich &
Rosati, PC, Palo Alto, CA.

    ADRIAN MARY PRUETZ, Glaser, Weil, Fink, Jacobs,
Howard, Avchen & Shapiro LLP, Los Angeles, CA, argued
for defendant-appellant Eitan Konstantino. Also repre-
sented by MIEKE K. MALMBERG, RICHARD W. BUCKNER.

                 ______________________

    Before REYNA, PLAGER, and HUGHES, Circuit Judges.
HUGHES, Circuit Judge.
    AngioScore, Inc. sued the defendant-appellants (Tri-
Reme Medical, LLC, Quattro Vascular PTE Ltd., QT
Vascular Ltd., and Eitan Konstantino) for patent in-
fringement, breach of fiduciary duty, aiding and abetting,
and unfair competition. After separate trials on the
patent and state-law claims, the district court entered
final judgment for Defendants on the patent claim, for
AngioScore on the state-law claims, and denied Corporate
Defendants’ (TriReme Medical, LLC, Quattro Vascular
PTE Ltd., and QT Vascular Ltd.) request for attorneys’
fees under 35 U.S.C. § 285. Because we find that the
district court improperly exercised supplemental jurisdic-
tion over the state-law claims but did not err in denying
attorneys’ fees, we reverse-in-part, affirm-in-part, vacate-
in-part, and remand with instructions to dismiss the
state-law claims for lack of jurisdiction.
                             I
    In March 2003, Eitan Konstantino co-founded Angi-
oScore to develop and market a new angioplasty balloon
catheter that he had co-invented, called AngioSculpt.
Dr. Konstantino initially served as AngioScore’s president
and sat on its board of directors. As a condition of his
ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC                3

employment, Dr. Konstantino and AngioScore entered
into an assignment agreement, in which Dr. Konstantino
agreed to assign AngioScore his rights in any inventions
that he conceived of or developed during his employment.
    In November 2005, the board of directors began grad-
ually reducing Dr. Konstantino’s role at AngioScore, and
on     April   1,     2007,    AngioScore     terminated
Dr. Konstantino’s employment, and, thereby, terminated
the assignment agreement. Dr. Konstantino remained on
AngioScore’s board as an outside board member charged
with representing certain minority investors.
    While     AngioScore    was      reducing   his   role,
Dr. Konstantino increased his involvement with TriReme
Medical, LLC, a separate company that he had co-
founded. TriReme initially focused on developing endo-
vascular bifurcation stents and delivery systems for
bifurcation stents, which differs from the technology used
in angioplasty balloons, e.g., AngioScore’s AngioSculpt
product. But, in the fall of 2009, Dr. Konstantino and
Tanhum Feld conceived of a new angioplasty balloon
catheter which they named Chocolate. On October 9,
2009, Dr. Konstantino filed a provisional patent applica-
tion for Chocolate, naming himself and Mr. Feld as co-
inventors. Thereafter, Dr. Konstantino sought funding
from outside investors to bring the device to market while
Mr. Feld worked on the design and development of the
device.
    On February 3, 2010, Dr. Konstantino informed Tom
Trotter, AngioScore’s CEO, that TriReme would be “mov-
ing into” the specialty balloon market, but did not specifi-
cally discuss Chocolate. J.A. 51342. The next day,
Mr. Trotter demanded that Dr. Konstantino resign from
AngioScore’s board because he felt that “the development
or marketing of an angioplasty device of any kind for the
treatment of peripheral artery disease which could com-
pete with AngioScore has created a serious conflict of
4                  ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC

interest for [Dr. Konstantino] as a Board Member of
AngioScore.” J.A. 80351. Dr. Konstantino attempted to
clarify that TriReme had “not made any decision” regard-
ing the specialty balloon market, and that it “may never
happen, depending on the investors coming to the ta-
ble . . . .” J.A. 80369. Ultimately, Dr. Konstantino re-
signed from AngioScore’s board, effective February 5,
2010.
    Dr. Konstantino and Mr. Feld assigned their rights in
Chocolate to TriReme’s corporate affiliate, Quattro Vascu-
lar PTE Ltd., on June 1, 2010. A non-provisional patent
application for Chocolate was filed in March 2011, and
Defendants began selling it in the United States in De-
cember 2011.
    On June 29, 2012, AngioScore sued Defendants for in-
fringing United States Patent No. 7,691,119 (the ’119
patent) by making and selling Chocolate. AngioScore
later added state-law claims for breach of fiduciary duty,
aiding and abetting, and unfair competition. AngioScore
asserted that Dr. Konstantino violated Delaware’s corpo-
rate opportunity doctrine by “fail[ing] to disclose and offer
to AngioScore the business opportunity relating to the
Chocolate device.” J.A. 2541. Further, AngioScore con-
tended that the Corporate Defendants aided and abetted
Dr. Konstantino’s alleged breach of fiduciary duty, which
constituted unfair competition. J.A. 2542–43.
    Defendants moved to dismiss the state-law claims for
lack of subject matter jurisdiction. In denying the motion
to dismiss, the district court concluded that the exercise of
jurisdiction was proper under 28 U.S.C. § 1367 because
“the core of this case concerns the Chocolate device,” as
both the federal and state-law claims “turn on proof
concerning exactly what [] Chocolate is, how it was devel-
oped, and its import relative to AngioScore both in terms
of lost profits if found to be infringing, or its value as a
potential corporate opportunity.” J.A. 37.
ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC               5

    Following a bench trial on the state-law claims, the
district court issued Findings of Fact and Conclusions of
Law, ruling in favor of AngioScore. The district court
found that Chocolate was a corporate opportunity and
Dr. Konstantino breached his fiduciary duty by failing to
offer it to AngioScore.      The district court award-
ed AngioScore $20,034,000 in lost profits. A separate trial
was held on AngioScore’s federal patent infringement
claim. The jury found that Chocolate did not infringe any
asserted claim of the ’119 patent and that all of Angi-
oScore’s asserted claims were invalid. The district court
subsequently denied Corporate Defendants’ request for
attorneys’ fees under 35 U.S.C. § 285.
    Defendants appeal the district court’s exercise of ju-
risdiction over the state-law claims and the denial of
attorneys’ fees under 35 U.S.C. § 285. We have jurisdic-
tion pursuant to 28 U.S.C. § 1295(a)(1).
                              II
    The threshold question here is whether the district
court properly exercised jurisdiction over the state-law
claims. We review de novo a district court’s exercise of
supplemental jurisdiction over state-law claims under 28
U.S.C. § 1367(a). Voda v. Cordis Corp., 476 F.3d 887, 892
(Fed. Cir. 2007).
    This court follows the “‘fundamental precept that fed-
eral courts are courts of limited jurisdiction,’ empowered
to act only within the bounds of Article III of the United
States Constitution.” Highway Equip. Co. v. FECO, Ltd.,
469 F.3d 1027, 1032 (Fed. Cir. 2006) (quoting Owen
Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374
(1978)). If diversity jurisdiction is lacking and the case
involves state-law claims that are not independently
subject to federal jurisdiction, a district court may exer-
cise supplemental jurisdiction over those state-law claims
only if they “are so related to claims in the action within
such original jurisdiction that they form part of the same
6                  ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC

case or controversy under Article III of the United States
Constitution.” 28 U.S.C. § 1367(a); see also Highway
Equip. Co., 469 F.3d at 1038. “For this relatedness re-
quirement to be satisfied, ‘[t]he state and federal claims
must derive from a common nucleus of operative fact’
such that they would ordinarily be expected to be tried in
one proceeding.” Highway Equip. Co., 469 F.3d at 1038
(quoting United Mine Workers of Am. v. Gibbs, 383 U.S.
715, 725 (1966)).
    An “operative fact” is one “that constitutes the trans-
action or event on which a claim or defense is based.”
Wisey’s #1 LLC v. Nimellis Pizzeria LLC, 952 F. Supp. 2d
184, 190 (D.D.C. 2013) (quoting BLACK’S LAW DICTIONARY
670 (9th ed. 2009)). Generally, claims arise out of a
common nucleus of operative fact when they “involve the
same witnesses, presentation of the same evidence, and
determination of the same, or very similar, facts.” Palmer
v. Hosp. Auth. of Randolph Cty., 22 F.3d 1559, 1563–64
(11th Cir. 1994); see also Lyndonville Sav. Bank & Trust
Co. v. Lussier, 211 F.3d 697, 704 (2d Cir. 2000) (a suffi-
cient relationship will be found if “the facts underlying
the federal and state claims substantially overlap[] . . . or
where presentation of the federal claim necessarily
b[rings] the facts underlying the state claim before the
court”). However, state-law claims that “only ‘relate
generally’ to federal claims through a broader dispute and
do not share any operative facts are insufficient for sup-
plemental jurisdiction.” Wisey’s #1 LLC, 952 F. Supp. 2d
at 190 (quoting Chelsea Condo. Unit Owners Ass’n v. 1815
A St., Condo. Grp., LLC, 468 F. Supp. 2d 136, 141 (D.D.C.
2007)).
    Here, no common nucleus of operative fact exists. The
patent infringement claim relates generally to whether
the Chocolate device satisfies the ’119 patent’s claim
limitations, see Markman v. Westview Instruments, Inc.,
517 U.S. 370, 374 (1996) (“Victory in an infringement suit
requires a finding that the patent claim covers the alleged
ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC                  7

infringer’s product or process, which in turn necessitates
a determination of what the words in the claim mean.”)
(internal quotations and citations omitted), while the
state-law claims relate solely to whether the Chocolate
device was a “corporate opportunity,” which requires
evidence that: (1) the opportunity is within the corpora-
tion’s line of business; (2) the corporation has an interest
or expectancy in the opportunity; (3) the corporation is
financially able to exploit the opportunity; and (4) by
taking the opportunity for his own, the corporate fiduciary
is placed in a position inimical to his duties to the corpo-
ration, Broz v. Cellular Info. Sys., Inc., 673 A.2d 148, 154–
55 (Del. 1996).
    Although the district court was required to have a
general understanding of how Chocolate operated to
determine if Chocolate fell within AngioScore’s line of
business, see J.A. 43–44 (“AngioSculpt and Chocolate,
TriReme’s device, are both angioplasty balloon catheters
used to open occluded or narrowed blood vessels at lesion
sites by inflating to compress plaque deposits against the
vessel wall and then deflating for removal from the pa-
tient’s body.”), this does not create a “common nucleus of
operative fact” because it is simply background infor-
mation and not the “transaction or event on which the
claims are based.” Wisey’s #1 LLC, 952 F. Supp. 2d at
190. Additionally, the fact that the same experts calcu-
lated the patent damages and opined on damages relating
to the state-law claims is not an “operative fact” sufficient
to confer jurisdiction.
    Because the state-law claims only generally relate to
the federal patent claim, a “common nucleus of operative
fact” does not exist. 1 Accordingly, we find that the district

    1   Because there is no common nucleus of operative
fact between the state-law claims and the federal claim,
the district court also lacks jurisdiction to hear the state-
8                  ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC

court erred in exercising supplemental jurisdiction over
the state-law claims pursuant to 28 U.S.C. § 1367(a).
                            III
     Corporate Defendants also appeal the district court’s
denial of attorneys’ fees under 35 U.S.C. § 285. Under
§ 285, a “court in exceptional cases may award reasonable
attorney fees to the prevailing party.” An “exceptional
case” is “one that stands out from others with respect to
the substantive strength of a party’s litigating position
(considering both the governing law and the facts of the
case) or the unreasonable manner in which the case was
litigated.” Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 134 S. Ct. 1749, 1756 (2014). On appeal, we review
the district court’s exceptional case determination under
§ 285 for an abuse of discretion.       SFA Sys., LLC v.
Newegg Inc., 793 F.3d 1344, 1347 (Fed. Cir. 2015).
    The district court did not find the patent claim “excep-
tionally weak,” in part because it survived summary
judgment. J.A. 181. However, Defendants argue that
they were entitled to summary judgment because claim
vitiation defeated the application of the doctrine of equiv-
alents. They assert, therefore, that because the district
court’s denial of summary judgment was premised on an
incorrect view of the doctrine of equivalents, reversal of
the denial of attorneys’ fees is proper since “legal error
invaded the district court’s evaluation of whether Angi-
oScore’s patent infringement claim was ‘exceptionally
meritless.’” Pet. Br. at 59.
    However, Corporate Defendants did not argue claim
vitiation in their initial motion for summary judgment.
Although Corporate Defendants sought leave to file a

law unfair competition claim under 28 U.S.C. § 1338(b).
See 13D Charles Alan Wright, et al., FEDERAL PRACTICE
AND PROCEDURE § 3582 (3d ed. 2015).
ANGIOSCORE, INC.   v. TRIREME MEDICAL, LLC              9

second motion for summary judgment to make this argu-
ment, the district court denied the request because it
violated its Standing Order in Civil Cases. J.A. 3353.1.
The district court’s failure to grant summary judgment on
an argument that was never properly presented does not
constitute a legal error. Therefore, we find that the
district court did not abuse its discretion in denying
attorneys’ fees under § 285.
                              IV
    For these reasons, we find that the district court im-
properly exercised supplemental jurisdiction over the
state-law claims, but did not err in denying attorneys’
fees. Therefore, we reverse-in-part, affirm-in-part, va-
cate-in-part, and remand with instructions to dismiss the
state-law claims for lack of subject matter jurisdiction.
    REVERSED-IN-PART, AFFIRMED-IN-PART,
      VACATED-IN-PART, AND REMANDED