HIF BIO v. YUNG SHIN PHARMACEUTICALS INDUS., 2006-1522.

• Citation: 600 F.3d 1347
• Decision Date: 31 March 2010
• Docket Number: No. 2006-1522.,2006-1522.
• Parties: HIF BIO, INC. and Bizbiotech Co., Ltd., Plaintiffs-Appellees, v. YUNG SHIN PHARMACEUTICALS INDUSTRIAL CO., LTD. (doing business as Yung Shin Pharmaceuticals and Yung Shin Pharm. Ind. Co. Ltd.), Yung Zip Chemical Co., Ltd., Fang-Yu Lee, and Che-Ming Teng, Defendants, and Carlsbad Technology, Inc., Defendant-Appellant, and Fish And Richardson P.C., and Y. Rocky Tsao, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

600 F.3d 1347

HIF BIO, INC. and Bizbiotech Co., Ltd., Plaintiffs-Appellees, v. YUNG SHIN PHARMACEUTICALS INDUSTRIAL CO., LTD. (doing business as Yung Shin Pharmaceuticals and Yung Shin Pharm. Ind. Co. Ltd.), Yung Zip Chemical Co., Ltd., Fang-Yu Lee, and Che-Ming Teng, Defendants, and Carlsbad Technology, Inc., Defendant-Appellant, and Fish And Richardson P.C., and Y. Rocky Tsao, Defendants.

No. 2006-1522.

United States Court of Appeals, Federal Circuit.

March 31, 2010.

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Bub-Joo S. Lee, Lee Anav Chung, LLP, of Los Angeles, CA, for plaintiffs-appellees.

Glenn W. Rhodes, Howrey LLP, of San Francisco, CA, for defendant-appellant. With him on the brief were Julie S. Gabler, Stephanie M. Byerly and Jesse D. Mulholland, of Los Angeles, CA; and Richard L. Stanley, of Houston, TX.

Before MICHEL, Chief Judge, GAJARSA, Circuit Judge, and HOLDERMAN, Chief District Judge.^*

GAJARSA, Circuit Judge.

This case is before this court on remand from the Supreme Court of the United States. In our original decision, HIF Bio, Inc. v. Yung Shin Pharms. Indus. Co., Ltd., 508 F.3d 659 (Fed.Cir.2007), we held that the Federal Circuit lacked appellate jurisdiction to review a district court's remand order that was based upon the district court's decision not to exercise supplemental jurisdiction. See id. at 667. The Supreme Court subsequently reversed our decision, and remanded the case back to us for further proceedings. See Carlsbad Tech., Inc. v. HIF Bio, Inc., ___ U.S. ___, 129 S.Ct. 1862, 1867, 173 L.Ed.2d 843 (2009). The sole remaining issue is whether the district court abused its discretion in remanding plaintiffs' amended complaint to California state court. For the reasons set forth below, we hold that the district court did abuse its discretion because two of the remanded causes of action "arise under" 28 U.S.C. 1338(a), but the district court should have dismissed these purported causes of action for failure to state a claim for which relief can be granted.

I.

A.

We accept as true the facts alleged in plaintiffs' first amended complaint ("FAC"). See Wells v. United States, 420 F.3d 1343, 1348 (Fed.Cir.2005). These facts have previously been described and need not be recited in full again. See HIF Bio, Inc., 508 F.3d at 660-62; see also HIF Bio, Inc. v. Yung Shin Pharms. Indus. Co., Ltd, No. CV 05-07976, 2006 WL 6086295, at *1-2 (C.D.Cal. June 09, 2006). A brief summary of the operative facts, however, is appropriate.

In late 1999, Professors Jong-Wan Park ("Park") and Yang-Sook Chun ("Chun") began investigating the effect of a chemical, YC-1, on a protein complex known as HIF1. A component of HIF-1 is expressed in human tumors and stimulates the growth of blood vessels within a tumor mass. Park and Chun hypothesized that YC-1 "could be used to inhibit the activity of HIF-1, which would have the effect of suppressing ... the growth of blood vessels into animal tumors, and thereby killing the tumor by starving it of oxygen and nutrients." FAC ¶¶ 19-21.

Between 1999 and 2002, Park and Chun conducted laboratory experiments to confirm their hypothesis and submitted research papers disclosing their discovery to academic journals. See id. ¶¶ 22-26. On April 7, 2003, Park and Chun filed a United States patent application titled "Method for Inhibiting Tumor Angiogenesis and Tumor Growth," which "disclosed their anti-angiogenic, anti-cancer application of YC-1." Id. ¶ 27. In July 2003, Park and Chun assigned their rights concerning YC-1 to Plaintiff BizBiotech Co., Ltd., which subsequently assigned the rights to Plaintiff HIF Bio, Inc. in February 2005. See id. ¶¶ 28-29.

While Park and Chun conducted their research, they also discussed their hypothesis with another scientist, Defendant Che-Ming Teng ("Teng"), who agreed to provide Park and Chun with the YC-1 necessary for their experiments. See id. ¶¶ 34-38. As an academic courtesy, Park and Chun provided Teng with information concerning their research including pre-publication drafts of academic papers disclosing the results of their laboratory experiments. See id.

Unbeknownst to Park and Chun, Teng disclosed the results of Park and Chun's research to Defendant Yung Shin Pharmaceuticals ("Yung Shin"), a Taiwanese drug manufacturer. Id. ¶¶ 40-45. On March 29, 2002, without the consent or knowledge of Park and Chun, Teng filed a U.S. Provisional Patent application titled "Angiogenesis Inhibitors." Id. ¶ 57. The provisional identified Teng and Defendant Fang-Yu Lee ("Lee"), the president of Yung Shin, "as the inventors of the novel anti-angiogenic, anticancer properties of YC-1." In March 2003, Yung Shin filed a PCT application claiming priority to the U.S. provisional application. See id. ¶ 86.

B.

In September 2005, after discovering Teng, Lee, and Yung Shin's actions, HIF Bio and BizBiotech filed suit in Los Angeles Superior Court. In addition to Teng, Lee, and Yung Shin, the suit named Carlsbad Technology, Inc. ("CTI"), a California corporation engaged by Yung Shin to commercialize the use of YC-1 as an antiangiogenic, anti-cancer drug in the United States. See id. ¶ 47. The suit also named Yung Shin's patent counsel, Y. Rocky Tsao and Fish and Richardson, P.C., and an alleged Taiwanese co-conspirator, Yung Zip Chemical Co., Ltd. See id. In November 2005, CTI removed the action to the United States District Court for the Central District of California. In March 2006, the plaintiffs filed their first amended complaint with the district court, asserting twelve causes of action.¹

Among other motions, CTI filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). The district court granted CTI's motion, dismissed plaintiffs' RICO cause of action, and remanded the case to state court. See HIF Bio, Inc., 2006 WL 6086295, at *6. In remanding the case, the district court held that the first and second causes of action claimed "rights of inventorship and ownership of inventions which are valid state law claims." Id. at *4. It then declined to exercise supplemental jurisdiction and remanded those claims along with the remaining nine "state law claims" to California state court. Id.

CTI appealed the remand order to this court. This panel held that 28 U.S.C. § 1447(d) barred appellate review of a remand order based on declining supplemental jurisdiction and dismissed the appeal for lack of jurisdiction. See HIF Bio, Inc., 508 F.3d at 667. The Supreme Court subsequently reversed and remanded, holding that § 1447(d) did not bar appellate review in such circumstances. Carlsbad Tech., Inc., 129 S.Ct. at 1867.

II.

We review for abuse of discretion the district court's decision not to exercise supplemental jurisdiction. See Mars, Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1374 (Fed.Cir.1994) ("The exercise of supplemental jurisdiction is within the discretion of the district court."). While the district court has discretion not to exercise supplemental jurisdiction over state law claims, it has no discretion to remand claims arising under federal law. See Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1328 (Fed.Cir. 1998) overruled in part on separate grounds in Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed.Cir. 1999); Gaming Corp. of Am. v. Dorsey & Whitney, 88 F.3d 536, 542 (8th Cir.1996) ("A district court has no discretion to remand a claim that states a federal question."); Borough of W. Mifflin v. Lancaster, 45 F.3d 780, 787 (3d Cir.1995) (same); Brockman v. Merabank, 40 F.3d 1013, 1017 (9th Cir.1994) (same).

Whether the district court possessed jurisdiction is a question of law that this court reviews without deference. See Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1335 (Fed. Cir.2007); Pennington Seed, Inc. v. Produce Exch. No. 299, 457 F.3d 1334, 1338 (Fed.Cir.2006). The district court's jurisdiction under § 1338(a) "extends only to those 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 necessarily depends on the resolution of a substantial question of federal patent law, in that patent law is a necessary element of the well-pleaded claims." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).

A. The Declaratory Judgment for Inventorship

The plaintiffs' second cause of action seeks a declaratory judgment that Park and Chun "were and are the first and true inventors/discoverers of the INVENTION." FAC ¶ 111. The amended complaint defines "INVENTION" as the discovery that "YC-1 had the potential to become the first anti-angiogenic, anti-cancer agent to HIF-1." Id. ¶ 22. According to plaintiffs, "an actual controversy has arisen" because the defendants "have made an open, public, and adverse claim that Lee and Teng are the inventors/discoverers of the INVENTION." Id. ¶ 109. The only open, public, and adverse claims to the INVENTION identified in the amended complaint are the defendants' multiple pending patent applications which named Lee and Teng as inventors. See id. ¶ 89; see also id. ¶¶ 47(c), 56-59, 61-62, 73-75.

In remanding the second cause of action, the district court noted that "Plaintiffs aver that they are not contesting patents or patent applications, but are instead seeking declaratory judgment on the issue of inventorship under state common law."² HIF Bio, Inc., 2006 WL 6086295, at *4. The district court then cited to a 1944 New Jersey District Court case, Bohlman v. Am. Paper Goods, 53 F.Supp. 794 (D.N.J. 1944), and concluded that a right of inventorship is a "valid state law claim." HIF Bio, Inc., 2006 WL 6086295, at *4.

The district court erred in concluding that the second cause of action presented a valid state law claim. This court has held that "the field of federal patent law preempts any state law that purports to define...