986 F.2d 476 (Fed. Cir. 1993), 92-1160, Additive Controls & Measurement Systems, Inc. v. Flowdata, Inc.

Docket Nº:92-1160.
Citation:986 F.2d 476
Party Name:25 U.S.P.Q.2d 1798 ADDITIVE CONTROLS & MEASUREMENT SYSTEMS, INC., Plaintiff-Appellant, v. FLOWDATA, INC. and Titan Industries, Inc., Defendants-Appellees.
Case Date:February 09, 1993
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 476

986 F.2d 476 (Fed. Cir. 1993)

25 U.S.P.Q.2d 1798

ADDITIVE CONTROLS & MEASUREMENT SYSTEMS, INC., Plaintiff-Appellant,

v.

FLOWDATA, INC. and Titan Industries, Inc., Defendants-Appellees.

No. 92-1160.

United States Court of Appeals, Federal Circuit

February 9, 1993

Page 477

William D. Durkee, Arnold, White & Durkee, Houston, TX, argued, for plaintiff-appellant.

William C. Norvell, Jr., Jackson & Walker, Houston, TX, argued, for defendants-appellees.

Before LOURIE, Circuit Judge, BENNETT, Senior Circuit Judge, and RADER, Circuit Judge.

RADER, Circuit Judge.

The United States District Court for the Southern District of Texas refused to remand Additive Controls & Measurement Systems, Inc.'s (Adcon) business disparagement case to state court. Instead the district court enjoined Adcon from infringing Flowdata, Inc.'s patent. Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc., No. H-90-1554, 1991 WL 345967 (S.D.Tex. Nov. 5, 1991). Because Adcon's suit requires resolution of a substantial question of patent law, the district court possessed subject matter jurisdiction and properly denied the motion to remand. The district court's injunction, however, is too vague and too broad. Therefore, this court vacates the injunction and remands to permit the district court to issue an injunction of proper scope.

Background

Adcon and Flowdata sell meters for measuring the flow of liquids. Flowdata obtained U.S. Patent No. 4,815,318 (the '318 patent) for a positive displacement flow meter. In 1988 and 1989, Adcon and Flowdata discussed the prospect of Adcon taking a license to incorporate Flowdata's flow meter into Adcon's OMNI-PAK system. Eventually, Adcon developed its own flow meter for the OMNI-PAK product.

In November 1989, Flowdata informed Adcon of its belief that Adcon's meter infringed the '318 patent. Adcon disagreed and sent machine parts to Flowdata in support of its position. Adcon continued production of its OMNI-PAK product.

Flowdata sent letters to Adcon's customers and potential customers warning that the meter in OMNI-PAK infringed Flowdata's patent. The letters further advised that Flowdata was "in the process of taking legal action."

On April 3, 1990, Adcon filed suit in Texas state court. This state suit sought damages for and an injunction against Flowdata's alleged interference with Adcon's business operations. On May 11, 1990, Flowdata filed a Notice of Removal with the United States District Court for the Southern District of Texas. After removal, Flowdata answered Adcon's complaint and counterclaimed for patent infringement.

In 1991, the district court granted Flowdata's motion for partial summary judgment of patent infringement. Because Adcon had not contested patent validity, the district court entered a permanent injunction on November 5, 1991. The injunction stated:

Plaintiff is forever barred from infringing Flowdata's patent. This order is made with the oral consent of ADCON's Secretary Treasurer who appeared before this Court in her official capacity.

On November 22, 1991, Adcon moved to remand to the state court for lack of subject matter jurisdiction. The district court denied this motion on February 5, 1992.

Jurisdiction

Adcon challenges the propriety of the removal of its business disparagement case from Texas state court. A defendant may properly remove an action if the district court to which it seeks removal has subject matter jurisdiction at the time of removal. 28 U.S.C. § 1441(a) (1988); see Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 8, 103 S.Ct. 2841, 2845-46, 77 L.Ed.2d 420 (1983). The district court in this case asserted jurisdiction under 28 U.S.C. § 1338(a) (198...

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