Beghin-Say Intern., Inc. v. Rasmussen

• Decision Date: 09 May 1984
• Docket Number: No. 84-579,BEGHIN-SAY,OLE-BENDT,84-579
• Citation: 733 F.2d 1568,221 USPQ 1121
• Parties: INTERNATIONAL INC., Appellant, v.RASMUSSEN, Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1568

733 F.2d 1568

221 U.S.P.Q. 1121

BEGHIN-SAY INTERNATIONAL INC., Appellant, v. OLE-BENDT RASMUSSEN, Appellee.

Appeal No. 84-579.

United States Court of Appeals, Federal Circuit.

May 9, 1984.

Theodore A. Breiner, Alexandria, Va., argued, for appellant. With him on the brief was A.W. Breiner, Alexander, Va.

William J. Daniel, Arlington, Va., argued, for appellee.

Before MARKEY, Chief Judge, and FRIEDMAN and RICH, Circuit Judges.

MARKEY, Chief Judge.

Appeal from an order of the United States District Court for the Eastern District of Virginia (district court) dismissing this action for lack of subject matter jurisdiction because it does not arise under any Act of Congress relating to patents within the meaning of 28 U.S.C. Sec. 1338(a) and because no other basis for federal jurisdiction exists. We dismiss.

Background

Beghin-Say, S.A. (Beghin-Say), plaintiff before the district court, is a French corporation engaged in research and development, manufacturing, and marketing of paper products. It markets its products throughout the world, including the United States, and has assigned its interest in certain United States patent applications to its United States subsidiary, Beghin-Say International Inc. (BSI). Beghin-Say's motion under Rule 43(b), Fed.R.App.P., to substitute BSI was granted on November 8, 1983, making BSI the appellant herein.

Ole-Bendt Rasmussen (Rasmussen), a Danish citizen residing in Switzerland, performs research for various companies. He is paid by each company for his research services and for his assignment of inventions resulting from his research to that company.

In a November 1971 written contract, Rasmussen allegedly assigned to Beghin-Say patent rights to a net-like reinforcement of paper products, and agreed to develop in conjunction with Beghin-Say an improved reinforced net structure known as "reinforced scrim fiber". On August 11, 1972, Beghin-Say and Rasmussen, having developed a reinforced product and method of making it, filed British Patent Application Serial No. 37,499 thereon.

In a January 1973 contract, Rasmussen allegedly "assigned" in writing to Beghin-Say "all United States patent rights including United States patent applications" in the product developed under the November 1971 agreement. Beghin-Say allegedly "complied fully" with the statute, 35 U.S.C. Sec. 261, ¹ making patent applications assignable, and a regulation, 37 CFR Sec. 1.331, governing the recording of assignments.

Beghin-Say and Rasmussen each filed a United States patent application based on the British application. Beghin-Say's United States Application Serial No. 821,079 and Rasmussen's United States Application Serial No. 794,527 are presently pending in Rasmussen alleged that the November 1971 contract was restricted to European rights and that the contracts could not have included assignments of applications that did not exist.

the Patent and Trademark Office (PTO). The filing dates to which the U.S. applications are entitled (August 13, 1973 and August 7, 1974, respectively) are after the contracts on which the present action is based.

Beghin-Say filed this action on June 6, 1983, requesting the district court to remove the cloud on Beghin-Say's title to the two U.S. applications and to declare them the property of Beghin-Say. Rasmussen moved to dismiss, and Beghin-Say responded with an amended complaint.

The amended complaint requested that the district court declare that the "assignment" of the two U.S. applications is "valid" under 35 U.S.C. Sec. 261, and that it vests in Beghin-Say all right to the invention(s) set forth in those applications.

On August 31, 1983, Rasmussen moved to dismiss the amended complaint under Rules 12(b)(1)-(6), Fed.R.Civ.P.

The district court dismissed the amended complaint for lack of subject matter jurisdiction, noting the absence of any claim for patent infringement, holding that the action did not arise under any Act of Congress relating to patents within the meaning of 28 U.S.C. Sec. 1338(a), citing T.B. Harms Co. v. Eliscu, 339 F.2d 823, 144 USPQ 46 (2nd Cir.1964), and finding no other basis for federal jurisdiction.

BSI says the complaint set forth a cause of action arising under the laws of the United States and an Act of Congress relating to patents, 28 U.S.C. Secs. 1331 and 1338(a), ² citing Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 43 S.Ct. 254, 67 L.Ed. 516 (1923).

BSI also asserts on appeal that its substitution makes the case now one between Rasmussen and BSI, a Delaware corporation with its principal place of business in New Jersey, so that there is now diversity of citizenship under 28 U.S.C. Sec. 1332(a)(2). ³

Issue

Whether the district court erred in dismissing the complaint for lack of jurisdiction under Sec. 1338(a).

OPINION

(1) 28 USC Sec. 1338(a)

For jurisdiction of the district court over this action to have been founded on Sec. 1338(a), plaintiff must have asserted some right or interest under the patent laws, or at least some right or privilege that would be defeated by one or sustained by an opposite construction of those laws. Excelsior Wooden Pipe Co. v. Pacific Bridge Co., 185 U.S. 282, 22 S.Ct. 681, 46 L.Ed. 910 (1902). That was not done here.

The action sounds exclusively in contract. BSI predicates its claim entirely on its interpretation of the contracts' provisions. Absent those contracts, BSI would have no claim whatever to ownership in the patent applications in dispute or otherwise. Absent those contracts, BSI would lack standing to sue in any court in relation to those applications.

No question under the patent laws (e.g., patent validity, patent infringement, fraud upon the PTO, patent-antitrust) is present in or arises out of the allegations in the complaint.

Though BSI alleges jurisdiction under Sec. 1338(a), nothing in that statute confers federal jurisdiction over mere private contract disputes, such as that presented here. That the involved contracts may or may not constitute agreements to assign future patent applications does not convert a contract dispute cognizable in state courts to a federal question appropriate for determination in a federal court. Wilson v. Sandford, 51 U.S. (10 How.) 99, 13 L.Ed. 344 (1850) and its progeny (Ausherman v. Stump, 209 USPQ 984 (10th Cir.1981); Combs v. Plough, Inc., 681 F.2d 469, 216 USPQ 463 (6th Cir.1982)), have consistently held for over 130 years that contract disputes involving patents do not arise "under any Act of Congress relating to patents," as required by 28 U.S.C. Sec. 1338(a).

BSI's primary citation, Crown Die & Tool Co. v. Nye Tool & Machine Works, supra, is totally inapposite. That case was a suit on an existing patent brought by an assignee of only the right to sue for damages for past infringement. The Court held that the assignee had no right to bring suit. The right to sue was at that time provided for in R.S. Sec. 4919, which read in pertinent part:

"Damages for the infringement of any patent may be recovered by action on the case, in the name of the party interested, either as patentee, assignee, or grantee."

Unlike this suit, Crown Die was not an action involving interpretation of a contract between the parties, there being no dispute that the contract was an assignment of only the right to sue for past infringement; it was an action involving interpretation of a statute governing the right to sue. Unlike this suit, where no U.S. applications existed when the contracts were entered, and where the sole question is whether the contracts themselves constituted assignments, Crown Die involved the effect of a statute on an existing unchallenged assignment of a right to sue upon an existing patent. Though the Court referred in Crown Die to the validity of a patent assignment as a matter arising under the patent laws, that reference cannot be read out of context. BSI is not here suing on a patent and is not claiming a right to sue based on an assignment of a right to sue from a patent owner. It is, on the contrary, requesting that the involved contracts be interpreted as creating or constituting an assignment. The present suit is therefore a contract suit, pure and simple, and is not a suit under an "Act of Congress relating to patents" as required by Sec. 1338(a).

BSI relies heavily on the PTO's having recorded the involved contracts, saying that recordation evidences their validity as title conveyances. That argument was considered and found without merit in Lang v. Patent Tile Co., 216 F.2d 254, 103 USPQ 287 (5th Cir.1954) (respecting R.S. Sec. 4898, predecessor of Sec. 261) and in T.B. Harms Co. v. Eliscu, supra, (respecting copyrights, treated identically with patents respecting jurisdiction of the district court under Sec. 1338(a)). In all events, recordation does not bring a suit on the contract within Sec. 1338(a), and no claim in the complaint arises under the patent statutes.

In addition to quoting inapplicable language from Crown Die, BSI relies inappropriately on two other court decisions, Unarco Industries, v. Kelley Co., 175 USPQ 199 (7th Cir.1972) (whether a nonexclusive license involved in a settlement is assignable; jurisdiction not an issue), and Pitney-Bowes, Inc. v. Mestre, 517 F.Supp. 52, 211 USPQ 681 (S.D.Fla.1981), aff'd in part, 701 F.2d 1365, 218 USPQ 987, cert. denied, --- U.S. ----, 104 S.Ct. 239, 78 L.Ed.2d 230 (1983) (whether alleged patent misuse was a type of antitrust violation; jurisdiction of the district court not an issue raised).

The sole question raised by the present complaint is whether the involved contracts should be interpreted as having conveyed title to two then non-existent U.S. patent applications. No Act of Congress relating to patents within the meaning of 28 U.S.C. Sec. 1338(a) spells out criteria for determining what does or does not constitute a conveyance by contract. The district court committed no error, therefore, in dismissing the complaint for lack...