Breed v. Hughes Aircraft Company

• Decision Date: 14 June 2001
• Docket Number: DEFENDANTS-COUNTER-CLAIMANTS-APPELLEES,PLAINTIFFS-COUNTER-DEFENDANTS-APPELLANTS,HE-HOLDINGS,No. 99-56130,99-56130
• Parties: (9th Cir. 2001) BEN R. BREED; BREEDAND HARVEL ASSOCIATES,, v. HUGHES AIRCRAFT COMPANY;INC.,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1173

253 F.3d 1173 (9th Cir. 2001)

BEN R. BREED; BREEDAND HARVEL ASSOCIATES, PLAINTIFFS-COUNTER-DEFENDANTS-APPELLANTS, v. HUGHES AIRCRAFT COMPANY; HE-HOLDINGS INC., DEFENDANTS-COUNTER-CLAIMANTS-APPELLEES.

No. 99-56130

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted May 8, 2001

Filed June 14, 2001

[Copyrighted Material Omitted]

Gerald L. Sauer, Sauer & Wagner Llp, Los Angeles, California, for the plaintiffs-counter-defendants-appellants.

Stephen H. McClain, Kirkland & Ellis, Los Angeles, California, for the defendants-counter-claimants-appellees.

Appeal from the United States District Court for the Central District of California Gary L. Taylor, District Judge, Presiding D.C. No. CV-97-00239-GLT

Before: Frank J. Magill¹, M. Margaret McKeown and Raymond C. Fisher, Circuit Judges.

McKEOWN, Circuit Judge

This case requires us to draw the line between the jurisdiction of our court and the jurisdiction of the Court of Appeals for the Federal Circuit. It also illustrates the relationship between pleading in the district court and federal appellate jurisdiction and serves as a reminder that pleading a patent claim in the complaint will, in all likelihood, put the case on the path to the Federal Circuit rather than the Ninth Circuit.

The underlying dispute stems from the breakdown in a long business relationship between Hughes Aircraft Company and Ben Breed, a physicist/inventor who performed consulting work for Hughes. After Hughes purportedly failed to honor an oral agreement regarding the development of certain technology, Breed sued, alleging multiple state law claims relating to breach of contract and misappropriation of trade secrets, as well as a single federal claim for correction of named inventor under the patent statute, 35 U.S.C. §§ 256. Federal court jurisdiction was premised on diversity, 28 U.S.C. §§ 1332, and on the district court's jurisdiction over a "civil action arising under any Act of Congress relating to patents," 28 U.S.C. §§ 1338(a). The district court granted summary judgment in favor of Hughes, and Breed appealed to this court. We do not reach the merits, however; because the district court's jurisdiction was based in part on §§ 1338, the Federal Circuit has exclusive jurisdiction over this case.

BACKGROUND

Because our disposition rests on jurisdictional grounds, we summarize only briefly the factual background. Breed began his consulting work with Hughes in 1976. Breed claims that, in or around 1988, he entered into an oral agreement with Hughes regarding the development of certain magnetics technologies. The parties dispute what, if anything, was actually promised. Breed asserts that Hughes, through a senior staff engineer, promised that Breed and his consulting firm "would have a right of first refusal as to any magnetics work done at Hughes, and they would get as much of the magnetics technology work that was done at Hughes as they wanted."

To make a very long story short, Breed claims that Hughes, beginning in 1995, breached that agreement by failing to give him work after the Department of Defense's Advanced Research Projects Agency awarded Hughes a major contract involving magnetics. As part of his case, Breed alleges that he assigned four patents to Hughes in reliance on the oral agreement regarding magnetics work. In addition, he states that Hughes improperly omitted his name as an inventor on a fifth patent, No. 5,264,793, "Split Array Dipole Moment Detection and Localization" ("the '793 Patent").

Breed, along with his consulting firm, filed suit against Hughes in state court in Texas. Hughes then filed a complaint for declaratory relief in federal court in the Central District of California. The Texas action was removed to the United States District Court for the Western District of Texas, and then transferred to the Central District of California and consolidated with the declaratory judgment action filed by Hughes.

Breed's First Amended Complaint makes 14 separate claims arising out of the alleged oral agreement. All except one arise under California law. The exception, Claim Eleven, was for "Omission of Inventor" under 35 U.S.C.§§ 256.² In his complaint, Breed specifically "request[ed] that the [district] Court issue an order requiring the amendment of the '793 Patent to reflect that Breed is a co-inventor."

The district court granted summary judgment to Hughes on all claims. Specifically, the court found that the staff engineer lacked authority under California law to bind Hughes, and that the alleged oral agreement was too indefinite to be an enforceable contract. In discussing Claim Eleven, the omission of inventor claim, the district court stated The Patent Act allows the parties and their assignees to apply to the Commissioner of the United States Patent and Trademark Office for a certificate correcting errors [relating to the omission of a name from a patent]. See 35 U.S.C. §§ 254. Hughes has provided Breed with Documentation to execute in order to have his name included on the '793 Patent . . . . Because the parties have already begun the process of including Breed's name as an inventor of the '793 Patent, a further order from this Court is not necessary.

Breed specifically appealed the dismissal of the co-inventor claim. Hughes states in its appellate brief that"Breed's name was inadvertently left off" the '793 Patent and that Hughes had sent Breed paperwork to remedy the omission, but Breed states in its own brief, "Presently, there has been no change in the standoff concerning this particular issue, and Dr. Breed ha[s] been deprived of his right to have the District Court issue an order compelling the correction of the '793 Patent."

DISCUSSION

We must first address jurisdiction. Though neither party actually raised the issue on appeal, this court has an obligation to review, sua sponte, whether we have jurisdiction. See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986) ("[E]very federal appellate court has a special obligation to `satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review,' even though the parties are prepared to concede it.") (quoting Mitchell v. Maurer, 293 U.S. 237, 244 (1934)); WMX Techs, Inc. v. Miller, 104 F.3d 1133, 1134 (9th Cir. 1997). We, of course, have jurisdiction to determine our own jurisdiction. United States v. Reyes-Platero, 224 F.3d 1112, 1114 (9th Cir. 2000).

We do not doubt that the district court had subject matter jurisdiction over the case. As stated in Breed's First Amended Complaint, the court's jurisdiction was premised both on diversity of citizenship, 28 U.S.C. §§ 1332, and on the court's jurisdiction over a "civil action arising under any Act of Congress relating to patents," 28 U.S.C. §§ 1338(a). We do question, however, whether we have jurisdiction over the appeal, or whether this case should properly be heard by the Federal Circuit.

The Federal Circuit has "exclusive jurisdiction of an appeal from a final decision of a district court of the United States . . . if the jurisdiction of that court was based, in whole or in part, on section 1338 of this title." 28 U.S.C. §§ 1295(a). Section 1338 confers jurisdiction on the district court in actions "arising under" the patent laws. The Supreme Court has explained that a case arises under the patent laws where "a well-pleaded complaint establishes . . . that federal patent law creates the cause of action." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809 (1988). The Federal Circuit itself has stated quite plainly that claims based on 35 U.S.C. §§ 256, such as that pled by Breed, arise under the patent laws. Banks v. Unisys Corp., 228 F.3d 1357, 1359 (Fed. Cir. 2000); MCV, Inc. v. King-Seeley Thermos Co., 870 F.2d 1568, 1570 (Fed. Cir. 1989) ("Is a suit in district court for determination of co-inventorship and correction of a patent under 35 U.S.C. §§ 256 . . . an action`arising under' the patent laws for purposes of 28 U.S.C. §§ 1338(a) so that we have jurisdiction under 28 U.S.C. §§ 1295(a)(1)? The answer is yes." (footnote omitted)). Thus, Breed's well-pleaded complaint, which stated a claim under 35 U.S.C. §§ 256, a "federal patent law creat[ing] the cause of action, " Christianson 486 U.S. at 800, triggered the Federal Circuit's jurisdiction under 28 U.S.C. §§ 1295(a).

The fact that Breed's §§ 256 claim was only one of fourteen claims and that state-law issues predominated in the suit is not relevant to determining whether the Federal Circuit has exclusive jurisdiction over the appeal. The statute creating the Federal Circuit's jurisdiction clearly states that such jurisdiction is exclusive "if the jurisdiction of[the district] court was based in whole or in part" on section 1338. 28 U.S.C. §§ 1295(a)(1) (emphasis added). In interpreting 28 U.S.C. §§ 1295(a)(2), which confers exclusive jurisdiction on the Federal Circuit for certain non-patent actions, we noted that we lack jurisdiction over the entire case if the complaint consists of a mixture of claims, some of which are specifically covered by 28 U.S.C. §§ 1295, and some of which are not: " `Presence of additional allegations . . . does not divest[the Federal Circuit] of its constitutionally granted jurisdiction of the entire case.' " Brant v. Cleveland Nat'l Forest Serv., 843 F.2d 1222, 1223 (9th Cir. 1988) (quoting Williams v. Sec'y of the Navy, 787 F.2d 552, 558 (Fed. Cir. 1986)). In other words, the presence in the complaint of even a single claim arising under the patent laws -no matter how worthy or unworthy and no matter how significant to the litigation -operates as an "on switch" or automatic trigger for Federal Circuit jurisdiction.

Nor would it be relevant if, as Hughes claims in its brief on appeal, Breed "abandoned" his omission of inventor claim by not pursuing the claim in summary judgment proceedings before the district court.³ The Federal Circuit's jurisdiction is...