ClearPlay, Inc. v. Abecassis

• Decision Date: 21 April 2010
• Docket Number: No. 2009-1471.,2009-1471.
• Citation: 602 F.3d 1364
• Parties: CLEARPLAY, INC., Plaintiff-Appellee, v. Max ABECASSIS and Nissim Corp, Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

602 F.3d 1364

CLEARPLAY, INC., Plaintiff-Appellee, v. Max ABECASSIS and Nissim Corp, Defendants-Appellants.

No. 2009-1471.

United States Court of Appeals, Federal Circuit.

April 21, 2010.

David L. Mortensen, Stoel Rives LLP, of Salt Lake City, UT, argued for plaintiff-appellee. With him on the brief was David J. Jordan. Of counsel on the brief was Thomas J. Meeks, Carlton Fields, of Miami, FL.

John C. Carey, Carey Rodriguez Greenberg & Paul, LLP, of Miami, FL, argued for defendants-appellants. With him on the brief was Allison J. Cammack.

Before BRYSON, ARCHER, and PROST, Circuit Judges.

BRYSON, Circuit Judge.

Nissim Corp. and Max Abecassis (collectively, "Nissim") appeal a May 29, 2009, order of the United States District Court for the Southern District of Florida granting a preliminary injunction to ClearPlay, Inc. At the outset, this case requires us to determine whether we have appellate jurisdiction over the underlying action, which relates to a dispute stemming from the parties' patent license agreement. We hold that we lack jurisdiction over this appeal and therefore transfer the case to the United States Court of Appeals for the Eleventh Circuit.

I

The license agreement, executed in December 2005, settled a patent infringement action that Nissim had brought against ClearPlay. Nissim had accused ClearPlay of infringing its patents relating to systems for filtering objectionable content from certain video media, such as DVDs. As part of their settlement of the lawsuit, the parties entered into a license agreement that allowed ClearPlay to distribute its accused products upon payment of royalties to Nissim. Shortly after the settlement and license agreement were entered, however, Nissim claimed that ClearPlay had violated the terms of the agreement, and in June 2007 Nissim filed a motion to enforce the agreement. Nissim filed the motion in the same court in which the patent action had been brought. While that motion was pending, Nissim informed several retailers who were selling ClearPlay's products that ClearPlay's devices were not licensed and that the retailers' continuing sale of those products could constitute patent infringement.

In response, ClearPlay brought this action in December 2007 in the same district court that had entertained the patent infringement action. Citing diversity of citizenship as a jurisdictional basis, ClearPlay accused Nissim of tortious interference with a contractual relationship, tortious interference with potential advantageous business relationships, breach of the license agreement, breach of the covenant of good faith and fair dealing, and violation of Florida's Deceptive and Unfair Trade Practices Act.

Meanwhile, in the patent case, the trial court assigned to a special master the task of determining whether, as alleged by Nissim, ClearPlay had breached the license agreement. In early 2009, the special master recommended finding that ClearPlay had substantially complied with the agreement and was not in breach. The district court, having previously held that the license agreement was valid and enforceable, adopted the special master's recommendation on March 31, 2009, and dismissed Nissim's motion for relief in the patent case. Nissim took an appeal from that decision. That appeal is now pending before a panel of this court as No.2009-1327.

Shortly after the district court's order denying Nissim's motion, Nissim informed ClearPlay of its position that, notwithstanding the terms of the district court's order, the effect of the order was to terminate the license agreement. Nissim pointed to section 12.3 of the license agreement, which provides that prior versions of the agreement "shall not be relied upon for interpretation of the terms and conditions herein." Nissim's theory was that the special master had treated that provision as invalid or unenforceable by relying in part on the negotiating history of the agreement as an aid to interpreting the agreement's terms. Nissim argued that, because the special master had relied on the parties' negotiating history and the district court had adopted the special master's recommendation, the effect of the district court's ruling was likewise to invalidate or deem unenforceable section 12.3 of the agreement. Nissim then pointed to section 12.5 of the agreement, which provides that each of the terms of the agreement is material and that if any term is "deemed invalid, illegal or unenforceable" and is not amended by agreement of the parties, the license agreement shall terminate 60 days "following such term or provision becoming or being deemed invalid, illegal, or unenforceable." That provision was triggered, according to Nissim, even though the district court had explicitly held that the agreement was still valid and in effect. As a consequence, Nissim advised ClearPlay that it would regard the license agreement as terminated as of May 30, 2009, 60 days after the district court's decision.

On May 22, 2009, ClearPlay sought a preliminary injunction in its state law action seeking to bar Nissim from breaching the license agreement by denying its validity and enforceability. The district court agreed with ClearPlay that Nissim was wrong to interpret the court's March 31 order as effectively terminating the license agreement. Instead, the court held that the agreement was valid and that ClearPlay was in substantial compliance with its terms. The court then entered a preliminary injunction against Nissim, ordering that neither Nissim nor its agents shall "suggest or state to potential retailers, purchasers, or manufacturers of ClearPlay's products that this Court has held that the License Agreement between ClearPlay and Nissim is terminated pursuant to Section 12.5 of the License Agreement." Nissim took this appeal from the district court's preliminary injunction order.

ClearPlay first argues that this court lacks jurisdiction over the appeal and that the appeal belongs, instead, in the Eleventh Circuit. On the jurisdictional issue, Nissim responds that this court has jurisdiction over the appeal because the dispute between the parties necessarily raises issues of patent law.

As to the merits, ClearPlay argues that the trial court correctly held that the agreement had not been terminated and that the court properly entered a preliminary injunction against Nissim to bar it from making contrary representations about the court's ruling to ClearPlay's business partners. For its part, Nissim reasserts its argument that the district court, despite stating that the license agreement remained valid and in force, actually precipitated the termination of the agreement by the way it resolved the dispute over the issue of breach. Nissim also contends that it was an abuse of discretion for the district court to issue the preliminary injunction.

II

We agree with ClearPlay that we lack jurisdiction over this appeal, and we order that the appeal be transferred to the Eleventh Circuit.

This court's jurisdiction over appeals from decisions of United States district courts is based on 28 U.S.C. § 1295(a). Section 1295(a)(1) provides that this court has jurisdiction over an appeal from a final decision of a district court "if the jurisdiction of that court was based, in whole or in part, on section 1338" of title 28. Section 1338, in turn, gives district courts original jurisdiction of "any civil action arising under any Act of Congress relating to patents." 28 U.S.C. § 1338(a).

In Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988), the Supreme Court addressed in detail the meaning of the term "arising under" in the context of section 1338. The Court stated that in order to demonstrate that a case is one "arising under" patent law, the plaintiff must "set up some right, title or interest under the patent laws, or at least make it appear that some right or privilege will be defeated by one construction, or sustained by the opposite construction of these laws." Id. at 807-08, 108 S.Ct. 2166, quoting Pratt v. Paris Gas Light & Coke Co., 168 U.S. 255, 259, 18 S.Ct. 62, 42 L.Ed. 458 (1897). Following its precedents under other jurisdictional statutes containing similar language, the Court explained that section 1338 jurisdiction extends

only to those cases in which a well-pleaded complaint establishes either 1 that federal patent law creates the cause of action or 2 that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.

Christianson, 486 U.S. at 809, 108 S.Ct. 2166.

Significantly, the Court explained that, to establish section 1338 jurisdiction, it is not necessarily sufficient "that a well-pleaded claim alleges a single theory under which resolution of a patent-law question is essential." 486 U.S. at 810, 108 S.Ct. 2166. If there are "`reasons completely unrelated to the provisions and purposes of the patent laws why the plaintiff may or may not be entitled to the relief it seeks'... then the claim does not `arise under' those laws." Id. Thus, the Court concluded, "a claim supported by alternative theories in the complaint may not form the basis for § 1338(a) jurisdiction unless patent law is essential to each of those theories." Id. We have consistently applied those governing principles to determine whether particular claims, including state law claims, can be said to arise under section 1338. See, e.g., Davis v. Brouse McDowell, L.P.A., 596 F.3d 1355, 1359-62 (Fed.Cir.2010); Thompson v. Microsoft Corp., 471 F.3d 1288, 1291-92 (Fed.Cir. 2006); Uroplasty, Inc. v. Advanced Uroscience, Inc., 239 F.3d 1277, 1279-80 (Fed. Cir.2001); Hunter Douglas, Inc. v. Harmonic Design, Inc. 153 F.3d 1318, 1325, 1328-29 (Fed.Cir.1998).

The first part of the Christianson test is plainly not satisfied in ...