Kroll v. Finnerty

Decision Date21 March 2001
Docket NumberNo. 00-1176,DEFENDANT-APPELLEE,PLAINTIFF-APPELLANT,00-1176
Citation242 F.3d 1359
Parties(Fed. Cir. 2001) MICHAEL I. KROLL,, v. FRANK A. FINNERTY, JR., CHIEF COUNSEL FOR THE NEW YORK STATE GRIEVANCE COMMITTEE FOR THE TENTH JUDICIAL DISTRICT,
CourtU.S. Court of Appeals — Federal Circuit

Appealed from: United States District Court for the Eastern District of New York

Edwin D. Schindler, of Coram, New York, argued for plaintiff- appellant.

Melanie L. Oxhorn, Assistant Solicitor General, Office of the Attorney General of the State of New York, of New York, New York, argued for the defendant-appellee. With her on the brief was Eliot Spitzer, Attorney General of the State of New York. Of counsel was Robert K. Drinan, of Mineola, New York.

Before Michel, Circuit Judge, Smith, Senior Circuit Judge,* and Gajarsa, Circuit Judge.

Michel, Circuit Judge.

Judge Arthur D. Spatt

This is an attorney misconduct case that concerns the scope of federal patent jurisdiction. Michael Kroll appeals from the November 12, 1999 judgment of the United States District Court for the Eastern District of New York, entered upon the district court's November 9, 1999 order granting summary judgment in favor of Frank Finnerty (nominal defendant for the New York State Grievance Committee, or "Grievance Committee") and dismissing Kroll's complaint seeking a declaratory judgment that federal patent law preempts the Grievance Committee's authority to bring disciplinary action against him. On January 7, 2000, Kroll filed a notice of appeal to this court. To the extent that the district court properly premised its decision on 28 U.S.C. §§ 1338(a), we have exclusive appellate jurisdiction pursuant to 28 U.S.C. §§ 1295(a)(1). We heard oral arguments in this case on December 8, 2000. Because we conclude that Kroll's assertion of federal jurisdiction is insubstantial and devoid of merit, we vacate the trial court's grant of summary judgment and remand the case for the district court to dismiss the complaint for lack of subject matter jurisdiction. The complaint simply fails to invoke federal question jurisdiction under 28 U.S.C. §§ 1331 or patent jurisdiction under 28 U.S.C. §§ 1338(a).

I. Background
A. Kroll's Alleged Misconduct

Michael Kroll was and is a member of the Bar of the State of New York and is also registered to practice as a patent attorney before the United States Patent and Trademark Office ("PTO"). As described below, the Grievance Committee initiated disciplinary action against Kroll in response to grievances filed by the following three clients regarding Kroll's patent prosecution practice on their behalf.

1. Elly Ildiko Elias

In approximately 1990, Elly Ildiko Elias conceived of the idea of making a "LOVE BED" for dogs and puppies. As described in a letter she later wrote to her Congressman, she contacted Kroll through the Yellow Pages, and after putting "faith and trust in [his] advertisement," paid him $8425 to obtain a patent claiming her invention. On August 28, 1990, Kroll filed a patent application on her behalf, which, according to Elias, disclosed that the LOVE BED could be made of wood, with mattress, bed sheets, narrow pillow, with pillow cases, and that the LOVE BED could come in different sizes, and would be a great gift idea.

Approximately one year later, Elias was looking through an L.L. Bean Inc. catalogue, and saw a dog bed for sale, allegedly very similar to the one described in her patent application. When Elias called Kroll to report this possible act of infringement, he was "not very nice," and he allegedly rebuffed her subsequent calls inquiring about the progress of her patent application, stating only that "it will take a very long time." It was not until the summer of 1992, when Elias contacted another attorney to investigate the matter, that Kroll disclosed to her that the PTO actually had rejected her application in July 1991.

Upset over Kroll's failure to inform her promptly of the rejection, Elias wrote a letter to her Congressman, who forwarded the complaint to the Grievance Committee. The Grievance Committee informed Kroll of the matter and dismissed the complaint, subject to Kroll's future compliance with his professional responsibilities.

2. Charles Strieber

In January 1993, Charles Strieber hired Kroll to file a patent application on his behalf. For approximately $21,000, Kroll prepared several dozen drawings, but never finalized the application. In April 1995, Strieber terminated Kroll's representation, and requested by phone an accounting of his payments and the return of his files. On August 11, 1995, Strieber wrote Kroll a letter (signed, "Zombies for Ever, Charles Strieber"), repeating his request. On September 16, 1996, his request still unfulfilled, Strieber filed a complaint with the Grievance Committee.

3. Vincent Davi

On March 2, 1996, Vincent Davi gave Kroll his credit card number and authorized a charge of $825.00 to initiate a patent application. Kroll charged $850.00 to the card on March 2, 1996, an additional $800.00 on March 8, 1996, and a further $1850.00 on March 10, 1996. After repeatedly calling Kroll, insisting that he credit his account for the overcharges, Davi closed his credit card account, initiated a fraud investigation, and filed a complaint with the Grievance Committee.

B. The District Court Litigation

On June 30, 1997, Kroll filed suit in the U.S. District Court for the Eastern District of New York, seeking a declaratory judgment that federal patent law preempts the Grievance Committee's subject matter jurisdiction to consider the Elias, Strieber, and Davi grievances. Kroll asserts that 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32, which grant the PTO the authority to regulate the practice of patent law before the PTO, preempt the authority of the Grievance Committee to discipline him for conduct arising out of his patent prosecution practice.1 Kroll argues that his suit constitutes a "civil action arising under any Act of Congress relating to patents," and thus that the federal district court had jurisdiction, pursuant to 28 U.S.C. §§ 1338(a).

The Grievance Committee moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and moved for summary judgment pursuant to Fed. R. Civ. P. 56. According to the district court, on May 14, 1999, the Grievance Committee dismissed Davi's and Strieber's allegations without qualification. As to Kroll's challenge to the Elias grievance, the district court ruled that the conditional nature of the Grievance Committee's dismissal of that complaint gave rise to a sufficient case or controversy to permit Kroll to seek a declaratory judgment. The court stated, moreover, that resolution of the dispute would require judicial interpretation of 28 U.S.C §§ 1338(a), 35 U.S.C. §§ 2(b)(2)(D), and 35 U.S.C. §§ 32, and thus that Kroll had "asserted a colorable federal claim arising under federal law" sufficient to establish federal jurisdiction. The district court, reasoning that allowing the state to discipline a member of its own bar would not frustrate the objectives of the patent system, granted the Grievance Committee's motion for summary judgment that federal patent law does not preempt the authority of the Grievance Committee to discipline Kroll.

II. Discussion
A. Legal Standard for Dismissal of Meritless Claims for Lack of Subject Matter Jurisdiction

A court must dismiss a complaint for lack of subject matter jurisdiction when the alleged basis for exercising federal jurisdiction is "so attenuated and unsubstantial as to be absolutely devoid of merit." Hagans v. Lavine, 415 U.S. 528, 536-37 (1974). Although the Supreme Court has cautioned against dismissing complaints for lack of subject matter jurisdiction when unstated questions of federal law may underlie a complainant's cause of action, see id. at 536-38, in this case the sole basis for alleging federal preemption, and hence federal jurisdiction, is plainly evident from the complaint.

Kroll asserts that the district court had jurisdiction to hear his declaratory judgment complaint pursuant to 28 U.S.C. §§ 1338(a), which grants federal district courts jurisdiction to adjudicate any "civil action arising under any Act of Congress relating to patents." The Supreme Court has interpreted this provision to confer jurisdiction upon district courts when "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 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 v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988); see also Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1325, 47 USPQ2d 1769, 1773 (Fed. Cir. 1998) (overruled on other grounds by Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 50 USPQ2d 1672 (Fed. Cir. 1999)).

Kroll's preemption claim rests on 35 U.S.C. §§ 2(b)(2)(D) and 35 U.S.C. §§ 32, which authorize the PTO to regulate the conduct of patent practitioners appearing before it, and to discipline them for related misconduct. The first of these statutes provides that the PTO may establish regulations governing patent practitioners:

(b) The [United States Patent and Trademark] office

(2) may establish regulations, not inconsistent with law, which

(D) may govern the recognition and conduct of agents, attorneys, or other persons representing applicants or other parties before the Office, and may require them, before being recognized as representatives of applicants or other persons, to show that they are of good moral character and reputation and are possessed of the necessary qualifications to render to applicants or other persons valuable service, advice, and assistance in the presentation or prosecution of their applications or other business before the Office.

35 U.S.C. §§ 2(b)(2)(D).

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