Mars Inc. v. Kabushiki-Kaisha Nippon Conlux

Decision Date29 April 1994
Docket NumberNo. 93-1507,KABUSHIKI-KAISHA,93-1507
Citation30 USPQ2d 1621,24 F.3d 1368
Parties, 30 U.S.P.Q.2d 1621 MARS INCORPORATED, Plaintiff-Appellant, v.NIPPON CONLUX, Defendant-Appellee.
CourtU.S. Court of Appeals — Federal Circuit

John B. Pegram, Davis, Hoxie, Faithful & Hapgood, of New York City, argued for plaintiff-appellant. With him on the brief were Peter H. Priest, Wayne S. Breyer and Jeffrey M. Weinick.

Richard H. Zaitlen, Spensley, Horn, Jubas & Lubitz, of Los Angeles, CA, argued for defendant-appellee. With him on the brief were David M. Simon and Steven C. Sereboff.

Before RICH and LOURIE, Circuit Judges, and MILLS, * District Judge.

LOURIE, Circuit Judge.

Mars Incorporated appeals from a judgment of the United States District Court for the District of Delaware granting the motion of Nippon Conlux Kabushiki-Kaisha to dismiss for lack of subject matter jurisdiction Mars' claim against Nippon Conlux alleging infringement of Mars' Japanese patent. Mars Inc. v. Nippon Conlux Kabushiki-Kaisha, 825 F.Supp. 73, 27 USPQ2d 1951 (D.Del.1993) (memorandum opinion). Because the district court has neither original nor supplemental jurisdiction over Mars' claim, we affirm.

BACKGROUND

On October 2, 1992, Mars filed an action in the Delaware district court against Nippon Conlux, a company organized and operating under the laws of Japan, and certain officers and directors of Conlux U.S.A. Corporation, a U.S. subsidiary of Nippon Conlux. The complaint contained three separate causes of action relating to alleged infringement of Mars' U.S. Patent 3,918,565 and Japanese Patent 1557883, which patents are directed to electronic coin discriminators with programmable memories. The first two counts of the complaint charged Nippon Conlux and the individual defendants, respectively, with direct infringement and inducement of infringement of claims 2, 3, and 60 of the U.S. patent. The third count accused Nippon Conlux of infringement of the sole claim of the Japanese patent. Mars averred in its complaint that the district court possessed subject matter jurisdiction over the two counts alleging infringement of the U.S. patent Nippon Conlux moved to dismiss the third count based on a lack of subject matter jurisdiction, principles of international comity, and the doctrine of forum non conveniens. In granting the motion to dismiss, the court "assum[ed] without deciding" that it had subject matter jurisdiction over the disputed claim, but "declin[ed] to exercise that jurisdiction pursuant to its authority to decline to exercise supplemental jurisdiction and for reasons of comity." 825 F.Supp. at 74, 27 USPQ2d at 1951. On July 1, 1993, the district court entered a final judgment pursuant to Fed.R.Civ.P. 54(b), dismissing Mars' claim of infringement of the Japanese patent. 1 Mars now appeals.

under 28 U.S.C. Secs. 1331, 1338(a) (1988), and "ancillary, pendant and supplemental jurisdiction" over the third count alleging infringement of the Japanese patent under 28 U.S.C. Secs. 1338(b) (1988), 1367 (Supp. IV 1992).

DISCUSSION
I. Choice of Law

When an issue before us pertains to a matter not unique to our exclusive appellate jurisdiction, our established practice has been to defer to the discernable law of the regional circuit in which the district court sits. See Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1574-75, 223 USPQ 465, 471 (Fed.Cir.1984) (procedural matters); U.S. Philips Corp. v. Windmere Corp., 861 F.2d 695, 702, 8 USPQ2d 1885, 1890 (Fed.Cir.1988) (nonpatent claims), cert. denied, 490 U.S. 1068, 109 S.Ct. 2070, 104 L.Ed.2d 635 (1989). Such deference, however, is inappropriate when an issue involves substantive questions coming exclusively within our jurisdiction, see Chrysler Motors Corp. v. Auto Body Panels of Ohio Inc., 908 F.2d 951, 953, 15 USPQ2d 1469, 1470 (Fed.Cir.1990), the disposition of which would have "a direct bearing on the outcome." Panduit, 744 F.2d at 1575 n. 14, 223 USPQ at 471 n. 14.

In this case, review of the propriety of the district court's dismissal for lack of jurisdiction necessarily requires consideration of facts and resolution of legal principles that "bear[ ] an essential relationship to matters committed to our exclusive control." Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 858-59, 20 USPQ2d 1252, 1259 (Fed.Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2957, 119 L.Ed.2d 579 (1992). The issue whether the district court had jurisdiction to hear Mars' claim of Japanese patent infringement "is of importance to the development of the patent law and is clearly a matter that falls within the exclusive subject matter responsibility of this court." Minnesota Mining & Mfg. Co. v. Norton Co., 929 F.2d 670, 672, 18 USPQ2d 1302, 1304 (Fed.Cir.1991). Thus, we are not bound by the law of the Third Circuit in deciding this case. Notwithstanding that conclusion, "[w]e may, of course, look for guidance in the decisions of the [Third Circuit], as well as those of other courts." Woodard v. Sage Prods., 818 F.2d 841, 844, 2 USPQ2d 1649, 1651 (Fed.Cir.1987) (in banc) (citation omitted).

Whether the trial court properly granted the motion to dismiss for lack of jurisdiction is a question of law. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). We address that question de novo. See Zumerling v. Marsh, 783 F.2d 1032, 1034 (Fed.Cir.1986); Air Prods. & Chems., Inc. v. Reichhold Chems., Inc., 755 F.2d 1559, 1562, 225 USPQ 121, 123 (Fed.Cir.), cert. denied, 473 U.S. 929, 106 S.Ct. 22, 87 L.Ed.2d 700 (1985); Speedco, Inc. v. Estes, 853 F.2d 909, 911, 7 USPQ2d 1637, 1639-40 (Fed.Cir.1988). Moreover, when a party has moved to dismiss for lack of jurisdiction, we consider the facts alleged in the complaint as being correct. If these facts reveal any reasonable basis on which the non-movant might prevail, the motion In considering the jurisdictional issues presented in this appeal, we are guided by the "fundamental precept that federal courts are courts of limited jurisdiction. The limits upon federal jurisdiction, whether imposed by the Constitution or by Congress, must be neither disregarded nor evaded." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 2403, 57 L.Ed.2d 274 (1978). See also Aldinger v. Howard, 427 U.S. 1, 15, 96 S.Ct. 2413, 2420-21, 49 L.Ed.2d 276 (1976) (it is a "well-established principle that federal courts ... are courts of limited jurisdiction marked out by Congress"). A party seeking the exercise of jurisdiction in its favor bears the burden of establishing that such jurisdiction exists. KVOS, Inc. v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 201, 81 L.Ed. 183 (1936).

will be denied. See Scheuer, 416 U.S. at 236, 94 S.Ct. at 1686.

II. Original Jurisdiction

Mars maintains that the district court has original jurisdiction over the Japanese patent infringement claim pursuant to 28 U.S.C. Sec. 1338(b), 2 which "is a jurisdictional statute, giving the district court jurisdiction to hear certain state or [other non-]federal unfair competition claims" when joined with a substantial and related claim under the patent laws. Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 669, 7 USPQ2d 1097, 1104 (Fed.Cir.), cert. denied, 488 U.S. 968, 109 S.Ct. 498, 102 L.Ed.2d 534 (1988). Mars contends that for purposes of section 1338(b), the term "unfair competition" should be broadly construed to cover all "business torts," including the infringement of a foreign patent.

Section 1338(b) was enacted to authorize a federal court to assume jurisdiction over a non-federal unfair competition claim joined in the same case with a federal cause of action arising from U.S. patent, copyright, plant variety protection, or trademark laws in an effort to avoid "piecemeal" litigation. See 28 U.S.C. Sec. 1338(b) note; 1 James W. Moore et al., Moore's Federal Practice p 0.62 (2d ed. 1993). However, being a jurisdictional provision, section 1338(b) creates no substantive basis for a claim of unfair competition. See Water Technologies, 850 F.2d at 669, 7 USPQ2d at 1104. Thus, an asserted claim of unfair competition which a plaintiff seeks to join with a related claim under federal patent, copyright, plant variety protection, or trademark law must find a substantive basis in some other, independent source of law. Id. at 670, 7 USPQ2d at 1105.

Here, Mars seeks to extend the scope of section 1338(b) to a claim of infringement of a Japanese patent, which it characterizes as a type of unfair competition. Mars, however, does not assert any state or federal basis for its claim of unfair competition. It does not even cite any Japanese precedent holding that patent infringement constitutes unfair competition under Japanese law. Nevertheless, Mars insists that infringement of a foreign patent is an act of unfair competition as a matter of United States law.

Whether an act constitutes the tort of "unfair competition" within the meaning of section 1338(b) is a question of law that we review de novo. See O'Brien v. Westinghouse Elec. Corp., 293 F.2d 1, 13-14, 130 USPQ 79, 88-89 (3d Cir.1961); Telechron, Inc. v. Parissi, 197 F.2d 757, 761 (2d Cir.1952). In determining the breadth of the term "unfair competition" as it is used in section 1338(b), we bear in mind that when Congress borrows a common law term in a statute, absent a contrary instruction, it is presumed to adopt the term's widely accepted common law meaning. See Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 249-50, 96 L.Ed. 288 (1952); see also Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979) ("[U]nless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.").

The common law concept of "unfair competition" has not been confined to any Unfair competition law and patent law have long existed as distinct and independent bodies of law, each with different origins and each...

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