Stark v. Advanced Magnetics, Inc.

• Decision Date: 13 October 2000
• Docket Number: No. 98-P-1749.,98-P-1749.
• Citation: 736 NE 2d 434,50 Mass. App. Ct. 226
• Parties: DAVID D. STARK v. ADVANCED MAGNETICS, INC., & others.
• Court: Appeals Court of Massachusetts

50 Mass. App. Ct. 226

736 NE 2d 434

DAVID D. STARK v. ADVANCED MAGNETICS, INC., & others.¹

No. 98-P-1749.

Court of Appeals of Massachusetts, Middlesex.

May 11, 2000.

October 13, 2000.

Present: JACOBS, PORADA, & BECK, JJ.

Henry C. Dinger for the plaintiff.

Ian Crawford for the defendants.

PORADA, J.

At issue in this case is whether the Superior Court lacks subject matter jurisdiction over the plaintiff's tort and G. L. c. 93A claims because determination of those claims requires the resolution of a substantial question of patent law under the exclusive jurisdiction of the Federal courts and, if the Superior Court has jurisdiction, whether those claims are barred by the applicable statute of limitations. We determine that the Superior Court has subject matter jurisdiction over all of the plaintiff's claims except his claim for negligent misrepresentation, and that material issues of fact preclude the disposition of the surviving claims by summary judgment on the ground that the claims are time barred.

We summarize the lengthy procedural history of this case. On September 3, 1992, the plaintiff filed an action in the United States District Court against the defendant, Advanced Magnetics, Inc. (AMI), seeking to be named as the inventor or coinventor on six patents issued to AMI relating to the use of superparamagnetic biodegradable contrast agents in magnetic resonance imaging (MRI) and to recover damages against AMI for breach of the duty of good faith and fair dealing, breach of implied contract, unjust enrichment, violation of G. L. c. 93A, § 11, conversion, misappropriation of trade secrets, negligent misrepresentation, and misrepresentation. Stark vs. Advanced Magnetics, Inc., U.S. Dist. Ct., No. 92-12157-Y (D. Mass. April 19, 1993). A United States District Court judge allowed summary judgment for AMI on the correction of inventorship claims and the tort claims. The judge ruled that the plaintiff had failed to exercise due diligence in pursuit of his correction of inventorship claims and that the tort claims were time barred. The judge also declined to exercise supplemental jurisdiction over the contract and G. L. c. 93A claims. The plaintiff appealed the allowance of summary judgment to the United States Court of Appeals for the First Circuit and filed his contract and G. L. c. 93A claims against AMI in the Superior Court. The plaintiff subsequently amended his complaint in the Superior Court to include claims against the individual defendants — Goldstein, Groman, and Josephson — for tortious interference with contractual or advantageous relations and for violation of G. L. c. 93A. The United States Court of Appeals for the First Circuit reversed the judgment of the United States District Court. Stark v. Advanced Magnetics, Inc., 29 F.3d 1570 (1st Cir. 1994). The Court of Appeals ruled first that there were material issues of fact which had not been considered by the District Court judge when he concluded that the tort claims were time barred and further that the correction of inventorship claims were not barred by lack of due diligence. Id. at 1576. On remand, the District Court judge declined supplemental jurisdiction over the tort claims and dismissed them. The plaintiff then filed a second action in the Superior Court against AMI in which he set forth those tort claims that had been dismissed in the Federal action.

Meanwhile, in the first Superior Court action, a judge had allowed the defendants' motion for partial summary judgment on the claim for tortious interference with contractual or advantageous relations against the individual defendants and on the claim for violation of G. L. c. 93A against AMI and the individual defendants. The Superior Court judge determined that those claims were barred by the statute of limitations. The parties then filed a joint motion to consolidate the two Superior Court actions upon representation that, once the motion to consolidate the actions was allowed, all counts of the consolidated amended complaint would be dismissed pursuant to a stipulation and agreement for judgment. The motion to consolidate was allowed, and the plaintiff filed a consolidated amended complaint. By means of a stipulation and agreement for judgment, the parties agreed that under the consolidated amended complaint: the tort claim against the individual defendants for tortious interference with contractual or advantageous relations (Count IV); the tort claims against AMI and the individual defendants for misappropriation of trade secrets (Count VIII) and conversion (Count IX); the tort claim against AMI for negligent misrepresentation (Count X); and the claim against AMI and the individual defendants for violation of G. L. c. 93A (Count VII) would be dismissed on the ground that they were time barred, as previously determined by the judge in the first Superior Court action. The parties further agreed that these claims would be subject to appeal by the plaintiff.²

On appeal, the plaintiff contends that the tort and G. L. c. 93A claims are not time barred. He also asserts, for the first time, a claim that the Superior Court lacks subject matter jurisdiction over those claims, whose resolution, he alleges, is dependent upon a determination of inventorship, which is a matter under the exclusive jurisdiction of the Federal courts.

1. Jurisdiction. "Subject matter jurisdiction cannot be conferred by consent, conduct or waiver." Litton Bus. Sys., Inc. v. Commissioner of Rev., 383 Mass. 619, 622 (1981). "Accordingly, this court must take note of lack of jurisdiction whenever it appears, whether by suggestion of a party or otherwise." Ibid. Here, the plaintiff contends that each of the claims cannot be resolved without deciding a substantial question of patent law, namely the inventorship of the subject matter of the patents.

Under 28 U.S.C. § 1338(a) (1994), the Federal District Courts have "original jurisdiction of any civil action arising under any Act of Congress relating to patents.... Such jurisdiction is exclusive of the courts of the states in patent... cases." This section confers exclusive jurisdiction on the Federal District Courts only in those cases in which a well-pleaded complaint establishes either that (1) Federal patent law creates the cause of action, or (2) "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, 808-809 (1988). Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1324 (Fed. Cir. 1998), cert. denied, 525 U.S. 1143 (1999). Here, the plaintiff does not argue that Federal patent law creates his causes of action but rather that resolution of each of his claims requires a determination of a substantial question of Federal patent law, namely, a determination of the inventorship of the subject matter of the patents in question. In determining this issue, we look only to the plaintiff's statement of his claims in his complaint. Christianson v. Colt Indus. Operating Corp., 486 U.S. at 809. In examining each claim, we also look to see whether the claim is supported by alternative theories and, if so, whether a determination of patent law is essential to each theory. Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d at 1325. If it is not, then the Federal District Court does not have exclusive jurisdiction of the claim. Ibid. Applying those principles to the claims set forth in the plaintiff's complaint, we discuss each claim.

(a) Count IV: Claims of intentional interference with contractual or advantageous relations against the individual defendants. The plaintiff alleges that the individual defendants wrongfully induced AMI to breach its agreement with the plaintiff not to seek patents on his inventions without his consent. The plaintiff thus argues that resolution of this claim depends on a substantial question of patent law, namely, whether the plaintiff was the inventor of the subject matter of the patents obtained by AMI. Ordinarily, interference with contractual or advantageous relations is a State law claim, even if questions of patent law arise in the controversy. Koratron Co. v. Deering Milliken, Inc., 418 F.2d 1314, 1317 (9th Cir. 1969), cert. denied, 398 U.S. 909 (1970). However, we need not decide whether this theory of the claim presents a substantial question of Federal patent law, because this is not the only theory alleged to support the plaintiff's claim. The plaintiff also alleged that the individual defendants wrongfully induced AMI to breach its agreement not to disclose the plaintiff's trade secrets or other proprietary information without his consent. "A trade secret need not be a patentable invention." J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 357 Mass. 728, 738 (1970). See American Tel. & Tel. Co. v. Integrated Network Corp., 972 F.2d 1321, 1324 (Fed. Cir. 1992) (not all inventions are patentable; some inventions are unpatentable trade secrets). "A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., supra at 736, quoting from Restatement of Torts § 757 comment b. In the plaintiff's complaint, he alleges that he disclosed to AMI certain findings and conclusions resulting from his research on the coating of iron oxide particles with certain materials that enables the particles to be used as contrast agents in MRI. This information may well constitute trade secrets but need not be a patentable invention. As a result, this alternative theory in support of the plaintiff's claim does not require as an essential element a determination of a substantial question of patent law. See American Tel. & Tel....