United States District Court, D. Delaware
Sanyo Electric Co., Ltd., originally filed this suit in the
Court of Chancery of the State of Delaware against Intel
Corporation alleging state law causes of action and seeking
declaratory and injunctive relief as to the parties'
rights under a 2006 patent cross-license agreement
("Cross License Agreement"). (D.I. 2, Ex.
Sanyo asserted four claims against Intel complaining of Third
Party Interference, Intentional Interference, Trespass to
Chattels, and requesting a declaration that Intel is not
authorized to sell wireless communication modules under the
Cross License Agreement. (D.I. 2, Ex A at ¶¶
128-78). Intel filed a notice of removal to this Court,
asserting that this Court has original jurisdiction of this
case under 28 U.S.C. § 1338(a). (D.I. 2 at 1). Intel
asserts at least one of Sanyo's claims and at least one
of Intel's counterclaims "arise under" federal
patent law. (Id.).
before this Court is Sanyo's Motion to Remand for lack of
federal jurisdiction. (D.I. 11 at 1). The issues have been
fully briefed. (D.I. 12, 16, 22). For the reasons set forth
below, Sanyo's Motion is GRANTED, and this action will be
remanded to the Court of Chancery of the State of Delaware.
filed this action against Intel in the Court of Chancery of
the State of Delaware on October 7, 2018. (D.I. 2, Ex. A).
Sanyo and Intel negotiated the Cross License Agreement over a
period of eighteen months. (D.I. 2, Ex. A at ¶ 2 and Ex.
1). At its heart, the Agreement identifies the categories of
products Intel can make and sell under patents Sanyo owned at
the time, and vice versa. (D.I. 2, Ex. A at ¶ 25).
addition, and critical to resolving this motion for remand,
the Cross License Agreement contains a forum selection
clause, which in pertinent part provides that: "All. . .
litigation arising out of or related to this Agreement, . ..
shall be subject to the exclusive jurisdiction of the courts
of the State of Delaware or of the Federal courts sitting
therein. Each Party ... hereby irrevocably submits to the
personal jurisdiction of such courts and irrevocably waives
all objections to such venue." (D.I. 2, Ex. A at Ex. 1,
2011, Sanyo sold certain of its patents to Hera Wireless
S.A., including patents concerning Wi-Fi technology, pursuant
to a patent assignment agreement. (D.I. 2, Ex. A at
¶¶ 9, 97). While Hera took all right, title, and
interest in the patents, the assignment agreement grants
Sanyo a portion of the revenues that Hera receives through
licensing or patent infringement enforcement activities.
(Id. at ¶ 98). The assignments were recorded
with the U.S. Patent and Trademark Office. (D.I. 2, Ex. B
(Intel's Answer and Counterclaims) at Counterclaim ¶
17 ("According to ... the assignment records of the U.S.
Patent and Trademark Office, Sanyo assigned the nine asserted
[Wi-Fi] patents after the Cross License became
effective.")). Intel does not dispute that Hera-not
Sanyo-owns the patents. (See id.).
in July 2017, Hera and its authorized licensing company,
Sisvel UK Limited, sued several companies for patent
infringement, including Intel's customer Lenovo-Hera
Wireless S.A. and Sisvel UK Ltd. v. Lenovo Holding Co., Inc.,
No. 17-1088 (RGA). (D.I. 2, Ex. B at Counterclaim
¶¶ 16, 24-26, 32, 34-42). Those cases are now
before this Court. In particular, Hera and Sisvel have
asserted nine of the patents that Hera purchased from Sanyo
(the "Wi-Fi Patents") against Lenovo. (D.I. 18
(Campbell Decl), Ex. 4 at ¶¶ 10-23).
Lenovo laptops use Intel integrated circuit chips that manage
wireless communications. Believing that Hera's
infringement theory was unavoidably aimed at its chips'
functions, Intel demanded, under the Cross License Agreement
between Sanyo and Intel, that Sanyo confirm that Sanyo had
conditioned its assignment of patents to Hera on Intel's
license rights as Section 6.13 of the Cross License Agreement
required. Intel further sought Sanyo's consent to
disclose the Cross License Agreement to Hera and Sisvel and
to communicate a demand to dismiss infringement allegations
based on Intel's chips. (D.I. 18, Ex. 7). After Sanyo
consented to that disclosure, Intel wrote to Hera and Sisvel
in October 2017 outlining in significant detail why
Intel's chips were licensed to the asserted patents under
the Cross License Agreement. (D.I. 18, Exs. 8 & 9).
October 2017 letter further detailed why the infringement
theory against Lenovo would necessarily contend that
Intel's licensed chips satisfy allegedly inventive
aspects of the patent claims resulting in exhaustion of the
infringement claims against computers that incorporate those
chips. (D.I. 18, Ex. 9). Intel therefore demanded that Hera
and Sisvel dismiss laptops with Intel chips from their
lawsuit against Lenovo. (Id.). In November 2017,
Hera and Sisvel wrote that they were working "with Sanyo
to analyze the proper scope of the license," and in
January 2018, they refused Intel's demand. (D.I. 18, Ex.
Hera and Sisvel refused Intel's demand to dismiss
infringement allegations based on Intel's chips, Intel
wrote to Sanyo explaining that Sanyo had breached its
non-delegable obligations under the Cross License Agreement
by assisting and encouraging Hera and Sisvel to ignore
Intel's license rights and Lenovo's resulting
exhaustion defense. (D.I. 18, Ex. 11). Intel also explained
that "before Intel may file suit to remedy Sanyo's
breach of contract," Sanyo and Intel must have their
senior executives meet to discuss the dispute and then
participate in a formal mediation as set out in the procedure
of Section 6.10 of the Cross License Agreement.
(Id.). At Intel's request and insistence, the
senior executive meeting was held, and (later) a mediation
was held and concluded without reaching resolution. (D.I. 18,
Ex. 2 at ¶ 28; Ex. 8; Ex. 12). During the
executives' meeting, Intel presented a detailed
slide-show, reiterating its demand that Sanyo confirm
Intel's license rights under the Cross License Agreement
and cause Hera to dismiss its infringement claims against
Lenovo computers with Intel chips because the patents were
exhausted as to such claims. (D.I. 18, Ex. 12). Sanyo refused
to do so.
alleges that in September 2017, Intel began falsely asserting
that the Cross License Agreement authorizes Intel to make or
sell wireless communication modules, and that Hera's
patent rights in Intel's customers' products
incorporating wireless communication modules are exhausted
under the doctrine of patent exhaustion. (D.I. 2, Ex. A at
¶¶ 13, 15, 109-13). After attempting to resolve the
dispute for over a year, on October 7, 2018, Sanyo sued Intel
in the Court of Chancery of the State of Delaware. (D.I. 2,
Ex. A at ¶ 20). In its complaint, Sanyo sought a
judgment declaring that Intel is not authorized to make or
sell wireless communication modules under the Cross License
Agreement and asserted additional state law claims for
interference with contract and trespass to chattels.
Sanyo's Complaint alleges the following claims: Third
Party Interference (D.I 2, Ex. A at ¶¶ 147-55);
Intentional Interference (D.I. 2, Ex. A at ¶¶
155-66); Trespass to Chattels (D.I. 2, Ex. A at ¶¶
167-78); and a Declaratory Judgment that Intel is not
authorized to sell wireless communication modules under the
Cross License Agreement (D.I. 2, Ex. A at ¶¶
October 29, 2018, Intel served its Answer and Counterclaims.
(D.I. 2, Ex. B). Intel alleges the following counterclaims:
Breach of Contract (D.I. 2, Ex. B at Counterclaim
¶¶ 43-54); a Declaratory Judgment that
non-party-Hera's infringement claims are exhausted and
the asserted Wi-Fi Patents are unenforceable as to Lenovo
laptop computers that contain the accused Intel Wi-Fi chips
(D.I. 2, Ex. B at Counterclaim ¶¶ 55-59); and a
Declaratory Judgment that the asserted Wi-Fi patents that are
owned by non-party Hera are unenforceable because they are
invalid over the prior art (D.I. 2, Ex. B at Counterclaim
fifth affirmative defense, that "Hera's infringement
claims for the asserted [Wi-Fi] Patents are exhausted as to
the Lenovo laptop computers that use the Intel Wifi
Chips," and its sixth affirmative defense, that
"the claims of the asserted [Wi-Fi] patents that Hera is
pursuing are invalid and unenforceable in view of the prior
art," are related to these counterclaims. (D.I. 2, Ex. B
at ¶¶ 184-85)
answer in Hera v. Lenovo, Lenovo pled several
defenses, including that the infringement claims under the
asserted patents are exhausted, in whole or in part. (D.I.
18, Ex. 5 at ¶ 165). In this case, Sanyo has alleged
that Lenovo's exhaustion defense in Hera v.
Lenovo is the direct result of Intel communicating and
supporting its position that the infringement claims against
Lenovo computers containing Intel licensed chips are barred
under the doctrine of patent exhaustion. (D.I. 18, Ex. 1 at
October 30, 2018, Intel removed the case to this Court. (D.I.
2). Intel claimed to have removed this action based on 28
U.S.C. §§ 1338(a), 1441, and 1454, on the ground
that this Court has jurisdiction over one or more of
Sanyo's claims and one or more of Intel's
counterclaims because those claims arise under the patent
laws or raise substantial questions of patent law. (D.I. 2,
at 1). Intel also contends that supplemental jurisdiction,
under 28 U.S.C. § 1367, exists over any claim or
counterclaim that does not raise a substantial question of
federal patent law. (Id.).
filed its motion to remand, claiming this Court lacks
jurisdiction over the parties' claims because they do not
arise under the patent laws, do not satisfy the
case-or-controversy requirement, or both.
removal of an action, a plaintiff may challenge such removal
by moving to remand the case back to state court. 28 U.S.C.
§ 1447. As is the case here, "a motion to remand
based on lack of subject matter jurisdiction may be made at
any time before final judgment," Foster v.
Chesapeake Ins. Co., 933 F.2d 1207, 1212-13 (3d Cir.
1991) (citing 28 U.S.C. § 1447(c)).
party asserting jurisdiction bears the burden of showing that
at all stages of the litigation the case is properly before
the federal court." Samuel-Bassett v. KIA Motors
America, Inc., 357 F.3d 392, 396 (3d Cir. 2004).
"The statute governing removal, 28 U.S.C. § 1441,
must be strictly construed against removal."
Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219
(3d Cir. 2005) (citing Samuel-Bassett, 357 F.3d at
district court has subject matter jurisdiction over cases
removed from state court for their assertion of federal
patent law claims. Under 28 U.S.C. § 1454, "[a]
civil action in which any party asserts a claim for relief
arising under any Act of Congress relating to patents, plant
variety protection, or copyrights may be removed to the
district court of the United States." More generally,
pursuant to 28 U.S.C. § 1441, a defendant may remove
"any civil action brought in a State court of which the
district courts of the United States have original
jurisdiction." A district court has original
jurisdiction over a civil action "arising under the
Constitution, laws, or treaties of the United States,"
28 U.S.C. § 1331, as well as "any Act of Congress
relating to patents, plant variety protection, copyrights and
trademarks," 28 U.S.C. § 1338(a).
"aris[es] under" federal law, and therefore may be
removed to federal court, when "federal law creates the
cause of action asserted." Gunn v. Minton, 568
U.S. 251, 257 (2013); see 28 U.S.C. §§
1331, 1338(a), 1441, 1454. For example, federal law
"creates" various patent causes of action under
Title 35 of the United States Code. See Gunn, 568
U.S. at 257 (citing 35 U.S.C. §§ 271, 281). A case
may also "aris[e] under" federal law when a
"state-law claim necessarily raise[s] a stated federal
issue, actually disputed and substantial, which a federal
forum may entertain without disturbing any congressionally
approved balances of federal and state judicial
responsibilities." Gunn, 568 U.S. at 258
(quoting Grable & Sons Metal Prods, v. Darue
Eng'g & Mfg., 545 U.S. 308, 314 (2005)). In
other words, under the Gunn test,  "federal
jurisdiction over a state law claim will lie if a federal
issue is: (1) necessarily raised, (2) actually disputed, (3)
substantial, and (4) capable of resolution in federal court
without disrupting the federal-state balance approved by
Congress." Gunn, 568 U.S. at 258. All four
factors must support federal jurisdiction, and jurisdiction
pursuant to this test is rare. Manning, 772 F.3d at
163 ("Because we conclude that no federal issue has been
necessarily raised here, we need not decide whether the other
three Grable requirements are met."). But,
"the mere presence of a federal issue in a state cause
of action does not automatically confer federal-question
jurisdiction." Merrell Dow Pharm. Inc. v.
Thompson, 478 U.S. 804, 813 (1986).