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Genelink Biosciences, Inc. v. Colby

July 1, 2010

GENELINK BIOSCIENCES, INC., PLAINTIFF,
v.
GARY D. COLBY, PH.D, ESQ., AND DUANE MORRIS LLP, DEFENDANTS.



The opinion of the court was delivered by: Hillman, District Judge

OPINION

This case concerns plaintiff's state law-based legal malpractice, negligence and breach of contract claims against defendants for their alleged failure to properly prosecute plaintiff's patent applications in Japan and the United States. Defendants Gary D. Colby and Duane Morris LLP removed plaintiff's case to this Court pursuant to 28 U.S.C. §§ 1331, 1338 and 1441, contending that plaintiff's claims arise under the federal patent laws. Presently before the Court is plaintiff's motion for remand. Defendants have opposed plaintiff's motion. For the reasons expressed below, plaintiff's motion will be granted.

BACKGROUND

On September 29, 2009, plaintiff, Genelink Biosciences, Inc.*fn1, filed a complaint in New Jersey state court alleging that defendant Gary D. Colby, Ph.D, Esquire, and the two law firms he was affiliated with--Duane Morris LLP and Akin, Gump, Strauss, Hauer & Feld LLP*fn2 --negligently handled two of its patent applications, one in Japan and one in the United States. Plaintiff claims that it lost valuable intellectual property rights because defendants allowed its Japanese OS Patent Application*fn3 to irrevocably and immediately lapse and caused its U.S. Patent Application*fn4 to be deemed abandoned.

In its complaint, plaintiff asserts three claims based on New Jersey state law: (1) legal malpractice/negligence; (2) negligent misrepresentation; and (3) breach of contract. Defendants Colby and Duane Morris removed plaintiff's case to this Court on the basis that in order to resolve plaintiff's state law claims, federal patent law must be considered. Because federal law, particularly patent law which has its exclusive province in the federal courts, arises on the face of plaintiff's complaint, defendants claim that jurisdiction here is proper under federal question jurisdiction. Plaintiff counters that federal law is not implicated by its claims, and therefore this Court lacks jurisdiction to hear its case.*fn5

DISCUSSION

Removal of a case from state to federal court is governed by 28 U.S.C. § 1441. Section 1441 is to be strictly construed against removal, so that the Congressional intent to restrict federal jurisdiction is honored. Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d 392, 396 (3d Cir. 2004) (citing Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990)). This policy "'has always been rigorously enforced by the courts.'" Id. (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)). Parties may not confer subject matter jurisdiction by consent, Samuel-Bassett, 357 F.3d at 396, and "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded," 28 U.S.C. § 1447(c).

Defendants removed plaintiff's state law complaint to this Court based on the well-pleaded complaint rule--i.e., the complaint raises a substantial federal question. A federal question case is one "'arising under the Constitution, laws, or treatises of the United States.'" Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987) (quoting 28 U.S.C. § 1331). "The presence or absence of federal-question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal question jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). "The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Id.

In Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983), the Supreme Court "referred to two situations where federal jurisdiction could be available even though plaintiff based its claim in state court on state law: (1) when it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims or (2) when it appears that plaintiff's claim is 'really' one of federal law." Goepel v. National Postal Mail Handlers Union, a Div. of LIUNA, 36 F.3d 306, 310 (3d Cir. 1994) (quoting Franchise Tax Bd., 463 U.S. at 13) (other citations omitted). This doctrine "captures the commonsense notion that a federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law, and thus justify resort to the experience, solicitude, and hope of uniformity that a federal forum offers on federal issues." Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308, 312 (2005).

A federal issue is not "a password opening federal courts to any state action embracing a point of federal law," however. Id. at 314. The federal issue will ultimately qualify for a federal forum "only if federal jurisdiction is consistent with congressional judgment about the sound division of labor between state and federal courts governing the application of § 1331."

Id. at 313-14. Thus, the question to be asked is "does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Id.; see also Christianson v. Colt, 486 U.S. 800, 809 (1988) (explaining that jurisdiction pursuant to § 1338(a) extends "only to those cases in which 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").

Defendants in this case urge the Court to answer "yes" to that question. Defendants argue that plaintiff's legal malpractice claims involve, like all such claims, the resolution of a case-within-a-case--that is, the "most common way to prove the harm inflicted by malpractice... is a suit-within-a-suit," where a plaintiff's burden is to prove by a preponderance of the evidence that but for the malpractice or other misconduct, he, inter alia, would have recovered a judgment in the underlying action. Garcia v. Kozlov, Seaton, Romanini, & Brooks, P.C., 845 A.2d 602, 611-12 (N.J. 2004) (citations omitted). Defendants here argue that in order to be successful on its malpractice claims, plaintiff must prove that (1) a valid U.S. patent would have issued*fn6, and (2) the patent would have been infringed in the United States causing plaintiff to suffer damages. Because patent validity and patent infringement are issues of federal law that have exclusive jurisdiction in the federal courts, defendants contend, plaintiff's case--at least the claim relating to the U.S. patent--raises a substantial federal issue which must be heard in this Court as Congress intended.

Plaintiff vigorously disagrees with defendants' view of its case. Plaintiff does not dispute the elements that need to be proven for a legal malpractice claim in New Jersey*fn7, that its claims involve issues concerning a U.S. patent application, or that patent law is an area of law Congress has indicated should be handled by federal courts. Plaintiff, however, disputes that its claims regarding defendants' failure to comply with procedural deadlines for its patent application and their overall negligence in their duties of representation require the analysis of federal law such that they raise a substantial federal issue. Plaintiff further disputes that its legal malpractice claims require the demonstration of a successful infringement action. Plaintiff argues that the only issue to be resolved is whether defendants' malpractice caused its patent application to go abandoned, and no analysis of patent law is needed to solve that issue.

The one thing the parties agree upon is that the United States Court of Appeal for the Third Circuit has not addressed the issue nor does it appear to this Court that it ever will under the current structure of the federal judiciary and the rules of appellate jurisdiction.*fn8 However, the Federal Circuit has issued two relatively recent decisions discussing whether legal malpractice claims concerning patents must be heard in federal court. In those cases, the Federal Circuit found "arising under" jurisdiction over state-law legal malpractice claims stemming from patent prosecution and patent litigation. See Air Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007); Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d 1281 (Fed. Cir. 2007). ...


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