Acer has petitioned to the U.S. Supreme Court after the Federal Circuit rejected its attempt to remove a case from state to federal court based on two federal statutes and Gunn v. Minton, 568 U.S. 251 (2013).
The underlying dispute is between Acer America Corporation and Acer Inc. (collectively, “Acer”), on one side, and Intellisoft, Ltd., and its president, Bruce Bierman (collectively, “Intellisoft”), on the other. Intellisoft sued Acer in California state court in 2014, alleging that Acer violated a nondisclosure agreement by using Intellisoft’s trade secret information in Acer’s applications for a group of related patents. Intellisoft brought various state-law claims, including a claim for trade secret misappropriation.
Shortly before trial, Intellisoft disclosed expert opinions suggesting it would pursue a theory that Bierman should have been named a co-inventor on Acer’s patents. Based on these disclosures, Acer sought leave to file a counterclaim to obtain a declaration that Bierman was not entitled to an inventorship correction under federal patent law. Acer also simultaneously removed the entire action to federal court based on 28 U.S.C. §§ 1441 and 1454. Intellisoft moved to remand, arguing that its state-law claims did not require resolution of any patent issue and that Acer’s counterclaim could not be considered because the state court never ruled on the motion for leave to file it.
The Northern District of California agreed with Acer that the case belonged in federal court, concluding that Intellisoft’s trade secret misappropriation claim—although technically a state-law claim—“arose under” federal law because it necessarily involved substantial patent-law issues. And, in any event, federal jurisdiction was proper under § 1454 because Acer asserted a patent inventorship counterclaim.
But the Federal Circuit disagreed. After the district court ruled in favor of Acer on summary judgment, Intellisoft appealed, arguing that the case should have been remanded to state court. In an opinion written by Hon. Timothy B. Dyk, the circuit court held that removal was improper under (1) § 1441 because the case did not fall into the “special and small category” of cases that meet the requirements for original federal jurisdiction under Gunn, 568 U.S. at 258, and (2) § 1454 because Acer’s patent counterclaim was not asserted in an operative pleading in the state-court action. In reaching the former conclusion, the court analyzed the nature of the trade secret claim and concluded that it did not give rise to jurisdiction under 28 U.S.C. § 1338 and Gunn because it did not require proof of patent inventorship or infringement, even if such evidence would be used as part of Intellisoft’s theory of the case. And in reaching the latter conclusion, the court drew on cases interpreting the word “brought” in § 1441 and held that the word “asserted” in § 1454 should have the same meaning.
In a petition for writ of certiorari, Acer has now asked the U.S. Supreme Court to weigh in, arguing that the Federal Circuit’s decision “flaunted Gunn” and “contravene[d] the plain meaning of” § 1454. Intellisoft waived its option to file an opposition brief.
Under the 2016 federal Defend Trade Secrets Act (“DTSA”)—passed after Intellisoft filed its case in 2014—a plaintiff can assert a federal cause of action. But even when the DTSA is a viable claim, some plaintiffs opt not to assert the claim to avoid federal jurisdiction and to stay in state court where some plaintiffs may feel they enjoy a greater local or procedural advantage. So despite the new federal claim, jurisdictional cases like this one will continue to be relevant.
The decisions are Intellisoft, Ltd. v. Acer America Corp., No. 17-CV-06272-PJH, 2018 WL 496739 (N.D. Cal. Jan. 22, 2018), and Intellisoft, Ltd. v. Acer America Corp., 955 F.3d 927 (Fed. Cir. 2020). The Supreme Court case number is 20-313.