CamSoft Data Services, Inc. v. Southern Electronics Supply, Inc.

Addressing whether federal courts have jurisdiction over patent disputes prior to issuance of a disputed patent, the U.S. Court of Appeals for the Fifth Circuit affirmed a lower court’s order remanding the case to state court, finding that the federal courts have no authority to adjudicate inventorship with respect to pending patents.  CamSoft Data Services, Inc. v. Southern Electronics Supply, Inc., Case No. 12-31013 (5th Cir., June 19, 2014) (Benavides, J.).

CamSoft sued Southern Electronics Supply and Active Solutions in state court, asserting that it had invented and developed a disputed wireless surveillance system. CamSoft alleged that the system was the subject of a pending patent application and sought ownership of the surveillance system and any related intellectual property.  The case was removed to district court on the basis of federal question jurisdiction under 28 U.S.C. §§ 1331 and 1338(a), a move opposed by CamSoft.  The federal district court found that the allegation of inventorship invoked patent law, giving rise to federal jurisdiction.

The district court presided over the case for three years and resolved various dispositive issues and dismissed others.  The district court then requested and reviewed the parties’ briefings on the remaining claims.  The court found that the patent issue had been abandoned and sua sponte declined to exercise supplemental jurisdiction over the remaining claims, remanding the case back to state court.  Southern appealed the remand to the Federal Circuit.  The Federal Circuit transferred the appeal to the 5th Circuit.

The 5th Circuit found that it had jurisdiction over the appeal.  Considering whether removal to district court had been proper in the first place, the court analyzed the inventorship issue invoked by CamSoft’s claim to ownership of a pending patent application.  Although inventorship raises a substantial question of federal patent law, the relevant statute places limitations on how a plaintiff may contest inventorship.  The court found that only the director of the U.S. Patent and Trademark Office (PTO) has jurisdiction with respect to inventorship of pending patent applications.  The 5th Circuit found that Congress explicitly vested the PTO with the sole discretion over granting patents and modifying inventorship of pending applications.  Courts may only correct inventorship of issued patents.

The 5th Circuit found that, regardless of CamSoft’s inventorship assertion, removal of CamSoft’s complaint from state court was improper because district courts have no jurisdiction over such disputes until the disputed patent issues.  The 5th Circuit found that the district court had no jurisdiction to remove this case, and affirmed the remand order.