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Companies that have been hauled into federal court and sued on a U.S. patent hardly constitute a select club. As intellectual property has become more important in today’s business world, such patent infringement actions are commonplace. What is unusual is to be sued in a U.S. federal court on a foreign patent. Patents are territorial; they typically are granted by a country to be operative regarding infringement in that country. As a result, patent infringement lawsuits in the U.S. deal with infringement of U.S. patents based on conduct that normally takes place in the United States. The entirely different situation of suing in the United States on a foreign patent is squarely raised in Voda v. Cordis Corp., a case currently before the U.S. Court of Appeals for the Federal Circuit. Various intellectual property law associations, as well as the U.S. government, have filed amicus curiae briefs. This article considers the limited history of the issue and examines the respective positions taken on appeal by the parties and the amici. The basic questions are: (1) do the federal courts have jurisdiction over such claims and (2) if they do, under what circumstances should they exercise their discretion and decline to entertain such claims? These are not academic questions. If they are answered so as to confer federal court jurisdiction, a new cottage industry of such litigation could develop, giving rise to significant new expense and exposure to the companies charged. LIMITED JURISDICTION OF FEDERAL COURTS Federal courts do not have subject matter jurisdiction over any and all disputes. Rather, they have a limited jurisdiction that is available only in certain circumstances. One basis is where jurisdiction is based on “the Constitution, laws or treaties of the United States.” This “federal question” jurisdiction is provided for by 28 USC �1331. A second basis for federal court jurisdiction is where the parties are from different states or countries — i.e., “diversity jurisdiction” provided for by 28 USC �1332. In cases where federal courts have such “original” jurisdiction, they also will have “supplemental jurisdiction” over related claims where these other claims are so related to the claims falling within the original jurisdiction as to “form part of the same case or controversy. … ” This supplemental jurisdiction is provided for by 28 USC �1367(a). Importantly, subsection (c) of �1367 provides that a district court may “ decline to exercise supplemental jurisdiction over a claim under subsection (a)” in various circumstances, including where “the claim raises a novel or complex issue of State law” and “in exceptional circumstances [where] there are other compelling reasons for declining jurisdiction.” THE ‘MARS’ CASE The issue of jurisdiction over claims regarding foreign patents was last examined by the Federal Circuit in Mars, Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F3d 1368 (Fed. Cir. 1994). In that case, Mars, the owner of a U.S. patent and its Japanese patent counterpart, sued Nippon Conlux in federal court. The first two counts of the complaint charged infringement of the U.S. patent. The third count alleged unfair competition based on the alleged infringement of the Japanese patent. The district court dismissed the third count and the Federal Circuit affirmed. On appeal, the Federal Circuit considered three arguments. The first was whether the court had original jurisdiction under 28 USC �1338(b) (jurisdiction over an unfair competition claim) where infringement of a Japanese patent was being asserted as the form of unfair competition. The Federal Circuit answered in the negative, holding that “a claim of infringement of a foreign patent does not constitute a claim of unfair competition within the meaning of section 1338 (b).” The second argument considered and rejected by the Federal Circuit was that the district court had supplemental jurisdiction by virtue of 28 USC �1367. In so doing, the Federal Circuit distinguished an earlier 7th U.S. Circuit Court of Appeals case, Ortman v. Stanray, 371 F2d 154 (7th Cir. 1967), in which it was held that the district court possessed supplemental jurisdiction over claims alleging foreign patent infringement. Because the Federal Circuit believed that, in Mars, “the respective patents are different, the accused devices are different, the alleged acts are different, and the governing laws are different,” no supplemental jurisdiction was found in Mars. The third argument the Federal Circuit considered in Mars was whether the court ought to decline to exercise jurisdiction under the doctrine of forum non conveniens. While noting that the district court did not directly rule on the issue, a number of its findings seemed to support the forum non conveniens argument, including that proceeding with the third count “would require the court to resolve complex issues of Japanese procedural and substantive law, a task further complicated by having to agree on a proper translation of laws, documents and other communications.” The Federal Circuit also noted that the district court concluded that “general concerns respecting international comity counsel against exercising jurisdiction over a matter involving a Japanese patent, Japanese law, and acts of a Japanese defendant in Japan.” ‘VODA v. CORDIS CORP.’ The same sorts of issues considered in Mars are again before the Federal Court in Voda v. Cordis Corp. In this case, plaintiff had sued for infringement of three U.S. patents and thereafter sought to amend its complaint to assert infringement of a Canadian and European patents. The district court concluded that Mars did not support a broad rule precluding supplemental jurisdiction, noting that “rather, the court in Mars took pains to distinguish the facts of that case from those in Ortman v. Stanray … where ‘all of the actions of defendant of which complaint is made are the result of defendant doing similar acts both in and out of the United States.’” Thus, the motion to amend was granted. The district judge in Voda, however, then certified the question for appeal and the Federal Circuit accepted the appeal “because of the paucity of law surrounding this issue. … ” Interestingly, one of the Federal Circuit judges on the panel that granted permission to appeal (Judge Alan D. Lourie) was the author of Mars. Also, interestingly, various amicus briefs have been filed, mostly in favor of Cordis’ position, including those by the Intellectual Property Owners Association, the American Intellectual Property Law Association and the Federal Circuit Bar Association. Even the U.S. government has filed an amicus brief in support of appellant Cordis’ position. The respective positions articulated by the parties and various amici are not symmetrical. Some on the pro-appellant side articulate the “hard” position that jurisdiction simply does not exist. For example, Cordis and the others assert that supplemental jurisdiction under �1367 does not apply to foreign patent claims. The pro-appellant side also argues the fallback position that even if jurisdiction may exist under �1367 or �1332, courts should decline to exercise it based on comity, the act of state doctrine and forum non conveniens. In contrast, appellee Voda and five law professors who have collectively filed an amicus brief in support of Voda take a more limited position. Voda argues that “exercising jurisdiction over foreign patent claims is appropriate only in rare cases.” The five professors, in turn, argue that rather than imposing a per se rule that categorically rejects jurisdiction over foreign patent claims, the Federal Circuit should establish “clear standards” for the application of restraining doctrines, such as forum non conveniens, on a case-by-case basis. They identify factors to consider, which include whether a U.S. patent is being asserted by a U.S. party, whether significant infringement is occurring in the United States, whether the asserted patents, charged infringements and arguably invalidating prior art are similar, whether potential conflicts with foreign law or policy (as a result of parallel foreign proceedings) might exist and whether a potential U.S. judgment could be enforced against sufficient assets in the United States. The five professors offer no real guidance as to when “enough” has been shown on a particular factor or how the various factors are to be balanced. A MAJOR ‘DISCONNECT’ One major “disconnect” is how the two sides view the similarities and differences in the scope, procedures and laws concerning foreign patents. It brings to mind the old Peace Corps ad that inquires “Is this glass half full or half empty?” Cordis and most of the amici see the glass half empty; they see numerous and important differences. For example, the patent claims and disclosures and the prosecution histories of U.S. versus foreign patents are characterized as likely almost always to be dissimilar. Differences in patent office procedure and substantive patent law likewise are stressed. For example, different countries approach patent claim construction differently. As Cordis notes, “in contrast to the situation in the U.S., prosecution histories do not feature prominently in claim construction in the United Kingdom.” Voda and the five law professors, in contrast, stress similarity as well as a growing convergence of patent procedure and law. The professors note that studies have “demonstrated the substantial similarity of patent examination results” in the U.S., Japan and Europe. They conclude that “core doctrines of the leading patent-issuing states are substantially similar to the point of identity” and that “other determinations … will differ from U.S. law but would nonetheless be straightforward to apply.” There also is disagreement on the related issue of efficiency. Cordis and most amici see a host of problems that will make litigation more protracted and inefficient, arguing that to apply different patent laws correctly in a case involving patents of different countries “would require separate trials within a trial.” Because of translation disputes, a special “translation hearing” also might be needed in advance of the usual Markman hearing on claim interpretation. Any understanding of foreign patent law and procedure would, of course, have to be provided by foreign law experts, which would be time-consuming, expensive and require adjudication by the court. The appellee’s side, in contrast, urges that one somewhat longer and more costly lawsuit in the United States is better than pursuing a largely duplicative action in each country where the patentee owns a foreign counterpart patent. INTERNATIONAL CONSENSUS? The various problems that might arise are enlisted in support of the legal doctrines that appellant and most amici advance. Cordis argues that issues of international comity compel declining jurisdiction over foreign patents. It asserts that there is “an international consensus that courts of one sovereign nation cannot rule on the validity of patents issued by another.” According to Cordis, if this consensus were to be ignored and U.S. courts began to adjudicate foreign patents, U.S. courts would have to accord foreign courts a similar right. This raises the less-than-appealing specter of a North Korean court invalidating U.S. patents. Problems could arise in other ways, as well. For example, Cordis argues that “the U.S. requirement that infringement be tried to a jury … might offend foreign jurisdictions such as Germany and Japan that are accustomed to having infringement actions heard by expert courts advised by patent and technology experts.” Several amici rely on the related act of state doctrine under which U.S. courts abstain from entertaining claims the resolution of which would require them to invalidate the acts of a foreign sovereign performed within its territory. This doctrine would be implicated where defenses of invalidity or unenforceability are raised. The doctrine of forum non conveniens also is advanced in support of appellant’s position. Among the possibly relevant factors identified by courts that warrant applying the doctrine are difficulties in obtaining access to evidence and witnesses, increased court congestion and imposing jury duty on people in a community unrelated to the litigation. CONCLUSION No one favors turning U.S. courts into the forum of first resort for litigating foreign patents. Voda asserts that foreign patents should be litigated in U.S. courts “only in rare cases.” The five professors, in turn, favor proceeding with such claims only when “clear standards” have been met. Cordis and most amici, in contrast, urge a prophylactic rule that would preclude such lawsuits. The Federal Circuit, 11 years after Mars, will soon have the opportunity to address this thorny issue again. John E. Daniel is a partner at Kramer Levin Naftalis & Frankel, focusing on litigation in all areas of intellectual property, and especially patents.

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