United States District Court, E.D. Michigan, Southern Division
TJ THEISEN and THE THEISEN GROUP, LLC, a Michigan Limited Liability Company, Plaintiffs,
INVENTIVE CONSULTING, LLC, a Michigan Limited Liability Company, d/b/a INVENTIVE ENGINEERING, MOHAMAD ZEIDAN, and SLOBODAN PAVLOVIC, Defendants.
OPINION AND ORDER GRANTING, IN PART, PLAINTIFFS'
MOTION FOR REMAND AND FOR COST AND FEES PURSUANT TO 28 U.S.C.
V. PARKER U.S. DISTRICT JUDGE
lawsuit arises from a breach of two oral contracts in which
Defendants Inventive Consulting, LLC d/b/a Inventive
Engineering (“IE”), Mohamad Zeidan and Slobodan
Pavlovic (collectively “Defendants”) orally
agreed to enter into written contracts to assign its patent
rights. In a Complaint originally filed in the Circuit Court
for the County of Oakland on April 12, 2018, Plaintiffs TJ
Theisen and the Theisen Group, LLC (collectively
“Plaintiffs”) allege various state law claims
against Defendants related to a business dispute.
Specifically, Plaintiffs claim: breach of two oral contracts,
promissory estoppel, unjust enrichment, fraudulent
misrepresentation/bad faith, misappropriation of trade
secrets, and breach of fiduciary duty-joint venture.
April 16, 2018, Defendants removed Plaintiffs' Complaint
to federal court on the basis of a federal question with
respect to the oral breach of contract claims against it, 28
U.S.C. § 1331. Defendants assert that Plaintiffs'
Complaint concerns the “validity of an alleged verbal
contract assigning an interest in the HP/HV Patent, ”
which implicates 28 U.S.C. § 1338(a) and 35 U.S.C.
§ 261. (See ECF No. 6 at Pg ID 281.)
Complaint, on its face, alleges claims arising only under
state law. Under the “well-pleaded complaint”
rule, then, this case could not have been removed from state
to federal court as involving claims “arising
under” federal law, see 28 U.S.C. § 1331,
1441(a), because federal question jurisdiction ordinarily
“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 [well-pleaded complaint]
rule makes the plaintiff the master of the claim; he or she
may avoid federal jurisdiction by exclusive reliance on state
law.” Id. (footnote omitted). Moreover, as it
relates to patents, “whether a claim ‘arises
under' patent law must be determined from what
necessarily appears in the plaintiff's statement of his
own claim in the bill or declaration, unaided by anything
alleged in anticipation or avoidance of defenses which it is
thought the defendant may interpose.” Christianson
v. Colt Indus. Operating Corp., 486 U.S. 800, 809
there is “‘an independent corollary' to the
well-pleaded complaint rule, known as the ‘complete
pre-emption' doctrine.” Caterpillar, Inc,
482 U.S. at 393 (internal citation omitted). As the Supreme
Court explained, this doctrine applies where “the
pre-emptive force of a statute is so extraordinary that it
converts an ordinary state common-law complaint into one
stating a federal claim for purposes of the well-pleaded
complaint rule.” Id. (internal quotation marks
and citation omitted).
attempt to characterize Plaintiffs' Complaint as one that
“concerns the validity of an alleged verbal contract
assigning an interest in the PH/HV Patent” is
unconvincing. Plaintiffs argue that they do not claim any
interest in the patent, and, therefore, § 261 is not
implicated. Plaintiff maintains, and the Court agrees, that
the issue is whether Defendants breached an oral agreement to
enter into an agreement, which involves a patent.
Defendants' argument that any such agreement is invalid
is a defense to Plaintiffs' claims, and an improper
ground for federal jurisdiction. See Christianson,
486 U.S. at 809 (“[A] case raising a federal patent-law
defense does not, for that reason alone, ‘arise
under' patent law, ‘even if the defense is
anticipated in the plaintiff's complaint, and even if
both parties admit that the defense is the only question
truly at issue in the case.”).
the Sixth Circuit has instructed “where an action is
brought to enforce, set aside, or annul a contract, the
action arises out of the contract, and not under the patent
laws, even though the contract concerns a patent
right.” Combs v. Plough, Inc., 681
F.2d 469, 470 (6th Cir. 1982); see also Boggild v.
Kenner Products, Div. of CPG Prods. Corp., 853
F.2d 465, 468 (6th Cir. 1988).0Specifically in
Combs, the Sixth Circuit relied on the analysis in
Lion Mfg. Co. v. Chicago Flexible Shaft Co., 106
F.2d 930, 932 (7th Cir. 1939):
the complaint prayed that the court require the defendant to
assign title to the patent to plaintiff and account for the
damages and lost profits caused by the alleged infringement.
The court held:
That the primary and controlling purpose of the bill was to
compel an assignment of the legal title to the patent, by the
defendants to the plaintiff, seems so certain as not to admit
of serious dispute. The other relief sought was dependent
thereon. The injunctive process of the court could not be
invoked nor the claim of infringement maintained until and
unless the plaintiff was entitled to and acquired legal
title. This being the situation, we think it plain, under the
authority of Luckett v. Delpark, 270 U.S. 496 (46
S.Ct. 397, 70 L.Ed. 703), that the bill of complaint failed
to state a cause of action arising under the patent laws, and
that the district court was without jurisdiction.
Combs, 681 F.2d at 471. Whether Defendants breached
an oral agreement to enter into an agreement to assign their
patent interest is not a matter that arises under patent law.
See, e.g. Pandey v. Sharma, No. 1:07-cv-64, 2008
U.S. Dist. LEXIS 111436, at * 14 (S.D. Ohio Aug. 1, 2008)
(“It is well settled that an action based on a
contract, which involves underlying patent rights, does not
arise under the patent law.”).
the Court declines Plaintiffs' request for an award of
costs and fees as the Court finds Defendants' basis for
removal was objectively reasonable. See 28 U.S.C.
§ 1447(c) (“An order remanding the case may
require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of
removal.”); see also Martin v. Franklin Capital
Corp., 546 U.S. 132, 141 (2005).
IT IS ORDERED, that Plaintiffs' motion
to remand (ECF No. 4) is GRANTED IN PART.
IS FURTHER ORDERED that the Defendants' motion
to dismiss (ECF No. 5) is DENIED AS MOOT;
IS FURTHER ORDERED that Plaintiffs' Complaint
shall be REMANDED to the Circuit ...