Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

NextPat, Ltd. v. Nextengine, Inc.

United States District Court, C.D. California

September 5, 2017

NextPat, Ltd.
NextEngine, Inc.



         Proceedings: IN CHAMBERS - COURT ORDER

         Before the Court is a Motion to Remand (Docket No. 19) filed by Plaintiff NextPat, Ltd. (“NextPat”). Defendant NextEngine, Inc. (“NextEngine”) has filed an Opposition. (Docket No. 22.) Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds this matter appropriate for decision without oral argument. The hearing calendared for August 14, 2017, is vacated, and the matter taken off calendar.

         I. Background

         NextPat filed this action on May 10, 2017, in Los Angeles County Superior Court, Case No. BC660870. According to the Complaint, NextPat and NextEngine are parties to a June 2, 2008 Assignment and Licence Agreement (the “2008 Assignment”). (Notice of Removal, Ex. 1 (“Compl.”), ¶ 10.)[1]/ Pursuant to the 2008 Assignment, NextEngine transferred the rights, title and interest in its patents, trademarks, copyrights, domain names (the “Intellectual Property Rights”) to NextPat. (Id., ¶¶ 10-11). NextPat then granted back to NextEngine an exclusive license to use the Intellectual Property Rights. (Id. ¶ 12.) The license was irrevocable so long as NextEngine did not default in it payment obligations under the 2008 Note. (Id.) If the license became revocable, NextPat could elect to terminate the license upon written notice to NextEngine. (Id.)

         In January 2015, NextEngine defaulted under the 2008 Note, and failed to make the payments necessary to prevent the license from becoming revocable. (Id., ¶¶ 16-18.) NextEngine's default ultimately resulted in an $8, 223, 486.00 judgment entered against it in a separate state court proceeding. (Id. ¶¶ 19-21.) NextPat then provided NextEngine with written notice terminating the license. (Id. ¶ 22.) Despite NextPat's notice of termination and subsequent cease and desist requests, Defendant has continued to use the Intellectual Property Rights. (Id. ¶¶ 24-25.)

         NextPat initiated this action on May 10, 2017, by filing a Complaint in Los Angeles County Superior Court, asserting a single claim for declaratory and injunctive relief. On June 12, 2017, NextEngine removed the action to this Court, alleging that federal subject matter jurisdiction exists over this action under the Court's federal question jurisdiction, 28 U.S.C. § 1331, and patent and trademark jurisdiction, 28 U.S.C. § 1338. Presently before the Court is NextPat's Motion to Remand, which asserts that this action must be remanded for a lack of subject matter jurisdiction.

         II. Legal Standard

         Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over matters authorized by the Constitution and Congress. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A suit filed in state court may be removed to federal court if the federal court would have had original jurisdiction over the suit. 28 U.S.C. § 1441(a). The bases for federal subject matter jurisdiction are federal question jurisdiction under 28 U.S.C. § 1331, diversity of citizenship jurisdiction under 28 U.S.C. § 1332, and patent jurisdiction under 28 U.S.C. § 1338(a).

         A removed action must be remanded to state court if the federal court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). “The removal statute is strictly construed against removal jurisdiction, and the burden of establishing federal jurisdiction falls to the party invoking the statute.” California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004) (citing Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988)). “Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

         III. Discussion

         As support for its invocation of federal jurisdiction, NextEngine asserts that because one of the forms of relief sought in Nextpat's Complaint is an injunction based on alleged patent and trademark infringement committed by NextEngine, the Complaint raises a substantial, disputed question of federal law.

         The Supreme Court has “identified a ‘special and small category' of cases in which arising under jurisdiction still lies” over claims originating in state law. Gunn v. Minton, 133 S.Ct. 1059, 1064-65, 185 L.Ed. 72 (2013). Such jurisdiction requires that “a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Where all four of these requirements are met . . ., jurisdiction is proper because there is a ‘serious federal interest in claiming the advantages thought to be inherent in a federal forum, ' which can be vindicated without disrupting Congress's intended division of labor between state and federal courts.” Gunn, 133 S.Ct. at 1065, 185 L.Ed.2d 72 (quoting Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 313-14, 125 S.Ct. 2363, 2363, 162 L.Ed.2d 257 (2005)). “[M]ere need to apply federal law in a state-law claim” is insufficient to open the “arising under” door. See Grable, 545 U.S. at 313, 125 S.Ct. 2363, 162 L.Ed.2d 257. In the patent context, “§ 1338(a) jurisdiction likewise extend[s] 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.” Am. Tel. & Tel. Co. v. Integrated Network Corp., 972 F.2d 1321, 1323-24 (Fed. Cir. 1992) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09, 108 S.Ct. 2166, 2174, 100 L.Ed.2d 811 (1988)).

         Here, NextPat's claim for declaratory and injunctive relief sounds in contract: NextPat seeks a declaration that it has terminated the license it granted to NextEngine, and seeks to enjoin NextEngine from using the same Intellectual Property Rights which were the subject of the license. Courts regularly find that such contractual cases can be resolved without resolution of a federal question of patent law. See, e.g., In re ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.