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Patent Infringement That Happens in Taiwan, Stays in Taiwan

Wheelabrator designs, sells, and licenses some process (phosphate-based treatment systems) that keep heavy metals from industrial waste (such as incinerator ash) from leaching into drinking water. Forrester does too. Both have patents on their proprietary methods.

Wheelabrator licensed its system to a company that sublicensed it to a Taiwanese company, Kobin. That company was unhappy with the product, however, because it stank. Forrester, meanwhile, took that opportunity to develop a less smelly alternative, which it sold to Kobin, despite the existing deal with Wheelabrator.

Shortly thereafter, the spurned company sent a threatening letter to Kobin, pointing out that the existing sublicense agreement gave Wheelabrator exclusive rights (and licensing fees) to Kobin’s trash burning operation. Eventually, Kobin re-upped with Wheelabrator, who may or may not have been using Forrester’s patented methods in the Kobin contract.

Forrester sued, alleging four New Hampshire state law causes of action, none of which had anything to do with patents. However, Wheelabrator removed the case to federal court because the tortious interference claims and trade secret claim involved questions about Forrester’s patented techniques (and federal courts have original jurisdiction over patent claims). Forrester later lost on all counts via summary judgment.

The claims, however, will live on.

You see, this case actually has very little to do with patent law. A case arises under patent law if the patent 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.” The Supreme Court’s recent decision in Gunn heavily limited the types of claims that can piggyback on patent law to get into federal court.

Even if a case may “necessarily rais[e] disputed questions of patent law,” those questions are “not substantial in the relevant sense.” The patent claim involved must have “forward-looking consequences” and create the possibility of inconsistent judgments between state and federal courts.

Here, there are no forward-looking issues. For one, the patents are expired. Also, there is no infringement of a U.S. patent when the process is used in Taiwan and it does not result in the importation of a resulting manufactured product. Any remedy would be in Taiwan, not the U.S. (hence why Forrester is pressing state law contract claims instead of patent claims).

The heart of this matter is the tortious interference with Forrester’s business relationship by, among other things, possibly infringing on their patented methods and using their trade secrets. Such a backward-looking analysis can be handled by the state court under Gunn’s holding.

Yep. That means the case, which made it all the way to the Federal Circuit, will now head to the New Hampshire state courts.

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