[00:00:11] Speaker 04:
The third case this morning is number 161524, Preston against Nagel.

[00:00:16] Speaker 04:
Mr. Mark.

[00:00:17] Speaker 05:
Thank you, Your Honor.

[00:00:19] Speaker 05:
Federal courts have declaratory judgment jurisdiction for cases just like this one, in which a new technology company faces a potentially crippling accusation.

[00:00:26] Speaker 04:
Well, that may be.

[00:00:27] Speaker 04:
But what about appealability?

[00:00:29] Speaker 05:
We could start there, Your Honor, certainly.

[00:00:31] Speaker 05:
We sort of have to, don't we?

[00:00:33] Speaker 05:
Well, there are two jurisdictional issues.

[00:00:35] Speaker 05:
I think you could start with either one.

[00:00:36] Speaker 05:
But let's go to the appellate jurisdiction first.

[00:00:39] Speaker 05:
Our basic position is that in section 1454, and in the American Events Act, Congress created a new removal and remand provision specifically for patent cases.

[00:00:52] Speaker 05:
If you look at 1454, it both has a provision which deals with the removal of patent claims.

[00:00:57] Speaker 05:
And in subsection D, it has a provision which deals with the remand of patent claims.

[00:01:02] Speaker 05:
And subsection D does not allow the remand of patent claims that are removed under 1454.

[00:01:09] Speaker 05:
It's clear when you look at the structure of 1454D.

[00:01:13] Speaker 05:
Unlike 1447, it does not say if there's not subject matter jurisdiction remand.

[00:01:18] Speaker 05:
Instead, 1454D says that if a claim neither is a basis for removal under 1454A nor falls within the court subject matter jurisdiction, then you remand.

[00:01:34] Speaker 05:
That's very different than 1447.

[00:01:36] Speaker 04:
And so we've...

[00:01:38] Speaker 04:
Kurcher has this language about exclusive federal jurisdiction, which is sort of confusing.

[00:01:43] Speaker 04:
Are you contending that any time there's a failure by the district court to recognize that something is within the exclusive federal jurisdiction that it makes a mistake in that regard, that that creates appealability?

[00:02:00] Speaker 05:
I'm not sure we would go that far, Your Honor, nor do I believe we need to.

[00:02:05] Speaker 05:
We think that actually this case was probably more like Osborne.

[00:02:07] Speaker 05:
where Congress creates a one-way shuttle to federal court.

[00:02:12] Speaker 05:
And the Supreme Court in Osborne said that that- You mean it's the enactment of the special removal provision as part of the AIA?

[00:02:19] Speaker 05:
It's both the special removal provision as well as the special remand provision in 1454D, which makes clear Congress intended for patent claims, perhaps to be dismissed by a federal district court, but not to be remanded by a federal district court to a state court, which lacks jurisdiction over patent claims.

[00:02:36] Speaker 05:
under the AIA.

[00:02:39] Speaker 05:
Well, he didn't remand the federal claim to the state court here.

[00:02:42] Speaker 05:
He dismissed it.

[00:02:44] Speaker 05:
No, he remanded it, Your Honor.

[00:02:45] Speaker 05:
If he had dismissed the claim, there would be no question but that this court would have.

[00:02:49] Speaker 05:
Right, right.

[00:02:50] Speaker 04:
But if the dismissal and the remand are part of the same order, then you have the problem.

[00:02:55] Speaker 04:
I thought he dismissed the federal claim.

[00:02:57] Speaker 05:
No, there was no motion to dismiss, Your Honor.

[00:02:59] Speaker 05:
This is purely a motion to remand.

[00:03:01] Speaker 05:
What should have happened here is that the district court should have

[00:03:06] Speaker 05:
looked at the motion to remand, observed that under 1454A, as the district court found, there was a proper basis for removal because there were patent counterclaims.

[00:03:19] Speaker 05:
And on the basis of that, concluded that there was not grounds for remand under 1454A.

[00:03:25] Speaker 05:
He might then have dismissed the counterclaims, which we could then appeal to this court and remand at the rest.

[00:03:33] Speaker 05:
But that's not what he did.

[00:03:34] Speaker 05:
He remanded the entire case back down to the state court.

[00:03:39] Speaker 05:
We think that's not what Congress intended in 1454D when it created the neither-nor test, which is a pretty radical departure from 1457C.

[00:03:50] Speaker 04:
Congress wanted these remand decisions to be appealable.

[00:03:55] Speaker 04:
Why wouldn't it have said so?

[00:03:57] Speaker 04:
as it has in other statutes.

[00:03:59] Speaker 05:
Well, that's not what happened in Osborne.

[00:04:01] Speaker 05:
So in Osborne, there was no provision which said a wrongful remand can be appealed to the court.

[00:04:07] Speaker 05:
The Supreme Court nonetheless found that implicitly.

[00:04:09] Speaker 04:
But there are other statutes that do say you can appeal a remand of her.

[00:04:14] Speaker 05:
There certainly are, Your Honor.

[00:04:15] Speaker 05:
But that's not necessary.

[00:04:17] Speaker 05:
And my brother.

[00:04:19] Speaker 02:
But aren't the, I mean, the problem with your reliance on Osborne is,

[00:04:24] Speaker 02:
those claims there, if they got remanded, could never be heard in federal court.

[00:04:30] Speaker 02:
And the statute gave the attorney general the authority to demand that they be heard in federal court.

[00:04:36] Speaker 02:
Here, there's nothing that would prevent you from separately filing a declaratory judgment action in federal court.

[00:04:44] Speaker 02:
So there's nothing that prevents you from having these

[00:04:47] Speaker 02:
Kate, your counterclaim heard in federal court, which seems to me really an important distinguishing factor.

[00:04:54] Speaker 05:
It's certainly a difference, Your Honor, but I'm not sure it distinguishes this case from Osborne, because Congress clearly in the AIA intended to depart from what had been the prior practice, under which we could have brought a separate action in federal court.

[00:05:08] Speaker 05:
My guess here, argument, is that what Congress did

[00:05:11] Speaker 04:
contemplated was that the federal claims and the related state claims would be tried together in federal court.

[00:05:16] Speaker 04:
Would be tried together in federal court.

[00:05:18] Speaker 04:
That was a departure.

[00:05:19] Speaker 04:
And that right is lost if there's no appeal.

[00:05:24] Speaker 04:
That's exactly right.

[00:05:24] Speaker 04:
I mean, you can't very well reverse a state court judgment on the state claims on the ground that they should have been tried together with the federal claims in federal court.

[00:05:34] Speaker 05:
That's exactly correct.

[00:05:36] Speaker 05:
And in this case... My question is whether that's enough.

[00:05:38] Speaker 05:
Well, we would posit that it is enough.

[00:05:41] Speaker 02:
Where do we get that message?

[00:05:43] Speaker 05:
I think you get the message from the combination of 1454A allowing a case to be removed from state court on the basis of counterclaims, which is somewhat unique in the law.

[00:05:54] Speaker 05:
Usually you have to look at the well-plead complaint.

[00:05:56] Speaker 05:
You get that from 1454D, which says you only remand if there is neither a basis for removal under 1454A, which there clearly was here.

[00:06:06] Speaker 05:
nor subject matter jurisdiction.

[00:06:08] Speaker 05:
You need to have both of those criteria satisfied to remand, which the district court, again, found that there was a proper basis for it.

[00:06:15] Speaker 02:
Well, I mean, that's still all that gets you is a notion that Congressmen one and them heard together.

[00:06:20] Speaker 02:
But it doesn't get us the further stuff of overriding 1447D, which I think has been pretty clearly applied to bar appellate review of remand orders.

[00:06:31] Speaker 05:
And, Your Honor, I think there are two further points there.

[00:06:34] Speaker 05:
One is that, under term trial,

[00:06:36] Speaker 05:
1447D only applies if there's a remand under 1447C.

[00:06:44] Speaker 05:
And here where there's a patent case and you have a sui generis removal and remand provision for patent cases under 1454.

[00:06:52] Speaker 05:
This is not a 1447C case in the first place.

[00:06:56] Speaker 05:
But second and more important and just as importantly, in Osborne the Supreme Court interpreted from the one-way shuttle set up by the West Hall Act

[00:07:06] Speaker 05:
that Congress intended there to be appellate review of decisions remanding to state court claims that Congress intended to be heard only in federal court.

[00:07:17] Speaker 05:
Here, again, we would view the combination of 1454A and D as setting up such a one-way shuttle that what should have happened is that the claim should have been dismissed, although we don't think it should have been dismissed either.

[00:07:29] Speaker 05:
just to be clear about that.

[00:07:30] Speaker 05:
And then if it were dismissed, this court could have review of it.

[00:07:33] Speaker 05:
But when you take that and the stripping of jurisdiction over patent claims from state courts, it's clear Congress did not want these to go back to state court.

[00:07:41] Speaker 05:
Just as in the Westfall Act, Congress did not want these claims at issue in that case to be heard in state court rather than federal court.

[00:07:49] Speaker 02:
I still don't understand that, because you can see that you could have separately filed a declaratory judgment action here.

[00:07:56] Speaker 02:
So Congress couldn't have intended for the state claims and the declaratory judgment claims to be heard together all the time.

[00:08:04] Speaker 05:
Well, that is certainly our option.

[00:08:06] Speaker 02:
But it's a right.

[00:08:07] Speaker 02:
It seems like you're putting yourself in the position of the attorney general in the other case and saying, as long as the defendant can come up with some counterclaims, patent counterclaims to these state law claims,

[00:08:18] Speaker 02:
you can always demand that it be heard in federal court, and that there's no possibility of remand.

[00:08:24] Speaker 05:
And that is the right that Congress clearly gave us in 1454, Your Honor, that if you have a counterclaim that you can raise to the state court claims, you have the right to remove that to federal court.

[00:08:35] Speaker 05:
And 1454D makes clear that if there is a patent claim, that patent claim cannot be remanded to state court.

[00:08:44] Speaker 02:
But you don't have a right to have the state claims heard at federal court, which is what is happening in the other case.

[00:08:51] Speaker 05:
We do not have that right under 1454D.

[00:08:55] Speaker 05:
The district court has the option.

[00:08:57] Speaker 02:
I mean, the point in that West Fall Act case is,

[00:09:00] Speaker 02:
Those cases can never go back to the state court once the attorney general has made the certification.

[00:09:05] Speaker 02:
Here, even if we agree with you that we can review the remand order, if we agree with the district court that there was no Article III controversy here, the district court can still remand the cases back to the state court, can't he?

[00:09:19] Speaker 05:
He would need to dismiss the patent claim first.

[00:09:22] Speaker 05:
And we have to go back down to the district court to hear a motion to dismiss.

[00:09:26] Speaker 05:
At this point, we've actually, as the

[00:09:29] Speaker 05:
as the appellees note, amended our counterclaim.

[00:09:32] Speaker 05:
We provided substantially more detail.

[00:09:34] Speaker 05:
And so there could be a motion to dismiss hearing.

[00:09:37] Speaker 05:
If the motion to dismiss winds up in dismissal, we may wind ourselves back up here.

[00:09:41] Speaker 05:
But there'd be no question of jurisdiction.

[00:09:43] Speaker 05:
And I completely understand.

[00:09:44] Speaker 05:
And we're not suggesting that this case is on all fours of Osborne.

[00:09:48] Speaker 05:
There are differences between the AIA and the Westfall Act.

[00:09:52] Speaker 05:
However, we think that those differences should not lead to a different outcome here.

[00:09:56] Speaker 05:
Because in both cases, it was clear

[00:09:58] Speaker 05:
that Congress wanted to give the defendant the ability to get the case to federal court and to drag along the state court claims.

[00:10:07] Speaker 05:
Again, the district court may have discretion under 1454 to remand the claims over which it has merely supplemental jurisdiction.

[00:10:15] Speaker 05:
That does not detract from our right to bring those claims to the district court in the first place and to at least have the opportunity to have the entire case heard in one form.

[00:10:25] Speaker 05:
derive and to have the advantages of a single, consolidated, more efficient proceeding that Congress intended to give defendants in patent cases by giving us the right to remove based on counterclaims rather than the well-pleaded complaint.

[00:10:40] Speaker 04:
Was there any discussion in the legislative history of the Holmes fix that there was an issue of appealability?

[00:10:50] Speaker 05:
I don't recall any discussion of appealability.

[00:10:52] Speaker 05:
We do cite the one statement by Senator Kyle

[00:10:54] Speaker 05:
in which he said that the intent was for these claims to remain in federal court.

[00:10:59] Speaker 05:
And I think we quoted it in our brief.

[00:11:02] Speaker 05:
I'm not going to pretend to remember word for word, but the gist of it was that if the cases get to federal court, they should stay in federal court and not be sent back down to state court if there are patent claims.

[00:11:13] Speaker 03:
Are there any examples outside the patent area where

[00:11:21] Speaker 03:
it is clear or courts have held that a remand under some provision other than, I'm not sure how to put this, where one would say that certain remands are not, jurisdictional remands, are not covered by 1447C and hence not subject to 1447D.

[00:11:48] Speaker 03:
You said early in your argument, you made a point which I think maybe I wasn't focusing on so much, that it's reasonably clear that 1447D applies only to remands for lack of subject matter jurisdiction, where the remand is covered by 1447C.

[00:12:03] Speaker 03:
And you made a kind of suggestion that maybe 1454 in its remand provision

[00:12:11] Speaker 03:
occupies the field and removes 1447C from the picture of remands here and therefore 1447D on appeals wouldn't apply.

[00:12:22] Speaker 03:
Right.

[00:12:23] Speaker 03:
Is there any other, is there any counterpart for that line of thinking elsewhere?

[00:12:28] Speaker 05:
You know, we've, we looked pretty hard.

[00:12:30] Speaker 05:
I'm not sure we found any.

[00:12:31] Speaker 05:
And if I can explain the 1454 point.

[00:12:34] Speaker 05:
So 1454 sets up a two part test for remand, one part of which is lack of subject matter jurisdiction.

[00:12:40] Speaker 05:
We believe that that would be, in effect, the two-part test under 1454 would be surplusage if under 1447C you had to remand based upon the showing of only one part of that test, which is the lack of subject matter jurisdiction.

[00:12:56] Speaker 05:
Whereas under 1454D, you have to have both the lack of subject matter jurisdiction plus the claim could not have been a basis for removal under 1454A.

[00:13:05] Speaker 05:
In other words, it's not a patent claim.

[00:13:11] Speaker 03:
And you're not making the argument that the absence of a case or controversy is not a subject matter jurisdiction ground.

[00:13:20] Speaker 05:
We're not, Your Honor.

[00:13:22] Speaker 05:
I'm down to two minutes.

[00:13:24] Speaker 05:
If I could turn to the issue of case or controversy.

[00:13:29] Speaker 05:
We have two basic points.

[00:13:34] Speaker 05:
The first is that if you look at the complaint and you fairly read all of the accusations,

[00:13:38] Speaker 05:
It is clear that what plaintiffs were talking about here was an infringement of patent rights, not trade secret rights.

[00:13:45] Speaker 05:
There's not even a reference to trade secret rights with respect to ELC, Electromagnetics Court, until you get to count seven of the counts in the complaint paragraph 123.

[00:13:58] Speaker 05:
Up to that point, it's all about ELC's patents.

[00:14:01] Speaker 05:
And in fact, if you look at paragraph 69 of the complaint,

[00:14:05] Speaker 05:
which tellingly is we focus on it in our opening brief.

[00:14:08] Speaker 05:
It's never addressed in the opposition brief.

[00:14:12] Speaker 05:
Paragraph 69 states that defendants are, quote, using electromagnetic chemistry to modify elements and to manufacture platinum.

[00:14:22] Speaker 05:
And they describe that as the core of the most important ELC intellectual property.

[00:14:26] Speaker 05:
If you look at the ELC patents, and we provide some examples in the briefing, I would suggest claims one and five.

[00:14:33] Speaker 05:
of both the 593 and 373 patents, which can be found at A354 and A439 in the appendix.

[00:14:44] Speaker 05:
You'll see what these claims are for is basically what we're accused of doing in paragraph 69 of the complaint using electromagnetic, inducing a change in metallic elements through the use of electrochemistry.

[00:15:00] Speaker 05:
If there had been a letter which came to us, which included all of the allegations between paragraphs 60 and 72 of the complaint that said that you are using our most important intellectual property without a license and without permission, if it had paraphrased language from the patents to say what we're accused of doing.

[00:15:22] Speaker 04:
OK, you're out of time.

[00:15:24] Speaker 04:
We'll give you two minutes for a moment.

[00:15:26] Speaker 04:
Thank you, Your Honor.

[00:15:35] Speaker 04:
Mr. Cacaca, is that how you pronounce it?

[00:15:38] Speaker 04:
Cacace.

[00:15:38] Speaker 00:
Cacace, okay.

[00:15:40] Speaker 00:
Good morning and may it please the court.

[00:15:42] Speaker 00:
Before addressing the threshold jurisdictional issue, I think it might be helpful just to spend, just very quickly remind the court what this case is really about and how we got here.

[00:15:52] Speaker 00:
This case is about... I think we know.

[00:15:55] Speaker 00:
Okay, so I'll move to the jurisdictional issue then.

[00:15:58] Speaker 00:
So our basic point is that 28 U.S.C.

[00:16:01] Speaker 00:
section 1447D is crystal clear.

[00:16:05] Speaker 00:
that a remand for lack of subject matter jurisdiction is not appealable.

[00:16:13] Speaker 02:
Why doesn't 1454 replace that altogether?

[00:16:17] Speaker 00:
So 1454 does include a specific section on removal, 1454A, and it addresses remand, but it first, 1454D,

[00:16:33] Speaker 00:
only requires remand of certain types of claims and permits remand of other categories of claims.

[00:16:44] Speaker 00:
But it does not expressly prohibit remand of patent claims that were first filed in state court when a district court finds a lack of subject matter jurisdiction.

[00:16:56] Speaker 00:
So that's unlike the Osborne case, where there really was an express statutory law.

[00:17:01] Speaker 02:
That wasn't really my question.

[00:17:02] Speaker 02:
I think my question was more to follow up on your friend's kind of point towards end of his argument that 1447 doesn't apply at all anymore to patent law counterplans.

[00:17:12] Speaker 02:
That we only look to 1454 as a basis for revans.

[00:17:15] Speaker 00:
Yeah, I don't think, I mean, I certainly haven't seen.

[00:17:20] Speaker 04:
The answer is that Kircher said that 1454

[00:17:25] Speaker 04:
or 1447D applies outside of the context of 1447C, right?

[00:17:32] Speaker 00:
Correct, correct.

[00:17:35] Speaker 00:
Kircher says that it applies to general removal and specific removal statutes that are enacted later.

[00:17:43] Speaker 00:
This, of course, is an example of one of them.

[00:17:46] Speaker 00:
And so that it's clearly undisputed and it's not disputed that the remand was for lack of subject matter jurisdiction and therefore there should be no appeal.

[00:17:58] Speaker 00:
As far as the dismissal point that Mr. Martin raised, I do need to point out that there was no argument in the district court that the correct disposition on our motion to remand was dismissal.

[00:18:12] Speaker 00:
That's been articulated most clearly for the first time today.

[00:18:18] Speaker 00:
But the defendants did not present, tell the district court, argued to the district court that it could not remand the entire case and that it had to dismiss the patent claims.

[00:18:31] Speaker 00:
And I think it's appropriate to remand the entire case because that's where it began procedurally.

[00:18:37] Speaker 00:
the case began in state court, the counterclaims were filed in state court, then the case was removed.

[00:18:44] Speaker 00:
If the district court finds on our motion to remand that there is no subject matter jurisdiction, which it did, then the appropriate course is to remand the case to the state court.

[00:18:53] Speaker 02:
Now, it's true that the state court will- So you didn't ask the patent law counterclaim to be dismissed.

[00:18:58] Speaker 00:
You wanted it remanded along with the- Remanded to where it was filed, to where it began.

[00:19:02] Speaker 00:
And it's true that it then will be dismissed because state courts have no jurisdiction.

[00:19:07] Speaker 00:
the procedural path on which those counterclaims travel.

[00:19:13] Speaker 04:
Do you agree that part of the Holmes fix was designed, at least in the compulsory counterclaim situation, to litigate the federal claims and state claims in the same federal form?

[00:19:27] Speaker 00:
In certain appropriate circumstances, yes, but I think 1454D

[00:19:32] Speaker 00:
itself contemplates parallel state and federal court actions.

[00:19:37] Speaker 00:
It requires the compulsory counterclaim.

[00:19:41] Speaker 04:
Congress certainly contemplated that where there was compulsory counterclaim, it would all be litigated in one place in federal court.

[00:19:48] Speaker 04:
And that if the remand occurs improperly and there's no appeal, that right is forever lost.

[00:19:59] Speaker 00:
if a counterclaim is indeed compulsory.

[00:20:06] Speaker 04:
So in that respect, the lack of an appeal provision does frustrate one congressional purpose, right?

[00:20:14] Speaker 00:
Only if we're dealing with compulsory counterclaims, which I don't believe these are.

[00:20:21] Speaker 04:
So if they were compulsory counterclaims, would that mean there was a right of appeal?

[00:20:26] Speaker 00:
I don't think that would mean that there's a right of appeal, because, again, the 1367C would permit remand of claims even within the district court's supplemental jurisdiction.

[00:20:41] Speaker 04:
And I think one case that's helpful on this point is- Well, I don't think the district court could remand a compulsory counterclaim, something that fell within that category.

[00:20:53] Speaker 00:
So I think one case that's helpful on this point and the argument that the AIA was designed to have state claims and federal claims tried together in one federal forum is this court's decision in angioscore versus trirem, which was decided just a couple of months ago after the briefing in this case.

[00:21:18] Speaker 00:
And that case was decided actually under 1367, but it involved

[00:21:23] Speaker 00:
actually a patent infringement claim by the plaintiff along with state law claims similar to the ones brought here, breach of fiduciary duty and the like.

[00:21:32] Speaker 00:
And both claims were tried.

[00:21:36] Speaker 00:
The patent infringement claims and the state law claims were tried.

[00:21:39] Speaker 00:
And even after trial, this court held that 1367, that the district court lacked supplemental jurisdiction over the state law claims, which related to theft of a corporate opportunity

[00:21:51] Speaker 00:
concerning essentially the same device that was at issue in the patent counterclaims.

[00:21:56] Speaker 00:
So I don't think that 1454 or anything in the AIA means that these types of claims need to be tried together or means that an appeal is available because there are compulsory counterclaims.

[00:22:15] Speaker 03:
If Nagel and Company filed a declaratory judgment action in federal court, new one,

[00:22:22] Speaker 03:
after the Massachusetts Superior Court dismisses the counterclaim there for lack of, I guess, their jurisdiction would be preempted.

[00:22:35] Speaker 03:
Putting aside the case of controversy issue, can that case proceed in district court?

[00:22:44] Speaker 00:
A couple of things.

[00:22:45] Speaker 00:
I think it should not proceed for two reasons.

[00:22:48] Speaker 00:
I think first, we already have a ruling from the district court that there is no case or controversy.

[00:22:54] Speaker 00:
And I would submit that.

[00:22:55] Speaker 00:
That's what I was putting aside.

[00:22:56] Speaker 00:
OK.

[00:22:56] Speaker 00:
So putting that aside, I still believe there are issues of ownership in the state court case.

[00:23:03] Speaker 00:
We have a claim for constructive trust.

[00:23:06] Speaker 00:
And if the plaintiffs prevail on the constructive trust claim, effectively, they own everything that Nagel and company have done.

[00:23:14] Speaker 00:
And so there cannot be infringement.

[00:23:16] Speaker 00:
And so that action, that federal action, if it were justiciable, if they were able to allege enough facts to make it justiciable, should be stayed pending the outcome of the state case, which we would submit will dispose of the dispute.

[00:23:35] Speaker 02:
But that sounds like a defense on the merits, not any kind of procedural objection to them refiling a declaratory judgment after the claim.

[00:23:44] Speaker 00:
Yeah.

[00:23:45] Speaker 00:
I mean, I don't know if there may be estoppel issues.

[00:23:51] Speaker 00:
Well, could there be estoppel?

[00:23:52] Speaker 00:
If there's no appealability, then if there's no appeal right, then

[00:23:58] Speaker 00:
collateral estoppel probably does not preclude the refiling of it.

[00:24:01] Speaker 02:
And if the district court found it lacked jurisdiction and the state court lacks jurisdiction, how could there be estoppel?

[00:24:07] Speaker 02:
There's been no marital determination whatsoever.

[00:24:10] Speaker 00:
Correct.

[00:24:10] Speaker 00:
But I think if the same case were refiled, there still would be no declaratory judgment jurisdiction in federal court.

[00:24:19] Speaker 00:
Sure.

[00:24:20] Speaker 01:
You could re-argue that.

[00:24:21] Speaker 01:
And then they could appeal that.

[00:24:22] Speaker 01:
If they lose that again, they could appeal that to us then.

[00:24:25] Speaker 00:
Yes.

[00:24:25] Speaker 00:
Yes, they could.

[00:24:26] Speaker 00:
And I think that's

[00:24:27] Speaker 00:
That's the only difference between a case like this and one that's first filed in federal court is that the declaratory judgment plaintiff or your counterclaimant risks the loss of their appeal right if they do what the defendants did here.

[00:24:47] Speaker 00:
to preserve that, and that's the only thing that they lose by doing that, to preserve that appeal right.

[00:24:53] Speaker 00:
In the case of a remand for lack of subject matter jurisdiction, which is pretty narrow, they would have to file an affirmative declaratory judgment action.

[00:25:01] Speaker 04:
But if they did file an affirmative declaratory judgment action, then what we have, if I understand what you're saying correctly, is sort of a race to judgment in which the federal court as part of the action would have to determine ownership of the patents.

[00:25:15] Speaker 04:
And you're saying that state court is also going to be determining ownership of the patents.

[00:25:20] Speaker 04:
And so there's a real mess that's created by bifurcating these cases and putting the federal claim in federal court and the state claim in state court.

[00:25:29] Speaker 00:
Well, respectfully, Your Honor, I don't think so.

[00:25:31] Speaker 00:
Because I think the federal claims, which would be filed later and far behind where the state law claims are and would be,

[00:25:42] Speaker 00:
uh... would should be should be stayed depending the outcome of that and then and then we can you know deal with the federal uh... uh... claims but that sounds again like an example where the congressional purpose of having federal claims tried in federal court is going to be undermined by having the ownership question determined in state court well I think respectfully again I think fourteen fifty four D

[00:26:09] Speaker 00:
itself contemplates having these parallel actions.

[00:26:14] Speaker 00:
I mean, you may have a similar issue that ends up getting remanded under 1447 D2, because there's lack of supplemental jurisdiction that might have some impact on the federal case.

[00:26:29] Speaker 00:
And again, I point to the angioscore decision as an example of a case where you do have

[00:26:37] Speaker 00:
patent issues and some arguably related, generally related state law claims.

[00:26:44] Speaker 00:
And those, even after trial, this court ordered that the state claims should have proceeded in state court, not federal court.

[00:26:53] Speaker 03:
I know we may not be able to get to the question, but on the case of controversy requirement, you said, I think, a couple of times in your brief, you focused on how

[00:27:07] Speaker 03:
The new Nagle group doesn't have products yet or anything.

[00:27:12] Speaker 03:
And it seemed to me that what you were saying there was not addressing the question of practicing the methods in the course of doing research.

[00:27:20] Speaker 03:
There's no general research exception to 271 infringement.

[00:27:28] Speaker 03:
Do I remember right, you allege that they basically hired all your researchers?

[00:27:31] Speaker 03:
Your researchers from... They hired former engineers.

[00:27:36] Speaker 03:
Why would their conducting of research to manipulate these atoms to create or molecules to create the materials they want not itself be a here and now form of

[00:27:56] Speaker 03:
alleged infringement.

[00:27:57] Speaker 00:
So I think the point we were trying to make by pointing out that actually neither company has commercialized the product and both our research and development companies is that there's no allegation or evidence of meaningful preparation for potential infringement or significant concrete steps of activity that would

[00:28:20] Speaker 00:
infringe the claims in the 11 patents that are alleged.

[00:28:25] Speaker 03:
A bunch of these patents have method claims in them.

[00:28:28] Speaker 00:
Correct, correct.

[00:28:30] Speaker 03:
Is there some reason to doubt or what should we think about the idea that their research, you say it's in the same field, would not be at least arguably

[00:28:45] Speaker 03:
practicing the method claims of some of these patents?

[00:28:48] Speaker 00:
Well, I think one of the critical aspects under the medimmune standard in terms of immediacy and actually reality is that the technology here, IDL's technology, be substantially fixed and not fluid and indeterminate.

[00:29:02] Speaker 00:
And if you look at the allegations in the complaint, there's really nothing added

[00:29:06] Speaker 00:
in the counterclaims, I would submit that there's nothing to determine that anything is substantially fixed.

[00:29:13] Speaker 04:
But you're accusing them of planning to do this.

[00:29:17] Speaker 00:
What we're accusing them of, and I think this really is at a higher level, is what distinguishes this case from the others.

[00:29:25] Speaker 04:
You're accusing them of planning to infringe, right?

[00:29:27] Speaker 00:
Not planning to infringe.

[00:29:28] Speaker 00:
What we're accusing them of is planning to avoid infringement by failing to pay patent maintenance fees, waiting until the patents lapse,

[00:29:35] Speaker 00:
and then possibly using the formerly patented technologies at IDL in the meantime.

[00:29:41] Speaker 03:
Or to put it another way, planning to engage in an activity that if your state law arguments are correct would be infringing.

[00:29:49] Speaker 00:
planning to engage in an activity that would no longer be infringement because they were alleging that they would do it after the... After they would improperly allow the patents to lapse.

[00:30:01] Speaker 03:
That's why I said planning to engage in activity that under your state law claims would in fact be infringing because their attempt to let the patents lapse would be defeated by those state law claims.

[00:30:16] Speaker 00:
Well, I think, temporally, it would only occur after the lapse, at which point it would no longer be.

[00:30:24] Speaker 03:
But if you're right about the state law claims, and these patents are going to last for a while, so that you've corrected the lapsing problem and the patents are

[00:30:32] Speaker 03:
then you don't think that they're going to engage in those activities.

[00:30:36] Speaker 00:
Right, correct.

[00:30:37] Speaker 00:
They're just going to shut down.

[00:30:40] Speaker 00:
Well, not necessarily shut down.

[00:30:41] Speaker 03:
Or go into another line of work.

[00:30:44] Speaker 00:
Or utilize the trade secrets.

[00:30:47] Speaker 00:
And that was the thrust of the first month of litigation here with the trade secrets on the encrypted hard drive.

[00:30:55] Speaker 00:
And so they may use technology, trade secret confidential proprietary information taken from CET that belongs to CET and ELC.

[00:31:02] Speaker 00:
at IDL, but that would not be patent infringement.

[00:31:05] Speaker 00:
And I see that I'm out of time.

[00:31:06] Speaker 04:
Thank you.

[00:31:15] Speaker 05:
Thank you, Your Honor.

[00:31:17] Speaker 05:
Just a few points.

[00:31:18] Speaker 05:
First, in Osborne, there was no express prohibition on the remand of claims in the statute there.

[00:31:24] Speaker 05:
There was an express requirement that certain claims be remanded to state court.

[00:31:28] Speaker 05:
And you can find this in the Supreme Court decision.

[00:31:31] Speaker 05:
where they quote the language, obviously, at length.

[00:31:34] Speaker 05:
But there was nothing saying that certain claims had to stay in state court and that there could be an appeal, sorry, had to stay in federal court and there could be an appeal if they were improperly remanded.

[00:31:43] Speaker 05:
That was the gist of Justice Scalia's dissent, that nothing in the statute expressly required the result in Osborne.

[00:31:50] Speaker 05:
We have exactly the same situation here with the AIA in section 1454, where it's clear from the structure and the purpose of 1454 A and D

[00:32:00] Speaker 05:
that Congress intended certain claims to get to federal court and to stay here.

[00:32:04] Speaker 05:
And so we're asking for the same logic to be applied in this case as it was applied there.

[00:32:09] Speaker 05:
With respect to Kircher, even if 1447 generally applies to remands, 1454D, for the reasons we've discussed, has a structure that would be rendered surplusage if you read 1447D to have that breadth of application here.

[00:32:27] Speaker 05:
because 1454 requires a two-part test to be satisfied before there's a remand, whereas 1447C only has a single-part test, which would subsume 1454's test.

[00:32:43] Speaker 05:
With respect to a race to judgment, it could be a big problem here.

[00:32:49] Speaker 05:
For the reasons we've pointed out in our briefing, if you look throughout their complaint, including the substantive counts in that complaint, there is a theme

[00:32:57] Speaker 05:
that we are not only attempting to practice their patents at some indefinite future period when they lapse, but that we're doing so today.

[00:33:04] Speaker 05:
And if you look at paragraph 69 again, which they've still never addressed, if you look at the paragraphs which surround paragraph 69, it's clear that they're saying that right now we are practicing their patents.

[00:33:19] Speaker 05:
They say that we're currently practicing their most valuable intellectual property.

[00:33:23] Speaker 05:
They say in two separate paragraphs that they would be worthless without their patents.

[00:33:27] Speaker 05:
So it's pretty clear they say that we're practicing their patents.

[00:33:30] Speaker 04:
OK, Mr. Martin, I think we're out of time.

[00:33:33] Speaker 04:
Thank you.

[00:33:33] Speaker 04:
Thank both counsels.

[00:33:34] Speaker 04:
The case is submitted.

[00:33:36] Speaker 05:
Thank you, Your Honor.