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Patent exhaustion does not create a cuse of action; dismissal affirmed

By McKee, Voorhees & Sease, P.L.C.

In a decision last week, the Federal Circuit affirmed a district court's decision dismissing a case for lack of subject matter jurisdiction.  The plaintiff brought suit when it believed the patent holder had fraudulently concealed a second licensee of the same patents.  The plaintiff was a licensee of the defendant patent holder and therefore could not seek a declaration of noninfringement, so instead brought suit alleging the patent holder had violated the "Patent Exhaustion/First Sale doctrine" by collecting royalties on the same product twice.  The district court held patent exhaustion was not an independent cause of action but instead a defense to an infringement claim, and dismissed the case for lack of subject matter jurisdiction so any state law claims could be pursued in state court.

The Federal Circuit affirmed, observing the case met neither of the criteria for § 1338(a) jurisdiction under the Supreme Court's decision in Christianson v. Colt Industries Operating Corp.  The complaint neither alleged claims created by federal patent law, nor was the plaintiff's right to relief dependent upon resolution of a substantial question of federal patent law.  Accordingly, the court affirmed the district court's dismissal.

More detail of ExcelStor Tech., Inc. v. Papst Licensing GmbH & Co. after the jump.

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Full post as published by FileWrapper on September 24, 2008 (boomark / email).