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First Data Corp. v. Inselberg

Dismissal Appropriate for Claims Seeking DJ on Patents Not Owned By Adversary

First Data Corp. v. Inselberg, 2017 U.S. App. LEXIS 17857 (Fed. Cir. Sept. 15, 2017) (Newman, O’MALLEY, Stoll) (D.N.J.: McNulty) (2 of 5 stars)

Fed Cir affirms dismissal of federal claims for lack of subject matter jurisdiction. The claims in question were counterclaims brought by First Data and its CEO Frank Bisignano for declaratory judgment of noninfringement/invalidity for certain patents listing Eric Inselberg as the inventor. The opinion describes how Mr. Inselberg had threatened infringement litigation against Mr. Bisignano and First Data, but per a signed 2011 agreement, Mr. Bisignano—not Mr. Inselberg—was the apparent owner of the patents in question. The district court did not err in dismissing First Data’s DJ claims because they had apparently been made solely for the purpose of establishing federal jurisdiction. Per Jim Arnold, 109 F.3d 1567 (Fed. Cir. 1997), and Arbaugh, 546 U.S. 500 (2006), there was no plausible basis under which First Data could contend the assignment agreement was null and void (though Mr. Inselberg was contesting, via his state law claims, the validity of that agreement). There was no dispute that, unless and until a state court granted rescission of the 2011 assignment, Mr. Inselberg did not own any of the patents at issue. The opinion also notes that there were significant standing and ripeness concerns.

First Data also challenged the district court’s remand of state law claims to state court, but the Federal Circuit is precluded from reviewing that remand by 28 U.S.C. § 1447(d).

KEYWORDS: DECLARATORY JUDGMENT; SUBJECT MATTER JURISDICTION