Krauser v. Biohorizons, Inc. , 753 F.3d 1263 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
JACK T. KRAUSER,
Plaintiff-Appellant,
v.
BIOHORIZONS, INC., BIOLOK INTERNATIONAL,
INC., AND BIOHORIZONS IMPLANT SYSTEMS,
INC.,
Defendants-Appellees.
______________________
2013-1461
______________________
Appeal from the United States District Court for the
Southern District of Florida in No. 10-CV-80454, Judge
Kenneth A. Marra.
______________________
Decided: June 4, 2014
______________________
ROBERT UNIKEL, Kaye Scholer LLP, of Chicago, Illi-
nois, argued for plaintiff-appellant. With him on the brief
were DEANNA KEYSOR and MICHELLE MAREK. Of counsel
on the brief were RONALD M. GACHÉ and SCOTT A. SIMON,
Shapiro Fishman & Gache LLP, of Boca Raton, Florida.
CHRISTOPHER N. SIPES, Covington & Burling LLP, of
Washington, DC, argued for defendants-appellees. With
him on the brief was MICHAEL N. KENNEDY. Of counsel
was JEREMY D. COBB.
2 KRAUSER v. BIOHORIZONS, INC.
______________________
Before LOURIE, CLEVENGER, and DYK, Circuit Judges.
DYK, Circuit Judge.
This case involves a suit for declaratory judgment
seeking to establish ownership rights in a dental implant
system. Plaintiff Jack T. Krauser appeals from the final
judgment of the United States District Court for the
Southern District of Florida in favor of defendants (Bi-
oHorizons, Inc., BioLok International, Inc., and BioHori-
zons Implant Systems, Inc., collectively, “BHI”, formerly
Minimatic Implant Technology, Inc. or “Minimatic”). 1
The district court held that Krauser did not have any
ownership rights to the dental implant system manufac-
tured by BHI. Because we hold that we do not have
jurisdiction to hear this appeal, we transfer this appeal to
the Eleventh Circuit.
BACKGROUND
In late 1987, Krauser, a periodontist, designed a
dental implant system. In May 1988, he employed Mini-
matic, the predecessor of defendant BHI, to produce
prototypes of the system. Krauser paid Minimatic $200 to
produce drawings and prototypes based on Krauser’s
initial drawings and work product. At this stage, there
was apparently no written agreement governing owner-
ship of the implant system. By March 1991, Minimatic
“had successfully formulated implants, attachments, and
1 As described below, Minimatic merged into Bio-
Lok in 1997. In 2006, BioLok was acquired by Health-
pointCapital, LLC. That same year, HealthpointCapital,
LLC founded BioHorizons, Inc. BioHorizons, Inc. now
holds the stock of BioHorizons Implant Systems, Inc. and
BioLok.
KRAUSER v. BIOHORIZONS, INC. 3
other products based on [Krauser’s work product].” J.A.
1317. To pursue marketing and sale of this system,
Minimatic and Krauser entered into a written consulting,
collaboration, and royalty agreement (the “1991 Agree-
ment”), which specified that Krauser would develop new
products for Minimatic and improve upon the dental
implant system, and Minimatic would produce and sell
the system and the associated products. The 1991
Agreement stated that the “[d]rawings [of the dental
implant system] and 510(k)’s are the property of Minimat-
ic.” Under the 1991 Agreement, Krauser was entitled to
receive a percentage of the net sales from the dental
implant system, among other benefits.
In his role at Minimatic, Krauser allegedly collaborat-
ed with Leon Shaw, then President of Minimatic, on the
development of dental implant systems. In 1994, Krauser
obtained a patent, U.S. Patent No. 5,316,476 (the
“Krauser patent”), covering one component of the dental
implant system and listing Krauser as the named inven-
tor. In 1995 and 1999, respectively, Minimatic secured
two patents covering dental implant systems, U.S. Patent
Nos. 5,415,545 and 5,964,766, both naming Shaw as the
sole inventor (collectively, the “Shaw patents”).
In 1993, Krauser alleged that Minimatic had failed to
pay the royalties due under the 1991 Agreement.
Krauser sued Minimatic and Shaw for a declaration of
ownership rights in state court, and for copyright in-
fringement and infringement of the Krauser patent in
federal district court. In 1996, while both suits were
pending, Minimatic filed for bankruptcy, and Krauser
filed claims in bankruptcy court against Minimatic corre-
sponding to the claims asserted in the pending lawsuits.
In May 1996, Minimatic and Krauser reached a settle-
ment to resolve Krauser’s outstanding claims (the “May
1996 Agreement”). In the May 1996 Agreement, Mini-
matic “recognize[d] Krauser’s significant individual
4 KRAUSER v. BIOHORIZONS, INC.
contribution to the invention and creation of what is today
known as the ‘Minimatic Implant System’ in concept,
design, design application, ease of installation and overall
system requirements.” J.A. 206 ¶ 18. Although Minimat-
ic initially moved the bankruptcy court to approve the
May 1996 agreement, Minimatic withdrew that motion
before the settlement was approved, and the bankruptcy
court vacated the agreement.
In October 1996, Minimatic and Krauser entered into
a second agreement (the “October 1996 Agreement”). In
the October 1996 Agreement, Krauser conditionally
granted to Minimatic a 10-year license both to the
Krauser patent and to “any and all rights he may
have . . . [to] the dental implant system currently being
manufactured by [Minimatic].” J.A. 813 ¶ 2. If Minimatic
complied with the terms of the October 1996 Agreement
for the specified ten year term, i.e., by paying Krauser
royalties from sales of the dental implant products and
fulfilling the attendant audit requirements, all of
Krauser’s rights to the dental implant system and the
Krauser patent would be “unconditionally assigned to
[Minimatic]” at the end of the ten years. J.A. 813 ¶ 2.
But in the “event of a default by [Minimatic] . . . ,
Krauser’s conditional grant of a license [would] automati-
cally terminate.” J.A. 813 ¶ 2. In addition, Krauser
“[would] have the option . . . to institute suit against
[Minimatic] for money damages and/or a declaration of
his rights in and to the dental implant system currently
being manufactured by [Minimatic].” J.A. 819 ¶ 8.
The bankruptcy court approved the October 1996
Agreement and incorporated it into Minimatic’s Joint
Second Amended Plan of Reorganization in February
1997. Pursuant to this reorganization, Minimatic merged
into BioLok in 1997.
KRAUSER v. BIOHORIZONS, INC. 5
Between 2000 and 2003, several patents on dental
implant systems issued to BioLok (the “BioLok patents”). 2
None of these patents listed Krauser as an inventor. In
his First Amended Complaint in this action, Krauser
alleged that he was entitled to be named an inventor on
both the Shaw and BioLok patents.
Although BHI paid Krauser royalties for some years,
Krauser alleged that BHI failed to pay the full amount of
royalties or submit to the audits required by the October
1996 Agreement. In October 2009, Krauser provided BHI
a formal notice of default, with a declaration of Krauser
asserting that he had ownership rights in the dental
implant system and terminating BHI’s license to the
same.
In 2010, Krauser sued BHI in Florida state court,
seeking a declaration that, among other things, Krauser
“is the inventor and owner of the subject matter set forth
in all of the Defendants’ patents based on [the Krauser]
Patent [namely, the Shaw and BioLok patents] . . . the
subject matter set forth in all of the Defendants’ 510(k)
registrations based on [the Krauser] Patent, [and] of the
Dental Implant System, now commercially known as the
BioHorizons Tapered Internal Implant System.” J.A. 74–
75. The Krauser patent had expired in June 1998 for
failure to pay maintenance fees. BHI then removed the
case to federal district court based on diversity jurisdic-
tion under 28 U.S.C. § 1332 and patent jurisdiction under
28 U.S.C. § 1338(a) based on Krauser’s inventorship
claims. After removal, BHI moved to dismiss the case for
failure to state a claim. In his response, Krauser
“withdr[ew], without prejudice, his claims of inventorship,
and . . . restrict[ed] his claims to his ownership rights in
2 U.S. Patent Nos. 6,149,432; 6,375,464; 6,406,296;
6,419,491; 6,454,569; 6,648,643.
6 KRAUSER v. BIOHORIZONS, INC.
and to [the Dental Implant System],” and described how
his complaint could be amended to include only ownership
claims. Thereafter, the district court “granted [Krauser]
leave to amend to file a complaint that reflects his repre-
sentation that his claims for inventorship are withdrawn
without prejudice.” Krauser v. BioHorizons, Inc., No. 10-
80454, 2010 WL 3468481, at *5 (S.D. Fla. Sept. 1, 2010).
Krauser filed his Second Amended Complaint that in-
cluded only ownership claims (rather than inventorship
claims). In 2012, Krauser filed a separate action in the
U.S. District Court for the Southern District of Florida,
seeking correction of inventorship of the BioLok patents, 3
all currently held by Evollution IP Holdings and exclu-
sively licensed to BHI. See Compl. ¶¶ 16, 23, 30, 37,
Krauser v. Evollution IP Holdings, Inc., No. 12-80977
(S.D. Fla. Sept. 11, 2012), ECF No. 1.
In July 2012, the district court granted BHI’s motion
for summary judgment in this case, Krauser v. BioHori-
zons. First, the district court found that because Krauser
was seeking a declaratory judgment of his ownership of
the dental implant system, not specific performance, his
claim was not barred by the one year Florida statute of
limitations on specific performance. On the merits of
Krauser’s declaratory judgment claim, the district court
construed the October 1996 Settlement language “cur-
rently being manufactured” to apply only to dental im-
plants being manufactured in October 1996, rather than
dental implants manufactured at the time of litigation.
Finally, the district court found that Krauser had no
ownership rights in dental implant systems or to the
510(k)s manufactured on or before October 1996.
3 Except for U.S. Patent Nos. 6,375,464 (now
lapsed), and 6,648,643.
KRAUSER v. BIOHORIZONS, INC. 7
Krauser appealed, initially to the Eleventh Circuit.
At the Eleventh Circuit, BHI moved to dismiss the appeal
or, in the alternative, to transfer to this court. There were
three possible theories supporting BHI’s assertion that
Krauser’s complaint necessarily raised a substantial
patent law issue. First, Krauser’s original complaint
contained a patent law claim of inventorship. Second,
BHI argued that even though Krauser had amended the
complaint to remove the inventorship claims, it was
nonetheless necessary to determine inventorship to
adjudicate Krauser’s remaining ownership claims. Third,
BHI argued that because Krauser’s ownership claims,
purportedly based on contract law, are allegedly preempt-
ed by federal patent law, the Federal Circuit has jurisdic-
tion. The Eleventh Circuit transferred the case to this
court in a brief per curiam opinion stating that “[b]ecause
the Federal Circuit has exclusive appellate jurisdiction in
civil actions ‘arising under . . . any Act of Congress relat-
ing to patents,’ we transfer this appeal to the Federal
Circuit.” Krauser v. BioHorizons, Inc., No. 13-11123 (11th
Cir. June 20, 2013) (omission in original).
JURISDICTION
Although Krauser asserts that we do not have juris-
diction, he concedes that he would prefer to have this
court adjudicate his claims in the interest of conserving
judicial resources. BHI asserts that this court has juris-
diction. Nevertheless, “[e]very federal appellate court has
a special obligation to satisfy itself . . . of its own jurisdic-
tion . . . even though the parties are prepared to concede
it.” Chamberlain Grp., Inc. v. Skylink Techs., Inc., 381
F.3d 1178, 1188 (Fed. Cir. 2004) (quoting Bender v. Wil-
liamsport Area Sch. Dist., 475 U.S. 534, 541 (1986))
(alteration and omissions in original). “We review issues
of jurisdiction de novo.” Forrester Env. Servs., Inc. v.
Wheelabrator Techs., Inc., 715 F.3d 1329, 1333 (Fed. Cir.
8 KRAUSER v. BIOHORIZONS, INC.
2013) (quoting Prasco, LLC v. Medicis Pharm. Corp., 537
F.3d 1329, 1335 (Fed. Cir. 2008)).
To support our jurisdiction, BHI makes the same ju-
risdictional arguments as at the Eleventh Circuit. In
addition, it contends that its theories, even if ultimately
incorrect, are nonetheless “plausible” and require us to
follow the law of the case of our sister circuit.
The law of the case issue was addressed by the Su-
preme Court in Christianson v. Colt Industries Operating
Corp., 486 U.S. 800, 815–19 (1988). The Supreme Court
explained that the “law of the case” from a sister circuit
could counsel against re-transfer—“transferee courts that
feel entirely free to revisit transfer decisions of a coordi-
nate court threaten to send litigants into a vicious cycle of
litigation,” id. at 816—but that law of the case was “not a
limit to [the] power” of the transferee court. Id. (quoting
Messinger v. Anderson, 225 U.S. 436, 444 (1912)). “[I]f the
transferee court can find the transfer decision plausible,
its jurisdictional inquiry is at an end.” Id. at 819. But it
held that a transferee court would “not exceed its power
in revisiting the jurisdictional issue, and once it con-
clude[s] that the prior decision was ‘clearly wrong’ it [is]
obliged to decline jurisdiction.” Id. at 817.
Here, the Eleventh Circuit has transferred this case
to us, and accordingly, the Eleventh Circuit’s decision
should normally be the law of the case. This is true even
though the transferring court had not explained the basis
for its decision. Id. at 817. We conclude, however, that
there is no “plausible” basis for this court’s jurisdiction. 4
4 The Eleventh Circuit may exercise jurisdiction
under 28 U.S.C. § 1332 because of the diversity of the
parties. All of the named defendants are Delaware corpo-
KRAUSER v. BIOHORIZONS, INC. 9
I
BHI first argues that we have jurisdiction because
Krauser included an inventorship claim in his original
complaint. “Federal courts have exclusive jurisdiction
over cases ‘arising under any Act of Congress relating to
patents.’” Gunn v. Minton, 133 S. Ct. 1059, 1062 (2013)
(quoting 28 U.S.C. § 1338(a)). An action “arises under”
patent law when “federal [patent] law creates the cause of
action asserted” or when it presents a federal patent issue
that 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.” Id. at 1064, 1065; see also Colt, 486 U.S. at
808–09 (“§ 1338(a) jurisdiction . . . 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 resolu-
tion of a substantial question of federal patent law, in
that patent law is a necessary element of one of the well-
pleaded claims.”). It is undisputed that Krauser’s First
Amended Complaint, with its inventorship claim, as filed
in state court, “arose under” federal patent law and was
subject to § 1338(a) jurisdiction, and correspondingly, our
appellate jurisdiction under 28 U.S.C. § 1295(a)(1). See
Bd. of Regents, Univ. of Tex. Sys. v. Nippon Tel. & Tel.
Corp., 414 F.3d 1358, 1363 (Fed. Cir. 2005) (“[I]ssues of
rations with their principal place of business in Alabama.
Plaintiff Krauser is a resident of Florida.
On March 31, 2014, the district court awarded BHI
attorney’s fees and expert witness fees. Krauser v. BioHo-
rizons, Inc., No. 10-80454 (S.D. Fla. Mar. 31, 2014), ECF
No. 216. Krauser has since appealed that judgment to the
Eleventh Circuit. In light of this opinion, it appears that
jurisdiction over that appeal is properly in the Eleventh
Circuit.
10 KRAUSER v. BIOHORIZONS, INC.
inventorship . . . present sufficiently substantial questions
of federal patent law to support jurisdiction under section
1338(a).”).
But after Krauser’s withdrawal without prejudice of
his inventorship claims, the Second Amended Complaint
did not contain any claims which depended “on resolution
of a substantial question of federal patent law.” Colt, 486
U.S. at 809. We have repeatedly held that an amendment
to the complaint that dismisses the patent law claims
without prejudice, as here, deprives this court of jurisdic-
tion over the case. Gronholz v. Sears, Roebuck & Co., 836
F.2d 515, 518 (Fed. Cir. 1987) (“[Plaintiff’s] dismissal of
the patent claim constituted an amendment of his com-
plaint. That amendment left a complaint which consisted
of a single, non-patent claim for unfair competition.
Applying the well-pleaded complaint rule to the complaint
then remaining, we determine that the present suit does
not ‘arise under’ the patent laws for jurisdictional purpos-
es.”); see also Chamberlain, 381 F.3d at 1189 (“For the
purposes of determining Federal Circuit jurisdiction, we
do not differentiate between actual and constructive [i.e.,
dismissals without prejudice] amendments; both divest us
of jurisdiction if they eliminate all issues of patent law.”);
accord Nilssen v. Motorola, Inc., 203 F.3d 782, 785 (Fed.
Cir. 2000). Therefore, the existence of inventorship
claims in the original complaint does not support our
exercise of jurisdiction in this case.
II
Second, although BHI conceded that Krauser had re-
moved his inventorship claims from this case, BHI con-
tends that the well-pleaded complaint rule requires us to
consider the issue of patent law inventorship even when
adjudicating Krauser’s claims of ownership of the Dental
Implant System based on the 1991 Agreement, the Octo-
ber 1996 Agreement and a quantum meruit theory. While
KRAUSER v. BIOHORIZONS, INC. 11
Krauser’s theory of ownership of the dental implant
system is not entirely clear, his ownership theories do not
rest on a theory of inventorship or require resolution of
any issue of patent law. In addition, on appeal to this
court, Krauser stated that he had withdrawn his claim in
the Second Amended Complaint that “he is the owner of
the subject matter set forth in the Defendants’ patents.”
J.A. 273. Therefore, BHI’s second jurisdictional theory
fails every element of the test described by the Supreme
Court in Gunn. The resolution of the inventorship ques-
tion is neither “necessary” nor “substantial” to the case. A
claim of ownership does not necessarily require considera-
tion of patent law inventorship. A state law contract
claim or quantum meruit claim may entitle Krauser to
royalties from the Dental Implant System even if he is not
listed as an “inventor” on the face of the patent. Given
that there is no federal issue in this case, an exercise of
federal question jurisdiction would certainly disrupt
“Congress’s intended division of labor between state and
federal courts.” Gunn, 133 S. Ct. at 1065.
III
BHI further argues that even if Krauser’s claims are
based in state law, there is federal jurisdiction because
Krauser seeks remedies that might be preempted by
federal patent law. BHI argues that because Krauser’s
ownership claims are based on his contribution of the
ideas in the dental implant system, these claims are
preempted. See, e.g., Ultra-Precision Mfg., Ltd. v. Ford
Motor Co., 411 F.3d 1369, 1377–82 (Fed. Cir. 2005); Univ.
of Colo. Found., Inc. v. Am. Cyanamid Co., 342 F.3d 1298,
1305–08 (Fed. Cir. 2003); Waner v. Ford Motor Co., 331
F.3d 851, 856–57 (Fed. Cir. 2003). But even if Krauser’s
ownership claims are preempted, this does not give this
court jurisdiction. The Supreme Court addressed this
very issue in Metropolitan Life Insurance v. Taylor, 481
U.S. 58, 63 (1987)—finding that because “[f]ederal pre-
12 KRAUSER v. BIOHORIZONS, INC.
emption is ordinarily a federal defense to the plaintiff’s
suit . . . it does not appear on the face of a well-pleaded
complaint, and, therefore, does not authorize removal to
federal court.” In Forrester, we applied Metropolitan Life
to an analogous situation, finding no federal jurisdiction
where plaintiff “[sought] remedies that might be preempt-
ed by federal patent law” because federal preemption was
only a defense to the plaintiff’s suit. 715 F.3d at 1335.
Therefore, BHI’s third theory does not support our exer-
cise of jurisdiction in this case.
In summary, there is no plausible claim that this
court has jurisdiction.
TRANSFERRED TO THE ELEVENTH CIRCUIT
COSTS
Costs to neither party.