Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Intellisoft, Ltd. v. Acer Am. Corp., 2019-1522 (April 3, 2020). Intellisoft and its president Bruce Bierman sued Acer in state court asserting various state law claims, including misappropriation of trade secrets. Intellisoft claimed that, despite an NDA, Acer misappropriated its trade secrets by including Intellisoft’s trade secrets in a patent specification. After years of litigation, Acer sought to add a federal claim for patent inventorship and removed the action to federal court. Intellisoft moved to remand the case back to state court. The district court denied Intellisoft’s motion to remand and later entered final judgment in favor of Acer. Intellisoft appealed.
On appeal, the Federal Circuit held removal was not proper under 28 U.S.C. § 1441 because Intellisoft’s trade secret claims did not necessarily raise substantial patent law issues. Specifically, Intellisoft did not need to prove patent inventorship under federal law to establish ownership of the trade secret; Intellisoft did not need to prove patent infringement to prove trade secret misappropriation; and Intellisoft’s damages case did not necessarily depend on patent infringement. The Court explained: “a plaintiff’s reliance on a patent as evidence to support its state law claims does not necessarily require resolution of a substantial patent question.” The Court also concluded removal was improper.
The Court further held removal was not proper under 28 U.S.C. § 1454. Section 1454 permits removal of an “action in which any party asserts a claim for relief arising under any Act of Congress relating to patents . . . .” Acer asserted § 1454 applies whenever such claim is asserted. The Court rejected that argument, concluding § 1454 “requires that the claim supporting removal must be contained in an operative pleading.” Here, Acer’s cross-complaint was not a legally operative pleading at the time of removal because Acer required, but did not obtain, leave from the state court to file it. The Court also rejected Acer’s alternative argument that its amended counterclaim filed in federal court after removal satisfied § 1454. The Court explained that the only relevant pleading is the one operative at the time the petition to remove is filed.
Because removal to federal court was improper, the Court vacated the district court’s judgment, reversed its denial of Intellisoft’s motion to remand, and remanded with instruction to remand the action to state court.