3:12-cv-01484
N.D. Cal.Apr 15, 2014Background
- Ariba sued Coupa for patent infringement (asserting the ‘165 patent) and sought leave to file a second amended complaint adding state-law claims: trade-secret misappropriation against Coupa and two former Ariba employees (Mark Carlton, Steve Paskow) and breach of employment contract claims against the two individuals.
- Ariba discovered allegedly confidential Ariba documents in a Coupa production (about 70,000 pages); eight documents (six Solution Package Descriptions and two competitive analyses) formed the basis for the proposed state claims.
- Coupa’s interrogatory responses implicated Carlton and Paskow as having brought Ariba documents to Coupa and provided them to Coupa executives; Carlton had left Ariba for Coupa and briefly was rehired by Ariba and terminated the same day.
- Ariba argued the state claims share a common nucleus of operative fact with the patent claims because evidence (e.g., sales, copying, profitability) overlaps as to infringement, intent, and damages.
- The court found most SPDs concerned products that do not practice the asserted ‘165 patent (only Procure-to-Pay was identified as practicing all asserted claims), and the state claims would involve different defendants, additional products, and distinct liability/damage theories.
- Procedurally: Ariba moved for leave to amend; the court granted Coupa leave to file a sur-reply and denied Ariba’s motion, declining supplemental jurisdiction and denying leave to file the amended complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the proposed state-law trade-secret and contract claims are part of the same case or controversy as the federal patent claims under 28 U.S.C. § 1367(a) | The state claims share a common nucleus of operative fact with the patent claims because evidence on sales, copying, intent, profitability, product use, and demand overlaps for infringement and damages | The state claims concern different products, different defendants, and require separate evidence and liability theories; minimal factual overlap with patent claims | Denied supplemental jurisdiction under §1367(a); state claims do not form the same case or controversy as the patent claims |
| Whether the court should nonetheless decline to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c) | N/A (Ariba sought jurisdiction) | State-law claims would predominate and raise complex state-law issues requiring substantial additional proof | Exercised discretion to decline jurisdiction under §1367(c) because state claims would substantially predominate over the patent claims |
| Whether pendent jurisdiction exists under 28 U.S.C. § 1338(b) for state unfair competition–type claims joined with patent claims | The factual overlap and shared issues justify pendent jurisdiction under §1338(b) | There is not the required "considerable overlap"; state claims need substantial additional evidence and risk jury confusion | No §1338(b) jurisdiction; factual bases lack considerable overlap and court would decline jurisdiction even if jurisdiction existed |
| Whether leave to amend should be granted under Fed. R. Civ. P. 15(a) given the jurisdictional issues | Leave should be freely given; amendment is proper to add state claims | Granting leave would force litigation of unrelated state claims in federal court; court should deny amendment | Motion for leave to file second amended complaint denied (primarily on jurisdictional grounds) |
Key Cases Cited
- Bahrampour v. Lampert, 356 F.3d 969 (9th Cir.) (state-law claims form part of same case or controversy when they share a common nucleus of operative fact)
- Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir.) (leave to amend under Rule 15 should be granted liberally; factors to consider)
- Verdegaal Bros., Inc. v. Union Oil Co. of Cal., 750 F.2d 947 (Fed. Cir.) (factors to decline pendent jurisdiction under §1338(b) include minimal factual overlap and risk of jury confusion)
- 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373 (Fed. Cir.) (trade libel/unfair competition claims can go hand-in-hand with patent claims when arising from the same sales activity)