Doukas v. Ballard
2011 U.S. Dist. LEXIS 134016
E.D.N.Y2011Background
- Ballard and DataTreasury removed the case to federal court; plaintiffs move to remand to state court.
- Plaintiffs allege fraud, breach of contract and joint-venture-based claims seeking monetary and equitable relief.
- Alleged joint venture between Ted Doukas and Ballard from 1994–1995 to develop biometric tech; Doukas funded and Ballard developed the tech.
- Ballard filed a patent August 27, 1997 and transferred it to CPS Holdings, then to DTC, which has since earned over $2 billion from related settlements/licensing.
- Plaintiffs filed in New York state court (April 15, 2011); removal on July 7, 2011; motion to remand filed July 29, 2011; arguments heard October 17, 2011; court fully submitted.
- Court remands: none of plaintiffs’ claims require patent law; no substantial patent-law issue; remaining issues are contract/partnership-based; thus no federal subject-matter jurisdiction; remand granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint presents a substantial federal patent question | Doukas/Ballard ownership dispute not indispensable to patent law | Ownership/ inventor status triggers patent-law questions | No substantial patent-law issue; remand granted |
| Whether removal was proper given lack of federal-question jurisdiction | Remand appropriate; no federal question | Removal proper due to patent-related arguments in complaint | Remand proper; federal jurisdiction lacking |
| Sanctions and costs under Rule 11 and 28 U.S.C. § 1447(c) | Defendants acted in bad faith; seek sanctions/costs | No bad faith; colorable basis for removal | Sanctions denied; costs denied |
Key Cases Cited
- Caterpillar Inc. v. Williams, 482 U.S. 386 (U.S. 1987) (well-pleaded complaint rule governs federal-question jurisdiction)
- Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (U.S. 1987) (well-pleaded complaint rule and jurisdiction limits)
- Christianson v. Colt Indus. Oper. Corp., 486 U.S. 800 (U.S. 1988) (patent law need not control if not essential element of claim)
- Nanomedicon, LLC v. Research Found, of State Univ. of NY, 784 F. Supp. 2d 153 (E.D.N.Y. 2011) (patent-right contract disputes resolved in state court)
- Synergy Adv. Pharmas. Inc. v. CapeBio LLC, 797 F. Supp. 2d 276 (S.D.N.Y. 2011) (patent ownership disputes not always federal questions)
- In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 488 F.3d 112 (2d Cir. 2007) (burden on removing party to show federal jurisdiction; strict construction of removal statute)
- Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237 (Fed. Cir. 1993) (ownership disputes in patent context; state-law controls)