Lead Opinion
ON SUGGESTION FOR REHEARING EN BANC.
This аppeal calls on us to decide whether a federal long-arm statute, 35 U.S.C. § 293
I.
In 1967, appellant National Patent Development Corporation (National), a Delaware corporation with its principal place of business in New York, entered into a series of agreements with SANACO, a British corporation, pursuant to which National and SA-NACO formed Hydron Limited, a British corporation owned in equal shares by National and SANACO. This joint venture was designed to link SANACO’s expertise in research and development of health care products with National’s patent rights relating to hydrophilic polymers; the parties agreed that the results of Hydron’s research, including any patent rights, were to be the property of Hydron — and thus of National and SANACO in equal parts.
Subsequent to those agreements, in 1968 and 1969, applications for British and U.S. patents relating to adhesive wound dressings were filed in the names of SANACO subsidiaries.
In January 1987, National sued Smith & Nephew in the United States District Court for the District of Columbia, seeking a declaratory judgment that National has a one-half ownership interest in the reissue patents. National alleged that SANACO and Smith & Nephew had concealed the commercial value of the wound dressing applications and had procured National’s agreement to the terms of the 1970 contract through fraud and breach of contractual and fiduciary obligations. National asked the district court to declare that Smith & Nephew held the allegedly misappropriated patents in trust for Hydron and to assign all rights, title, and interest in the patents to Hydron.
Subject matter jurisdiction over National’s suit was based solely on diversity of citizenship and an amount in controversy in excess of $10,000, exclusive of interest and costs. See 28 U.S.C. § 1332(a) (1982).
Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person*1005 residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.
(Emphasis added.)
The district court, relying upon two precedents of this circuit, Neidhart v. Neidhart S.A.,
On appeal, a panel of this court affirmed the district court’s judgment. Neidhart and Riker, the panel agreed, held that section 293 provides a basis for personal jurisdiction over a nonresident patentee only “if the complaint shows that the court will be obliged to resolvе an issue of patent law.” National Patent,
Two judges on the panel stated in a separate concurrence that “[w]ere this court writing on a clean slate,” they would read section 293 to encompass a suit over patent ownership. Id. at 358 (Ruth B. Ginsburg, J., concurring). The author of the panel opinion, too, indicated that absent-the constraint of circuit precedent, he might construe section 293 more broadly.
National then petitioned for rehearing en banc. We granted that petition and, upon consideration by the full court,
II.
The genesis of the existing narrow construction of section 293 is the opinion of the district court in North Branch. In that case, the district court stated that it lacked jurisdiction under section 293 over a suit by a U.S. corporation seeking a judgment declaring that it, and not the defendant, a resident of Canada, owned certain U.S. patents.
The court’s rationale in North Branch was twofold. First, although it found section 293’s legislative history unenlightening, the court stated: “The fact that the Section is included in the codification of laws relating to patents [Title 35] would seem to lead tо the conclusion that the Section should be construed as being limited to actions under the patent laws, rather than extended to all actions affecting patents generally.” Id. at 845. Second, the court feared “a possible lack of any constitutional basis for jurisdiction either over the subject matter or the person, if such a suit were not brought either under the patent laws or under the provision relating to diversity of citizenship.” Id.
This court first addressed the scope of section 293 in Neidhart. That case consisted of two consolidated actiоns. In one, a United States citizen alleged that the defendant, a Swiss corporation, had breached an agreement giving the plaintiff the exclusive right to award sublicenses under the defendant’s U.S. patents. The plaintiff sought a judgment declaring the validity of, and modifying, the agreement, establishing his entitlement to royalties, and enjoining the defendant from interfering with his sublicensing. In the companion case, a Maryland corporation charged that a Canadian corporation had breached an аgreement giving the plaintiff an exclusive territorial use license of the defendant’s U.S. patents. The plaintiff sought a judgment declaring the existence and validity of the license, an order directing specific performance, an injunction preventing the defendant from granting conflicting licenses, and damages.
This court, announcing its essential agreement with the North Branch rationale, held that license agreement controversies were not “among the situations embraced by section 293.” Id. at 764. The court added the qualification, however, that it “would not go so far as to say that 28 U.S.C. § 1338(a) and 35 U.S.C. § 293 are synonymous.” Id. Furthermore, unlike the district court in North Branch, the Neidhart court drew on the statute’s legislative history. That history, the court said, showed that Congress intended section 293 to refer to suits concerning the validity or infringement of patents. “The least that may be adduced from the legislative history,” the court continued, “is that Congress most assuredly did not contemplate application of section 293 to actions to determine license rights.” Id. at 763. Such actions, the court concluded, “while termed patent licensе agreement controversies, are, quite simply, contract disputes.... We see no reason to bring such matters within the realm of the federal judiciary, nor do we think Congress intended such a result.” Id. at 764-65.
Judge Leventhal dissented in Neidhart. He maintained that the natural meaning of the words “proceedings affecting the patent or rights thereunder” — written, critically, in the disjunctive — encompasses a proceeding to determine the validity of, or the extent of rights granted by, a license. Id. at 766 (Levanthal, J., dissenting). The broad language of section 293, Judge Lev-enthal stated, should not “be construed in the same way as the distinctly different language of 28 U.S.C. § 1338,” for section 1338 “entail[s] an exclusive grant of subject matter jurisdiction to the Federal courts and a corresponding removal from the state courts,” whereas section 293 is
The final episode, until now, in the trilogy of section 293 cases was Riker. In Riker, Gist-Brocades, a Netherlands corporation, had licensed Riker Laboratories, a United States corporation, to make, use, and sell Gist-Brocades' patented products. As part of the licensing agreement, Riker was required to use a Gist-Brocades trademark and to devеlop and hold in trust for Gist-Brocades two other trademarks. When the agreement was terminated or the patent expired, Riker was to assign all its right, title, and interest in the trademarks to Gist-Brocades. Another provision also required Riker to pay royalties after the expiration of the patent for use of the trademarks.
While the agreement was still in effect, Riker’s competitors began infringing Gist-Brocades’ patent and cutting into Riker’s sales. Riker requested that Gist-Brocades amend the licensing agreement to delete the trademark tie-in and post-patent royalty provisions, contending that those provisions constituted patent misuse, in violation of United States antitrust laws, and prevented enforcement of the patent against infringers. When Gist-Brocades refused, Riker cancelled the agreement, citing the anti-trust problems. Riker then sued Gist-Brocades, requesting declaratory, injunc-tive, and monetary relief.
This court held that the district court had personal jurisdiction over Gist-Brocades undеr section 293 because Riker’s allegation of patent misuse “embraces the patent laws directly.”
The Riker court thus distinguished the consolidated actions in Neidhart as “essentially contract disputes, only incidentally involving patents”; “there, the only relation to the patent laws was the fact that the center of [each] contract dispute happened to be a patent rather than some other subject.” Id. at 778 (emphasis in original). Although “the genesis of the dispute” in Riker also was a license agreement, “the heаrt of the dispute,” this court said, “[did] not involve mere license terms but the effect under the antitrust laws of the terms of the patent license on rights under the patent.” Id. at 779.
The panel in this case reconciled Neid-hart and Riker by holding that section 293 is applicable “if the complaint shows that the court will be obliged to resolve an issue of patent law.”
III.
We conclude that this court embarked on the wrong course in Neidhart, and that Judge Leventhal’s dissent in that case correctly construes section 293. The statutory language broadly authorizes the assertion of jurisdiction over a nonresident owner of a U.S. patent in cases “respecting the patent or rights thereunder.” 35 U.S.C. § 293 (emphasis added). A suit over patent ownership surely respects or affects rights under a patent: if one does not own a patent, one certainly lacks the rights of a patentee. In this regard, a suit over patent ownership affects rights under the patent at least as much as a suit claiming patent
The court in Neidhart disregarded the recognized natural meaning of the statutory language on the ground that “ ‘[n]atural meaning' simply will not suffice where, as here, other considerations necessitate more sophisticated interpretation.”
Smith & Nephew urges that the legislative history supports Neidhart's parsimonious reading of section 293. We disagree. The sparse legislative history is of little help in reconstructing Congress’ intent. See Riker,
The Department understands that this provision has been added for the benefit of American residents desiring to bring action against foreign owners of United States patents. At the present time American manufacturers threatened by charges of infringement of United States patents by persons resident abroad are especially handicapped by inability to bring suit for declaratory judgment.
Hearings on H.R. 3760 Before the Sub-comm. No. 3 of the House Comm, on the Judiciary, 82d Cong., 1st Sess. 91 (1951) (emphasis added); see also id. at 93 (similar statement by Chief of the Patent Litigation unit of the Department of Justice).
Perhaps the prime consideration motivating the Neidhart majority was its fear that a less restrictive reading of section 293 would “abrogate the traditional separation
In Neidhart, the Department of Justice contributed to the confusion by suggesting that section 293 indeed did confer both subject matter and personal jurisdiction on the district court over patent-related cases. In response, the Neidhart majority emphasized its resistance to allowing the district court to intrude on the domain of state courts by asserting jurisdiction over what were, in essence, contract disputes.
When one addresses subject matter and personal jurisdiction separately, however, the Neidhart and North Branch courts’ concern largely vanishes. Section 293 does not supply subject matter jurisdiction; that fundamental competence must be based, ordinarily, on diversity of the parties’ citizenship, see Neidhart,
The district court clearly possessed subject matter jurisdiction over this case based on the parties’ diverse citizenship and the requisite amount in controversy. See 28 U.S.C. § 1332(a); see also supra note 2. Furthermore, to the extent National’s claims relate to patents Smith & Nephew registered in the United States,
Finally, Smith & Nephew argues that we should eschew a “plain language” or “natural meaning” approach becausе an expansive interpretation of section 293 would render the provision unconstitutionally vague. Smith & Nephew’s Reply to National’s Suggestion for Rehearing en Banc at 7-8. For support, Smith & Nephew cites the panel’s remark that under a plain language approach, “we would face problems in defining the outer boundary of jurisdiction. How tangential or remote to the core dispute could be patent be and still authorize use of the long-arm statute?” National Patent,
Conclusion
35 U.S.C. § 293 authorizes the assertion of personal jurisdiction by the United States District Court for the District of Columbia over a nonresident patentee in a suit over patent ownership. We therefore vacate the decision of the panel, reverse the decision of the district court, and remand this case to the district court for further proceedings consistent with this opinion.
It is so ordered.
Notes
. Patent applications were also filed in the name of appellee T.J. Smith & Nephew Limitеd, one of the SANACO subsidiaries, in eighteen other countries.
. National’s complaint was filed January 14, 1987. For civil actions filed after May 18, 1989, $50,000 replaces $10,000 in the section 1332(a) amount-in-controversy prescription. Judicial Improvements and Access to Justice Act, Pub.L. No. 100-702, § 201, 102 Stat. 4642, 4646 (1988).
. Because the issue was clearly framed in the panel opinions, circuit precedent, and the parties’ filings for and against the suggestion for rehearing en banc, we decided that further briefing and oral argument before the еntire court were unnecessary. Cf. Irons v. Diamond,
. North Branch's discussion of section 293 is dictum. After declaring that it lacked jurisdiction under section 293, the court observed that the defendant had submitted to the court’s jurisdiction by filing a permissive counterclaim.
.The district court in North Branch and this court in Neidhart and Riker focused on the phrase "proceedings affecting the patent or rights thereunder” in section 293 rather than on the subsequent language, “any action respecting the patent or rights thereunder." The latter language is the relevant portion of section 293
. 28 U.S.C. § 1338(a) provides in relevant part:
The district courts shall have original jurisdiction of any civil action arising under any Acts of Congress relating to patents.... Such jurisdiction shall be exclusive of the courts of the states....
. There were no hearings in the Senate. The House and Senate Reports are unhelpful, stating only that "[s]ection 293 is a new section that is needed on some occasions to obtain jurisdiction over foreign patent owners that do not reside in the United States.” H.R.Rep. No. 1923, 82d Cong., 2d Sess. 10 (1952); S.Rep. No. 1979, 82d Cong., 2d Sess. 9 (1952), U.S.Code Cong. & Admin.News 1952, pp. 2394, 2403. The committеe reports do not explain, however, on what “occasions" such jurisdiction is necessary, leaving us where we began: with the statutory language. See Neidhart,
The majority in Neidhart found that these reports "characterize section 293 as being part of ‘a group of sections relating to remedy for infringement of a patent.’”
. National’s complaint, which alleges that Smith & Nephеw also misappropriated National’s rights in the relevant inventions by filing applications in Great Britain and eighteen other countries, would have to be trimmed so that the issues before the district court concern only the U.S. patents and rights thereunder.
. Smith & Nephew has at least four times availed itself of its rights under United States patent registrations by seeking to enforce the patents against infringers. See T.J. Smith & Nephew Ltd. v. Ferris Corp., No. 86 C 5461 (N.D.Ill. filed July 25, 1986); T.J. Smith & Nephew Ltd. v. Pfizer Hosp. Prods. Group, Inc., No. 85-301 (D.Del. filed May 20, 1985); T.J. Smith & Nephew Ltd. v. Consolidated Medical Equip., Inc.,
Lead Opinion
Opinion for the Court filed by Circuit Judge RUTH BADER GINSBURG.
Concurring opinion filed by Circuit Judge SILBERMAN.
Concurrence Opinion
concurring:
I concur in the court’s opinion, including its unwillingness to explore the outer boundaries of the statute’s reach — which, as I mentioned in the panel opinion, are not readily apparent. Compare Michigan Citizens For An Independent Press v. Thornburgh,
Of course, as it turns out, we are unanimous in our decision, so this case cannot be described as an “apparent ideological use of en banc review” according to a recent political polemic in the Harvard Law Review. See Note, The Politics of En Banc Review, 102 HARV.L.REV. 864 (1989). That simplistic concept, as defined in the note, turns on the identity of the President who appointed all of the judges in the majority of an en banc vote. I do not, however, think that factor should weigh one way or the other in determining whether we should afford en banc review.
. Perhaps I have been too parsimonious.
