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Indiana Law Journal

Document Type

Article

Publication Date

Spring 2015

Publication Citation

90 Indiana Law Journal 659 (2015)

Abstract

The patent law has long recognized a patent owner’s ability to license some interest in the patent by granting to others permission to tread upon the patent owner’s property rights without legal consequence. When one of the parties to a patent license decides to seek remedies from the other party for a license harm, the resulting litigation may be a patent-infringement case with a contract issue or a contract case with a patent issue. In most cases, the patent owner brings her suit against the licensee in federal court, alleging that the licensee breached the license contract and, as a result, now infringes the patent. However, a patent owner, as the master of her suit, may choose to bring it in state court and raise only a contract claim governed by state law. The license agreement, by its very nature, implicates patent issues, but it is not always clear when a state suit like this one may be removed to federal court. This is especially true after a recent Supreme Court case, Gunn v. Minton, and amendments to the relevant jurisdictional statutes as part of the Leahy-Smith America Invents Act of 2011.

The jurisdictional rules governing these types of cases are convoluted, clunky, and heavily criticized. In this Article, I argue that the current jurisdictional rules are unnecessary and burdensome in patent-license cases, and I propose a new rule that would place patent-license cases—even those that would be considered state contract cases under the existing framework—in federal courts with exclusive appeals to the Federal Circuit. Ultimately, the reduced burden on litigants and courts, the increased clarity of the law, and the structural advantages for the Federal Circuit as it continues to develop an important body of licensing law outweigh any federalism costs.

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