Inspired Development Group v. Inspired Products Group, LLC, No. 18-1616 (Fed. Cir. 2019)Annotate this Case
Inspired Development sued KidsEmbrace for breach of contract and other related state law claims in federal district court on the basis of diversity jurisdiction under 28 U.S.C. 1332(a). The dispute involved the purported breach of a patent-licensing agreement by failure to pay outstanding royalties. The district court granted summary judgment in KidsEmbrace’s favor on certain claims. On appeal, the Eleventh Circuit discovered that diversity jurisdiction did not exist. The district court concluded on remand that it retained jurisdiction over the suit based on federal question jurisdiction. The Eleventh Circuit transferred the case to the Federal Circuit, which vacated and remanded for dismissal. The parties’ claims did not arise under the patent laws pursuant to 28 U.S.C. 1338(a). No claims allege a cause of action created by federal patent law. This is a state law contract case for past due royalties. Inspired Development need not demonstrate that KidsEmbrace actually practiced the licensed patents, and the question of infringement is not a “necessary element” of the claim. Finding a federal question here merely because this contract implicates a run-of-the-mill question of infringement or validity would undoubtedly impact the wider balance between state and federal courts.