Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Papst Lic. GmbH & Co. KG v. Fujifilm Corp., No. 07 C 3401, Slip Op. (N.D. Ill. Nov. 27, 2007) (Holderman, C.J.).

Judge Holderman transferred this case to the District of the District of Columbia (“D.D.C.”) pursuant to an order of the Multidistrict Litigation Panel (“MDL Panel”). Plaintiff Papst Licensing (“Papst”) sought centralization pursuant to 28 U.S.C. Section 1407 of this case and four others – two in the D.D.C, one in the District of Delaware and on in the District of New Jersey. The MDL Panel centralized the cases, but centralized them in the D.D.C., instead of the Northern District. The first, and the most advanced, of the cases was pending in the D.D.C. And the MDL Panel held that the East Coast would be the most convenient location for the majority of the parties.

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ExcelStor Tech., Inc. v. Papst Licensing GMBH & Co. KG, No. 07 C 2467, 2007 WL 3145013 (N.D. Ill. Oct. 24, 2007) (Der-Yeghiayan, J.).

Judge Der-Yeghiayan granted defendant Papst Licensing’s (“Papst”) Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. Plaintiffs, various related ExcelStor Technology entities (collectively “ExcelStor”) licensed Papst’s patent portfolio (the “Agreement”) related to hard disk drives (“HDD”). ExcelStor alleged that when the Agreement was signed, Papst had already given third party Hitachi a license covering the same HDDs. Furthermore, ExcelStor alleged that Papst concealed the Hitachi license from ExcelStor. 

Based upon the alleged double royalties, ExcelStor filed this action seeking declaratory judgments that both Papst and the Agreement violated the patent exhaustion doctrine* by extracting two licensing fees for the same product based upon the same patent portfolio. But the Court held that patent exhaustion is a defense to patent infringement, not a cause of action. Because patent exhaustion does not entitle ExcelStor to relief, it does not create federal question jurisdiction. Similarly, ExcelStor’s state law claims for fraud and breach of contract claim do not create federal question jurisdiction because they relate to patent exhaustion – they are questions of state law for which the Court lacked jurisdiction. The Court also noted that it did not consider whether diversity jurisdiction existed because neither party raised it.

* For more on patent exhaustion, specifically the Supreme Court’s patent exhaustion case this term, click here.

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