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Online Resources Corporation v. Joao Bock Transaction Systems, 15-1669 (2015)

Court: Court of Appeals for the Eighth Circuit Number: 15-1669 Visitors: 12
Filed: Dec. 15, 2015
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 15-1669 _ Online Resources Corporation; ACI Worldwide, Inc. lllllllllllllllllllll Plaintiffs - Appellants v. Joao Bock Transaction Systems, LLC lllllllllllllllllllll Defendant - Appellee _ Appeal from United States District Court for the District of Nebraska - Omaha _ Submitted: November 17, 2015 Filed: December 15, 2015 _ Before RILEY, Chief Judge, BEAM and KELLY, Circuit Judges. _ RILEY, Chief Judge. Online Resources Corporation (ORCC
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                United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 15-1669
                        ___________________________

              Online Resources Corporation; ACI Worldwide, Inc.

                      lllllllllllllllllllll Plaintiffs - Appellants

                                           v.

                      Joao Bock Transaction Systems, LLC

                      lllllllllllllllllllll Defendant - Appellee
                                     ____________

                   Appeal from United States District Court
                     for the District of Nebraska - Omaha
                                ____________

                         Submitted: November 17, 2015
                           Filed: December 15, 2015
                                ____________

Before RILEY, Chief Judge, BEAM and KELLY, Circuit Judges.
                              ____________

RILEY, Chief Judge.

       Online Resources Corporation (ORCC) and ACI Worldwide, Inc. (ACI, and
collectively, ACI Worldwide) appeal from a March 2, 2015, order and judgment of
the district court1 denying ACI Worldwide’s motion for partial summary judgment


      1
       The Honorable Joseph F. Bataillon, United States District Judge for the
District of Nebraska.
and granting partial summary judgment to Joao Bock Transaction Systems, LLC
(JBTS). For the reasons stated below, we dismiss for lack of appellate jurisdiction.

I.     BACKGROUND
       ACI provides online banking products to financial institutions in the United
States. JBTS owns several patents related to ensuring financial account and
transaction security, including U.S. Patent No. 7,096,003 (the ’003 patent). JBTS did
not sue ACI directly, but by 2012, JBTS had sued several of ACI’s customers,
alleging patent infringement related to ACI’s products.

       To resolve their patent dispute, on November 13, 2012, ACI and JBTS entered
into a settlement agreement in which ACI made a large cash payment to JBTS in
exchange for a patent license, release, and covenant not to sue from JBTS for ACI
and certain ACI affiliates, related entities, and customers. JBTS also dismissed its
pending suits against ACI’s customers.

     In March 2013, ACI, through a subsidiary, acquired ORCC in a short-form
merger. As a result of the merger, ORCC became a wholly owned subsidiary of ACI.2
ORCC, like ACI, provided online banking products to financial institutions.

       On June 18, 2013, JBTS sued ORCC in the Southern District of New York,
alleging ORCC infringed the ’003 patent before the merger. ACI maintained ORCC
became an ACI affiliate and related entity as defined in the settlement agreement
upon merging and was therefore protected by the release and license ACI had
obtained.

     When JBTS refused to dismiss its infringement suit, ACI Worldwide filed case
number 8:13-cv-231 (case 231) in the District of Nebraska, asserting JBTS’s suit


      2
          ORCC later merged into another ACI subsidiary.

                                         -2-
breached the settlement agreement. ACI Worldwide also sought a judgment declaring
either the ’003 patent was not infringed or was invalid. JBTS filed a counterclaim for
breach of the settlement agreement. On August 13, 2013, JBTS’s infringement suit
was transferred at the parties’ request from the Southern District of New York to the
District of Nebraska, where it became case number 8:13-cv-245 (case 245). On ACI
Worldwide’s motion, the district court consolidated cases 231 and 245 “for all
purposes.” ACI Worldwide then asserted affirmative defenses and a counterclaim for
breach of contract in case 245.

       On cross-motions for partial summary judgment in both cases, the district court
denied ACI Worldwide relief and granted JBTS summary judgment in part. The
district court dismissed each party’s breach-of-contract claim, but granted JBTS’s
request for a declaration that the settlement agreement did not apply to ORCC’s pre-
merger conduct. Reasoning ACI Worldwide’s claims for a declaration of non-
infringement and invalidity in case 231 duplicated its defenses in case 245, the
district court deemed those claims merged into case 245 and dismissed the claims in
case 231. The district court dismissed case 231; case 245 is pending.

       ACI Worldwide appealed the district court’s rulings in both cases to this court
and filed a corresponding cross-appeal in the Court of Appeals for the Federal
Circuit. JBTS appealed only to the Federal Circuit. JBTS maintains the Federal
Circuit has exclusive jurisdiction of this appeal because this consolidated case arises
under U.S. patent law. We now consider that threshold jurisdictional question and
conclude 28 U.S.C. § 1295(a)(1) gives the Federal Circuit exclusive jurisdiction of
this appeal.3




      3
        We also question whether the district court’s order and judgment constitute a
final decision for purposes of 28 U.S.C. § 1295(a)(1), but leave that question to the
Federal Circuit.

                                         -3-
II.     DISCUSSION
         As relevant here, 28 U.S.C. § 1295(a)(1) grants the Federal Circuit “exclusive
jurisdiction of an appeal from a final decision of a district court of the United States
. . . in any civil action arising under, or in any civil action in which a party has
asserted a compulsory counterclaim arising under, any Act of Congress relating to
patents.” “An action ‘arises under’ patent law when ‘federal patent law creates the
cause of action asserted’ or when it presents a federal patent issue that is
‘(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of
resolution in federal court without disrupting the federal-state balance approved by
Congress.’” Krauser v. BioHorizons, Inc., 
753 F.3d 1263
, 1268 (Fed. Cir. 2014)
(alteration omitted) (quoting Gunn v. Minton, 568 U.S. ___, ___, ___, 
133 S. Ct. 1059
, 1064, 1065 (2013)).

       We have no trouble concluding cases 245 and 231, as pled, arose under U.S.
patent law. In case 245, JBTS alleged ORCC infringed the ’003 patent. See
35 U.S.C. § 271 (infringement). In case 231, ACI Worldwide—averring its claims
arose under U.S. patent law and claiming federal jurisdiction on that basis—sought
a declaration of non-infringement and invalidity. “‘[I]ssues of . . . infringement,
validity and enforceability present sufficiently substantial questions of federal patent
law to support’” exclusive jurisdiction in the Federal Circuit under 28 U.S.C.
§ 1295(a)(1). Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 
599 F.3d 1277
,
1283 (Fed. Cir. 2010) (quoting Bd. of Regents, Univ. of Tex. v. Nippon Tel. & Tel.
Corp., 
414 F.3d 1358
, 1363 (Fed. Cir. 2005)).

       ACI Worldwide argues the district court’s order altered the jurisdictional
analysis. Relying on 28 U.S.C. § 1291, ACI Worldwide asserts we have appellate
jurisdiction because “the only issues remaining in Case 231 relate to the breach of
contract issues. The patent issues now reside exclusively in Case 245 and are not at
issue in this appeal.” According to ACI Worldwide, the Federal Circuit does not have



                                          -4-
exclusive jurisdiction because “the breach of contract issues herein address only
contract interpretation claims under Nebraska law.”

       ACI Worldwide ignores two critical points. First, the district court’s order and
the issues on appeal do not relate exclusively to the breach-of-contract claims in case
231 as ACI Worldwide contends. ACI Worldwide’s appeal notices expressly
challenge rulings in both cases.

       Second, although we have not decided this issue, the Federal Circuit and other
circuits have decided in analogous cases that appellate jurisdiction of a consolidated
case lies exclusively in the Federal Circuit when at least some of the consolidated
claims arise under U.S. patent law. See, e.g., Dorf & Stanton Commc’ns, Inc. v.
Molson Breweries, 
56 F.3d 13
, 14-15 (2d Cir. 1995) (concluding the Federal Circuit
had exclusive appellate jurisdiction of a consolidated case under a prior version of
28 U.S.C. § 1295(a)(1)); In re Innotron Diagnostics, 
800 F.2d 1077
, 1080 (Fed. Cir.
1986) (same).

      The First Circuit’s decision in CytoLogix Corp. v. Ventana Med. Sys., Inc.,
513 F.3d 271
(1st Cir. 2008) (per curiam), is particularly instructive. In CytoLogix,
the plaintiff brought two separate cases against the same defendant—one was a
patent-infringement action, the other was not. See 
id. at 271.
The trial court
consolidated the cases and entered a single judgment. 
Id. The plaintiff
filed notices
of appeal in the First Circuit and the Federal Circuit. 
Id. at 271-72.
On the
defendant’s motion to dismiss the First Circuit appeal for lack of jurisdiction, the First
Circuit concluded that although the non-patent action did not itself “arise under patent
law, ‘once the two cases were consolidated, jurisdiction of the entire case was
necessarily based “in part” on [28 U.S.C.] section 1338.’” 
Id. at 272
(alterations
omitted) (quoting Xeta, Inc. v. Atex, Inc., 
825 F.2d 604
, 607 (1st Cir. 1987) (per
curiam)). “Accordingly, the Federal Circuit ha[d] exclusive jurisdiction over th[e]
appeal.” 
Id. -5- On
similar facts, we reach the same conclusion here. Even if case 231,
standing alone, no longer arose under U.S. patent law after the district court deemed
ACI Worldwide’s non-infringement and invalidity claims merged into case 245, the
Federal Circuit still has exclusive appellate jurisdiction of this entire consolidated
case composed in large part of federal patent claims. Although we could transfer this
case to the Federal Circuit, see 28 U.S.C. § 1631 (authorizing transfer to cure “a want
of jurisdiction”), we conclude transfer is unnecessary because an appeal raising the
same issues is already pending in the Federal Circuit. See 
CytoLogix, 513 F.3d at 272
.

III.   CONCLUSION
       This appeal is dismissed without prejudice.
                        ______________________________




                                         -6-

Source:  CourtListener

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