The State of Vermont has filed a Motion to Remand, asking the Federal Court to send the case back to State Court. The full motion can be found here.
The crux of the State’s argument is summarized nicely in the following paragraph from the motion:
This is a state-law case and it belongs in state court. True, the letters sent by MPHJ alleged patent infringement. But the State’s consumer fraud claims have nothing to do with the validity of MPHJ’s patents. Nor does the State’s complaint address whether, in fact, any Vermont businesses are infringing the patents. Even assuming the patents may be valid, and some Vermont businesses may have infringed those patents, the letters sent to Vermont consumers were unfair and deceptive. Although federal jurisdiction over patent law is broad, it does not stretch this far. This Court lacks jurisdiction and the case should be remanded to state court.
Although I’ll provide more detail later – the two prongs of this analysis address the two means for the Federal Court to have jurisdiction, i.e., federal question jurisdiction and diversity jurisdiction. Addressing the later, there is little doubt based on current case law that the State’s participation as a party does not give rise to diversity jurisdiction. MPJH will likely argue that the State is merely representing the interest of infringing parties that could have defended the infringement claims, but haven’t. Of course, the State is always representing the interest of a myriad of parties that could otherwise defend themselves. If the Federal Court allowed this theory to proceed, it would open up a pandora’s box of questions for future State enforcement actions.
Federal question jurisdiction is more appropriate, but likely isn’t available here. There will not be a claim construction; there will not be any analysis of validity of the patents; there will be no infringement analysis. In short, many of the patent specific questions are simply not going to be an issue in this case.
What remains, of course, is the preemption issue – but this issue does not require resolution by a federal court.
Being in State Court doesn’t mean that the AG is going to win this case. As I discuss here, there are significant hurdles it needs to overcome. However, if the AG wins at the trial court, one would expect, based upon the past history of the Vermont Supreme Court, that it would likely uphold a finding of no preemption.