Blackhawk Network Incorporated v. SL Card Company Incorporated

• Court: District Court, D. Arizona
• Decided: March 9, 2022
• Docket: 2:21-cv-00813
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Blackhawk Network Incorporated, No. CV-21-00813-PHX-MTL

10 Plaintiff, ORDER

11 v.

12 SL Card Company Incorporated, et al.,

13 Defendants. 14 15 Plaintiff Blackhawk Network Inc. (“Blackhawk”) brings this action against 16 Defendants SL Card Company Inc. (“SL Card”), Interactive Communications 17 International (“ICI”), e2Interactive Inc. (“e2”), Linq3 Technologies LLC (“Linq3”), and 18 L3 Innovations LLC (“L3”), asserting claims under the Patent Act, 35 U.S.C. § 256, 19 and Arizona contract law. (Doc. 46.) Defendants move to dismiss Plaintiff’s claims for 20 lack of subject matter jurisdiction, lack of personal jurisdiction, and failure to state a 21 claim upon which relief may be granted. (Docs. 58, 59.) Defendants’ motions are fully 22 briefed (Docs. 63, 64, 69, 70). For the reasons that follow, the Court will grant both 23 motions and dismiss for lack of subject matter jurisdiction. 24 I. BACKGROUND 25 Blackhawk is the nation’s largest distributor of third-party branded gift cards. (Doc. 26 46 ¶ 58.) As such, Blackhawk distributes gift cards from hundreds of brands (e.g., Barnes 27 & Noble, Gap, Lowes, and Panera) to various retail locations across the country (e.g., 28 Albertsons, Food Lion, Kroger, and Safeway) to be sold to consumers. (Id. ¶ 59.) 1 Blackhawk’s service enables retailers to attract consumers by offering a broad range of 2 branded gift cards in a single location and enables consumers to conveniently purchase 3 branded gift cards at a local location without having to make a special trip. (Id. ¶¶ 60–61.) 4 In addition to distributing gift cards, Blackhawk operates a computer network 5 through which it receives and acts on its retailers’ requests to activate Blackhawk- 6 distributed gift cards. (Id. ¶ 60.) When a consumer purchases a gift card at one of its 7 partner’s locations, an activation request is sent to Blackhawk. (Id.) Blackhawk then sends 8 the request to a card processor who maintains the account associated with the gift card. The 9 card processor then activates the account and sends a confirmation back to Blackhawk. 10 Finally, Blackhawk sends the confirmation back to the retailer, at which point the gift 11 card is activated and can be used by the consumer. (Id.) 12 Several years ago, Blackhawk began using its computer and distribution networks 13 to sell lottery products, in addition to gift cards. (Id. ¶ 62.) Traditionally, lottery products 14 were available in retail stores only at specialized kiosks with a lottery terminal. Since most 15 retailers had just one kiosk, consumers often had to wait in line to purchase their tickets 16 and, even once they purchased their tickets, consumers had to wait for the tickets to print. 17 (Id.) 18 In an effort to remedy these outdated shortcomings and provide a more convenient 19 experience for consumers, the Ontario Lottery and Gaming Corporation (“Ontario 20 Lottery”) developed a product that would allow consumers to purchase pre-printed lottery 21 tickets at retail locations and have the tickets activated and entered into lottery drawings 22 directly at the point of sale, much like a branded gift card. (Id. ¶¶ 62–64.) Ontario Lottery 23 referred to this new product as “QuickTicket.” (Id. ¶ 63.) Ontario Lottery filed a Canadian 24 patent application for QuickTicket that issued as Canadian Patent Number 2,855,434 (the 25 “434 Patent”). (Id. ¶ 65.) The 434 Patent named Ontario Lottery employee Gino Giunti 26 as sole inventor. (Doc. 58 at 5.) Ontario Lottery also filed for and received a Canadian 27 Trademark registration for the mark “QuickTicket.” (Id. at 5–6.) 28 Blackhawk acquired the 434 Patent from Ontario Lottery in March 2016 and, six 1 months later, in September 2016, acquired Ontario Lottery’s analogous U.S. patent 2 application, which subsequently issued as U.S. Patent Number 9,865,135 (the “135 3 Patent”). (Doc. 46 ¶ 65.) The 135 Patent claimed priority to the 434 Patent and also 4 named Ontario Lottery employee Gino Giunti as sole inventor. (Doc. 58 at 5.) Two years 5 later, in April 2018, Blackhawk filed a continuation application that issued as U.S. Patent 6 Number 10,769,894 (the “894 Patent”) and again named Giunti as sole inventor (the 135 7 and 894 Patents are collectively referred to as the “Blackhawk Patents”). (Doc. 5 at 5.) 8 The Blackhawk Patents are each entitled “Methods for Selling Pre-Printed Online 9 Lottery Tickets.” (Doc. 46 ¶ 67.) The patents describe two distinct QuickTicket 10 embodiments: (i) “pre-printed lottery tickets that do not have a draw date or wager (i.e., 11 lottery numbers) assigned or associated to the pre-printed ticket” (“Unnumbered Draw 12 Tickets”) and (ii) “pre-printed tickets with pre-printed wagers on the ticket” (“Numbered 13 Draw Tickets” or “QuickTicket V2”). (Id. ¶¶ 68–72.) Although both Patents describe and 14 provide examples of both embodiments, only the 894 Patent has claims directed to 15 QuickTicket V2.1 (Id. ¶ 73.) 16 On January 1, 2017, Defendants SL Card and L3 entered into a Product 17 Distribution Agreement (“Distribution Agreement”) with Blackhawk to have Blackhawk 18 distribute their lottery products to Blackhawk’s U.S. retailers.2 (Doc. 46 ¶ 76; see Doc. 47.) 19 Both Blackhawk and SL Card are Arizona corporations. (Doc. 46 ¶¶ 18, 20.) L3 is a 20 Delaware entity headquartered in Atlanta, Georgia. (Id. ¶ 22.) Before March 2019, L3 21 operated under the name Linq3 Technologies LLC, and owned all of SL Card’s 22 outstanding shares of stock.3 (Doc. 58 at 3.) The Distribution Agreement was principally

23 1 On September 12, 2020, ICI filed two petitions for post-grant review of the 894 Patent at the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office. Nos. 24 PGR2020-00084 and PGR2020-00085. See Exs. 24 (Petition for Post Grant Review, No. PGR2020-00084) & 25 (Petition for Post Grant Review, No. PGR2020- 00085). 25 2 The Distribution Agreement states that it is between “Blackhawk Network, Inc., an Arizona corporation (‘Blackhawk’), SL Card Company Inc., an Arizona corporation 26 (‘Linq3’) . . . and, for purposes of Sections 15.1 and 21.12 hereof, Linq3 Technologies LLC, a Delaware limited liability company and the owner of all the issued and outstanding 27 capital stock of Linq3 (‘Linq3 Technologies’).” (Doc. 47.) 3 This Linq3 Technologies LLC, a Delaware entity, should not be confused with Defendant 28 Linq3 Technologies LLC, which is a Florida entity that was formed in 2019 under the name Linq3 Acquisition LLC. (Doc. 58 at 3–4.) 1 centered on a lottery product called “Play Now.” (Doc. 46 ¶¶ 76–77.) Play Now was 2 described in the Distribution Agreement as a “consumer solution for real-time, ticketless 3 lottery transactions.” (Id. ¶ 78.) To use the product, consumers would purchase a Play Now 4 lottery card—as opposed to a lottery ticket—that would be scanned at checkout to be 5 activated. (Doc. 59 at 6.) Consumers would then text a code located on the card to the 6 lottery to receive lottery numbers on their mobile phones for the next draw. (Id.) 7 Play Now was launched in 2017 under the name “Lottery Card” in Ohio, Georgia, 8 and Kentucky. (Doc. 46 ¶ 76.) Shortly after the product’s launch, Blackhawk and L3 9 approached the Texas State Lottery Commission about introducing Play Now in Texas. 10 (Id. ¶ 97.) The Commission informed them that because lottery play was not permitted on 11 mobile devices in Texas, Play Now could not be sold there. (Id.) Eager to capitalize on the 12 lucrative Texas lottery market, Blackhawk suggested to L3 that QuickTicket, which did 13 not require the use of a mobile device, and which Blackhawk was already distributing in 14 Canada for Ontario Lottery, might provide a viable solution in Texas and other states with 15 similar rules regarding mobile devices. (Id. ¶¶ 97–98.) On December 13, 2017, Blackhawk 16 gave L3 a PowerPoint presentation about QuickTicket. (Id. ¶ 98.) The presentation, which 17 was marked “confidential,” described both QuickTicket embodiments (Numbered and 18 Unnumbered Draw Tickets), highlighted QuickTicket’s unique features, and detailed the 19 QuickTicket purchase flow. (Id. ¶¶ 98–103.) The presentation also included several images 20 of QuickTicket products. (Id.) After the presentation, Blackhawk employee Ryan Koop 21 sent L3 personnel a copy of the slide deck that was used during the presentation. (Id. ¶ 104.) 22 Several months later, in May 2018, Blackhawk and L3 personnel again met to 23 discuss products that could be marketed to the Texas Lottery Commission. The 24 Commission had by then expressed interest in an “in-lane” lottery product—one that 25 consumers could purchase in an ordinary checkout lane, rather than a dedicated lottery 26 kiosk. (Id. ¶ 105.) At the meeting, Blackhawk again suggested that QuickTicket V2, a 27 “new version of [Blackhawk’s] [l]ottery [p]roduct in Canada,” “might be [a] good fit[] 28 for . . . TX.” (Id. ¶ 106.) L3 agreed, and the companies decided to pitch QuickTicket to the 1 Texas Lottery Commission. They did so on June 18, 2018. (Id. ¶¶ 108–09.) The pitch was 2 successful, and the companies worked to prepare QuickTicket for sale in Texas and other 3 states, including Arizona. This work included: (1) interfacing with the Texas Lottery’s 4 intermediary, IGT; (2) ensuring QuickTicket met the necessary technical and security 5 specifications to work properly; and (3) creating the look of the final, saleable product. 6 Blackhawk and L3 also negotiated with the Texas Lottery and retailers on pricing. (Id. 7 ¶ 110) 8 On November 20, 2017, before Blackhawk had given L3 the presentations 9 describing QuickTicket, L3 filed U.S. Patent Application Number 15/818,569 (the “569 10 Application”). (Id. ¶ 111.) The 569 Application was directed at the Play Now product and 11 said nothing about physical lottery tickets that consumers could purchase at retail locations. 12 (Id.) On June 18, 2018, the same day Blackhawk and L3 pitched QuickTicket to the Texas 13 Lottery Commission, L3 filed, without Blackhawk’s knowledge, U.S. Patent Application 14 Number 16/010,398 (the “398 Application”), a continuation-in-part of the 569 Application. 15 (Id. ¶ 112.) The 398 Application added “nearly 10 new drawings, and approximately six 16 additional columns of information, and disclosed new embodiments including a physical 17 lottery ticket—none of which had been disclosed in the [569 Application] or any other 18 application in the family history of the [398 Application].” (Id.) The Complaint alleges that 19 these new disclosures and embodiments constitute “stolen patent rights” based on 20 Blackhawk’s pre-existing intellectual property—the 135 and 894 Patents. (Id. ¶ 154.) 21 The 398 Application issued on March 12, 2019, as U.S. Patent Number 10,229,561 22 (the “561 Patent”). (Id. ¶ 118.) While the 398 Application was pending, on August 22, 23 2018, L3 filed another application, U.S. Patent Application Number 29/660,720 (the “720 24 Application”), that claimed the benefit of the 398 Application. The 720 Application issued 25 as U.S. Patent Number D877,812 on March 10, 2020 (the “812 Patent”). (Id. ¶ 116.) These 26 two patents—the 561 and 812 Patents, are the subject of the instant action. 27 Defendant ICI is a Florida corporation and wholly owned subsidiary of HI 28 Technology Corp, a Georgia corporation (“HITC”). (Doc. 58 at 3.) The HITC umbrella 1 consists of dozens of entities, including both direct and indirect subsidiaries, that are 2 generally referred to by the trade name “InComm.” (Id. at 3.) One such company is 3 Defendant e2, a direct HITC subsidiary, that was formed to hold the intellectual property 4 used by the InComm Family of entities. (Id.) HITC, ICI, and e2 are all headquartered in 5 Atlanta, Georgia. (Id.) InComm, like Blackhawk, is a leading provider of prepaid and 6 stored-value products and payment system solutions (e.g., gift cards, financial services 7 cards, etc.). (Id.) Blackhawk and InComm are direct competitors. 8 In February 2019, Defendant Linq3 was formed in Florida under the name Linq3 9 Acquisition LLC, for the purpose of acquiring some of L3’s assets, including L3’s patents, 10 patent applications, and ownership interest in Defendant SL Card. (Id. at 3–4.) Linq3 was 11 and remains a subsidiary of PRE Solutions, Inc., which is in turn a subsidiary of PRE 12 Holdings, Inc., a direct HITC subsidiary. (Id. at 4.) After the acquisition, L3 changed its 13 name from Linq3 Technologies LLC to L3 Innovations LLC and ceased its business 14 operations, Linq3 Acquisition LLC changed its name to Linq3 Technologies LLC, 15 and Linq3 assigned the patent applications it acquired from L3 to e2. (Id.) 16 Blackhawk initiated this action on May 6, 2021. (Doc. 1.) Blackhawk alleges that 17 Defendants stole its intellectual property by filing patents claiming QuickTicket V2, an 18 invention claimed in the Blackhawk Patents and disclosed to Defendants SL Card and L3 19 in confidence pursuant to the parties’ contractual agreement. (Doc. 63 at 6.) Blackhawk 20 seeks: (1) to have Gino Giunti and/or one or more Blackhawk employees named as 21 inventors on the 561 and 812 Patents; (2) sole ownership of the 561 and 812 Patents; (3) 22 injunctive relief prohibiting Defendants from using QuickTicket or claiming QuickTicket 23 in any future patent applications; and (4) injunctive relief enforcing the terms of the 24 Distribution Agreement. (Doc. 46 at 65–66.) Defendants seek to dismiss Blackhawk’s 25 claims for lack of subject matter jurisdiction, lack of personal jurisdiction, and failure to 26 state a claim upon which relief may be granted under Federal Rule of Civil Procedure 27 12(b)(1), (b)(2), and (b)(6). (Docs. 58, 59.) Because the Court concludes that it lacks 28 subject matter jurisdiction over all of Blackhawk’s claims and dismissal under Rule 1 12(b)(1) is warranted, the Court will not address Defendants’ Rule 12(b)(2) and (b)(6) 2 arguments. 3 II. LEGAL STANDARD 4 Federal Rule of Civil Procedure 12(b)(1) authorizes a court to dismiss claims over 5 which it lacks subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Issues of standing are 6 properly raised in a motion to dismiss under Rule 12(b)(1). White v. Lee, 227 F.3d 1214, 7 1242 (9th Cir. 2000). “When the motion to dismiss attacks the allegations of the complaint 8 as insufficient to confer subject matter jurisdiction, all allegations of material fact are taken 9 as true and construed in the light most favorable to the nonmoving party.” Renteria v. 10 United States, 452 F. Supp. 2d 910, 919 (D. Ariz. 2006) (citing Fed’n of African Am. 11 Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996)). 12 Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. 13 of Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies outside this limited 14 jurisdiction, and the burden of establishing the contrary rests upon the party asserting 15 jurisdiction.” Id. (citations omitted). Thus, on a motion to dismiss based on lack of 16 standing, the party invoking federal jurisdiction bears the burden of establishing the 17 elements of Article III standing. See Spokeo v. Robins, 578 U.S. 330, 338 (2016). “Where, 18 as here, a case is at the pleading stage, the plaintiff must ‘clearly . . . allege facts 19 demonstrating’ each element.” Id. (alteration in original) (quoting Warth v. Seldin, 422 20 U.S. 490, 518 (1975)). 21 III. DISCUSSION 22 A. Section 256 Claims 23 Article III authorizes federal courts to resolve only “cases” and “controversies.” 24 U.S. Const. art. III, § 2. “To state a case or controversy under Article III, a plaintiff must 25 establish standing.” Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 133 (2011). 26 Thus, whether a plaintiff has standing presents a “threshold question in every federal case 27 [because it determines] the power of the court to entertain the suit.” Warth, 422 U.S. at 28 490. To establish Article III standing, a plaintiff must show: “(1) it has suffered an ‘injury 1 in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural 2 or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; 3 and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a 4 favorable decision.” Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 5 U.S. 167, 180–81 (2000). 6 Defendants allege that Blackhawk lacks standing to pursue its claims for correction 7 of inventorship under 35 U.S.C. § 256.4 (Doc. 58 at 7–10; Doc. 59 at 6–7.) Section 256 8 reads: 9 Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an 10 issued patent, the Director may, on application of all the parties and assignees, with proof of the facts and such other 11 requirements as may be imposed, issue a certificate correcting such error. 12 The error of omitting inventors or naming persons who are not 13 inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The 14 court before which such matter is called in question may order correction of the patent on notice and hearing of all parties 15 concerned and the Director shall issue a certificate accordingly. 16 35 U.S.C. § 256. As interpreted by the Federal Circuit, section 256 “provides a cause of 17 action to interested parties to have the inventorship of a patent changed to reflect the true 18 inventors of the subject matter claimed in the patent.” Fina Oil & Chem. Co. v. Ewen, 123 19 F.3d 1466, 1471 (Fed. Cir. 1997); see also Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 20 1352, 1356 n.1 (Fed. Cir. 2004) (“A person who alleges that he is a co-inventor of the 21 invention claimed in an issued patent who was not listed as an inventor on the patent may 22 bring a cause of action to correct inventorship in a district court under 35 U.S.C. § 256.”). 23 Patent inventorship and ownership are distinct concepts. Beech Aircraft Corp. v. 24 EDO Corp., 990 F.2d 1237, 1248 (Fed. Cir. 1993). “[I]nventorship is a question of who 25 actually invented the subject matter claimed in a patent. Ownership, however, is a question 26

27 4 Because the Declaratory Judgment Act does not by itself confer federal subject matter jurisdiction, Nationwide Mut. Ins. Co. v. Liberatore, 408 F.3d 1158, 1161 (9th Cir. 2005), 28 Blackhawk’s claims for declaratory relief do not “arise under” federal law for jurisdictional purposes. 1 of who owns legal title to the subject matter claimed in a patent, patents having the 2 attributes of personal property.” Id. Nevertheless, “[a]t the heart of any ownership analysis 3 lies the question of who first invented the subject matter at issue, because the patent right 4 initially vests in the inventor who may then, barring any restrictions to the contrary, transfer 5 that right to another.” Id. Thus, Blackhawk, in seeking to correct inventorship on 6 Defendants’ patents, also seeks to be named at least a co-owner of those patents. (Doc. 46 7 at 65–66.) 8 To establish injury-in-fact under section 256, a plaintiff must allege facts 9 demonstrating that it has a “concrete financial interest” or a “particularized reputational” 10 interest in the patent at issue. See Chou v. Univ. of Chi., 254 F.3d 1347, 1358–59 (Fed. Cir. 11 2001); Shukh v. Seagate Tech., LLC, 803 F.3d 659, 663 (Fed. Cir. 2015); Larson v. Correct 12 Craft, Inc., 569 F.3d 1319, 1326 (Fed. Cir. 2009). Chou is illustrative. In that case, the 13 plaintiff, a graduate student and research assistant, alleged that her name had been 14 improperly omitted from several patents and sought correction of inventorship under 15 section 256. Chou, 254 F.3d at 1353. Although the terms of her university employment 16 contract required that she assign her inventions to the university, Chou argued she had 17 standing because, if named as an inventor, she would be entitled under university policy 18 to royalties, licensing revenue, and equity in start-up companies. Id. at 1355. The Federal 19 Circuit agreed and held that Chou’s financial interest in the patents, while less than an 20 ownership interest, was sufficiently concrete to grant her standing to assert a section 256 21 claim. Id. at 1358–59. 22 The Federal Circuit reached the opposite conclusion in Larson. 569 F.3d 1319. 23 There, the plaintiff, a draftsman who designed boat components, assigned all his rights 24 in the contested patents to his employer. Id. at 1322. Years later, when he “discovered his 25 rights” as an inventor, he brought an action to correct inventorship under section 256. Id. 26 at 1321–22. The court determined that Larsen lacked standing, because he had 27 “affirmatively transferred title to the patents to [his employer], and he [stood] to reap no 28 benefit from a preexisting licensing or royalties arrangement.” Larson, 569 F.3d at 1326. 1 Thus, naming him as an inventor on the disputed patents would have provided him no 2 redress. See Informatics Applications Grp., Inc. v. Shkolnikov, No. 1:11-cv-726, 2011 WL 3 4804870, at *5 (E.D. Va. Oct. 11, 2011). Together, Chou and Larson illustrate that in 4 order to have standing to pursue a section 256 claim, a plaintiff must have an actual, 5 concrete interest in the challenged patent. Absent such an interest, any alleged error in 6 the patent’s stated inventorship inflicts merely abstract, hypothetical injury. And such 7 injury is insufficient to invoke federal jurisdiction under Article III. 8 In the instant case, Blackhawk petitions the Court to correct inventorship on the 9 561 and 812 Patents to indicate that Gino Giunti and one or more Blackhawk employees 10 are “at least joint inventor[s]” of the patents. (Doc. 46 ¶¶ 156, 177.) Blackhawk argues it 11 has standing to asserts its section 256 claims for two independent reasons. “First, 12 Blackhawk has standing with respect to inventorship claims on behalf of Gino Guinti 13 based upon his assignment to Blackhawk. Second, Blackhawk has standing with respect 14 to inventorship claims on behalf of other Blackhawk employees, like Ryan Koop.” (Doc. 15 63 at 18.) The Court will consider each argument in turn. 16 1. Assignment from Gino Giunti 17 Blackhawk contends that it has standing to assert its section 256 claims based on 18 the rights it was assigned by Gino Giunti. (Doc. 63 at 19–20.) In response, Defendants 19 argue Blackhawk has not alleged facts sufficient to establish injury-in-fact on its section 20 256 claims because, even accepting the allegations in the Second Amended Complaint 21 as true, Giunti lacks standing to bring a section 256 claim on his own behalf. (Doc. 76.) 22 Thus, even if he assigned Blackhawk the right to seek correction of inventorship on his 23 behalf, Blackhawk lacks standing to do so. (Id.) Further, according to the Second Amended 24 Complaint, Giunti assigned Blackhawk only his rights under the 135 Patent and “related 25 patents and applications.” (Doc. 58 at 9.) Thus, because Defendants’ patents are not 26 “related” to the 135 Patent under the terms of the Assignment Agreement, Blackhawk has 27 no standing to challenge Defendants’ patents based on the agreement. (Id.) 28 Giunti is not now, and has never been, a Blackhawk employee. (Doc. 46 ¶ 165.) 1 The assignment of his patent rights to Blackhawk is governed exclusively by the 2 Assignment Agreement he and Blackhawk executed on August 30, 2016. (Doc. 58-1 at 3 155–60.) In the agreement, Giunti assigned Blackhawk the provisional and utility 4 applications that issued as the 135 Patent and 5 all patents that issue from or claim priority to such patent applications, and all continuations, continuations-in-part, 6 divisionals, extensions, substitutions, reissues, re- examinations, foreign equivalents, and renewals, of any of the 7 foregoing, and any patents or patent applications from which any of them claim priority or that claim priority from any of 8 them. 9 (Doc. 58-1 at 157.) With respect to those patents and applications, Giunti assigned 10 Blackhawk: 11 All rights, privileges, and protections of any kind whatsoever 12 of Assignor accruing under any of the Assigned Patents. . . .

13 . . . .

14 All rights to any and all claims and causes of actions, with respect to any of the Assigned Patents, whether accruing 15 before, on or after the Effective Date, including all rights to and claims for damages, restitution and injunction and other legal 16 and equitable relief for past, present and future infringement, misappropriation, violation, misuse, breach or default, with the 17 right but no obligation to petition or sue for, or otherwise seek, such legal and equitable relief and to collect, or otherwise 18 recover, any such damages. 19 (Id.) 20 Blackhawk seeks to have Giunti named as a joint inventor on the 561 and 812 21 Patents. (Doc. 46 ¶¶ 156, 165.) A person can qualify as a joint inventor “only if he 22 contributes to the conception of the claimed invention.” Eli Lilly, 376 F.3d at 1359; see 23 also Fina Oil & Chem. Co. v. Owen, 123 F.3d 1466, 1473 (Fed. Cir. 1997) (“[T]o be a joint 24 inventor, an individual must make a contribution to the conception of the claimed 25 invention that is not insignificant in quality, when that contribution is measured against the 26 dimension of the full invention.”). Further, the person seeking to be named joint inventor 27 must demonstrate that he acted jointly with the named inventors. 28 [T]he alleged joint inventor seeking to be listed on a patent 1 must demonstrate that his labors were conjoined with the efforts of the named inventors. Joint inventorship . . . can only 2 arise when collaboration or concerted effort occurs—that is, when the inventors have some open line of communication 3 during or in temporal proximity to their inventive efforts: “What is clear is that the statutory word ‘jointly’ is not mere 4 surplusage. For persons to be joint inventors under Section 116, there must be some element of joint behavior, such as 5 collaboration or working under common direction, one inventor seeing a relevant report and building upon it or 6 hearing another’s suggestion at a meeting.” 7 Eli Lilly, 376 F.3d at 1359 (quoting Kimberly-Clark Corp. v. Procter & Gamble Distrib. 8 Co., 973 F.2d 911, 917 (Fed. Cir. 1992)). Absent an allegation that the putative inventor 9 acted in conjunction with the named inventors, any claim under section 256 must 10 necessarily fail. 11 Although the Second Amended Complaint alleges Giunti “contributed to the 12 conception of one or more claims” on Defendants’ patents (Doc. 46 ¶¶ 156, 177), the 13 Complaint is utterly bereft of allegations that Giunti acted in conjunction with the 14 individuals named as inventors on those patents. Instead, Blackhawk argues that Giunti 15 (and, through the Assignment Agreement, Blackhawk itself) has standing to seek 16 correction of inventorship on Defendants’ patents based solely on his having invented 17 QuickTicket, a concept allegedly incorporated into Defendants’ patents. (Doc. 63 at 18– 18 20.) But “inventing something in an earlier patent or patent application does not 19 automatically make one an inventor of patents that incorporate the earlier invention.” 20 Horizon Medicines LLC v. Alkem Labs. Ltd., No. 2021-1480, 2021 WL 5315424, at *4 21 (Fed. Cir. Nov. 16, 2021). There must also be “corroborated collaboration” between the 22 putative inventor and the inventors named on the challenged patent. Id. Indeed, because 23 “the inventors as named in an issued patent are presumed to be correct,” Eli Lilly, 376 F.3d 24 at 1358 (quoting Hess v. Advanced Cardiovascular Sys., Inc., 106 F.3d 976, 980 (Fed. Cir. 25 1997)), the party “alleging misjoinder or non-joinder of inventors must meet the heavy 26 burden of proving its case by clear and convincing evidence and must provide evidence to 27 corroborate the alleged joint inventor’s conception” and collaboration with the named 28 inventors. Id. at 1359. Because the Second Amended Complaint contains no allegations of 1 such collaboration, there is no legal basis for Giunti to be named as an inventor on 2 Defendants’ patents. Horizon, 2021 WL 5315424, at *4. Thus, Blackhawk cannot 3 plausibly allege that Giunti has a “concrete financial” or “reputational” interest in 4 Defendants’ patents such that he would have standing to bring section 256 claims against 5 Defendants. Blackhawk’s argument that it has standing based on the Assignment 6 Agreement therefore fails a fortiori. 7 2. Blackhawk Employees 8 Blackhawk also argues it has standing to assert its section 256 claims on behalf of 9 one or more of its employees. (Doc. 63 at 20.) Defendants respond that Blackhawk’s 10 claim that one or more of its employees contributed to the conception of the 561 and 11 812 Patents is merely a “vague and implausible allegation,” because “the sole aspect of the 12 [561 and 812 Patents] that supposedly supports Blackhawk’s inventorship claims are 13 Numbered Draw Tickets, which is a concept Blackhawk purports to own by virtue of the 14 [135 and 894 Patents] for which Mr. Giunti, not any Blackhawk employee, is the sole 15 named inventor.” (Id. at 9–10.) Defendants are right. Blackhawk has not alleged facts 16 sufficient to support its contention that one or more of its employees contributed to the 17 inventions claimed in the 561 and 812 Patents. The Second Amended Complaint contains 18 only three cursory allegations regarding Blackhawk employees’ contributions to the claims 19 of the 561 and 812 Patents: 20 1. “[Blackhawk employee] Mr. Koop . . . disclosed the operation of the QuickTicket 21 products to [L3] employees.” (Doc. 46 ¶ 150.) 22 2. “[O]ne or more Blackhawk employees contributed to the conception of one or more 23 claims of [the 561 and 812 Patents].” (Id. ¶¶ 156, 177.) 24 3. “[Giunti] worked collaboratively with one more Blackhawk employees, including 25 Ryan Koop, to design the QuickTicket products.” (Id. ¶¶ 165; 186.) 26 These conclusory allegations fall well short of plausibly alleging that Blackhawk 27 has standing to pursue claims under section 256 on its employees’ behalf. See Twombly, 28 550 U.S. at 558–59 (allegations must state a claim that is “plausible on its face”). Although 1 the Second Amended Complaint contains the general allegation that one or more 2 Blackhawk employees contributed to QuickTicket’s invention, it fails to specifically 3 identify any employee’s purported contribution or describe the manner in which any 4 employee “worked collaboratively” with Giunti to develop QuickTicket. See In re Gilead 5 Sciences Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (courts need not accept 6 “conclusory” allegations, “unwarranted deductions of fact, or unreasonable inferences”). 7 Simply stating that Blackhawk employees contributed to QuickTicket’s invention, without 8 more, is insufficient to plausibly allege Article III standing. See Spokeo, 578 U.S. at 338 9 (“Where, as here, a case is at the pleading stage, the plaintiff must clearly allege facts 10 demonstrating each element [of standing].”). And, as Defendants note, Blackhawk’s 11 allegations that its employees helped invent QuickTicket are implausible given that 12 Blackhawk’s own patents (the 434, 135, and 894 Patents), which allegedly claim 13 QuickTicket, name only Giunti as inventor. (Doc. 69 at 4–5.) Had one or more Blackhawk 14 employees indeed contributed to QuickTicket’s invention, Blackhawk would seemingly 15 have named them as inventors on their filed patents, as the Patent Act requires. See 35 16 U.S.C. § 115(a) (“An application for patent . . . shall include, or be amended to include, the 17 name of the inventor for any invention claimed in the application.”). Blackhawk’s failure 18 to do so belies its argument that section 256 standing obtains based on its employees’ 19 inventorship. Further, even had Blackhawk employees worked collaboratively with Giunti 20 to develop the QuickTicket concept, Blackhawk would yet lack standing because, as 21 with Giunti, there is no allegation that the employees collaborated with the inventors 22 named on the challenged patents.5 Thus, as a matter of law, they cannot be named joint 23 inventors on Defendants’ patents. See Eli Lilly, 376 F.3d at 1359. 24 Moreover, even were the Court to conclude that the Second Amended Complaint 25 plausibly alleges Blackhawk employees contributed to the claims set forth in the 561 and 26 5 Despite Blackhawk’s argument to the contrary, the mere fact that Koop disclosed 27 QuickTicket to L3 employees in no way suggests that he contributed to the inventions claimed in Defendants’ patents. See Eli Lilly, 376 F.3d at 1359 (holding that, to be an 28 inventor with standing to bring a section 256 claim, the alleged inventor must have “contribute[d] to the conception of the claimed invention.”). 1 812 Patents, and worked collaboratively with the inventors named on those patents, the 2 Complaint contains no allegation that the employees assigned their putative rights in 3 Defendants’ patents to Blackhawk. Absent such an allegation, Blackhawk is unable to 4 demonstrate that it has a concrete interest in the Patents, even if its employees do. See 5 Shkolnikov, 2011 WL 4804870, at *5 (“Whether an employer has standing to assert a 6 Section 256 claim and have its employee named an inventor of a patent often turns on 7 whether the employee has assigned his putative ownership rights in the patent to the 8 employer.”); Armor Screen Corp. v. Storm Catcher, Inc., No. 07-cv-81091, 2008 WL 9 5746938, at *10 (S.D. Fla. Nov. 10, 2008) (finding employer lacked standing to assert 10 Section 256 counterclaim on behalf of non-party employee where the employee had not 11 assigned the employer his rights in the patent). Thus, Blackhawk cannot plausibly assert a 12 concrete interest in the 561 and 812 Patents based on its employees’ alleged inventorship, 13 and the Court lacks subject matter jurisdiction over Blackhawk’s section 256 claims. 14 B. Breach of Contract Claims 15 Defendants also argue the Court lacks jurisdiction over Blackhawk’s surviving 16 state-law claims. (Doc. 58 at 10–11; Doc. 59 at 6–7.) Blackhawk responds that (1) the 17 Court has supplemental jurisdiction over the state-law claims because those claims form 18 part of the same case or controversy as the section 256 claims (Doc. 63 at 16), and (2) even 19 if the Court lacks supplemental jurisdiction over the state-law claims, it has original 20 jurisdiction over them, because they arise under federal patent law (Doc. 63 at 14). 21 Because the Court has determined that it lacks original jurisdiction over 22 Blackhawk’s section 256 claims, those claims cannot serve as a jurisdictional anchor for 23 Blackhawk’s breach of contract claims. See 28 U.S.C. § 1367(a); Larson, 569 F.3d at 1325 24 (“[I]f the jurisdiction-conferring patent claim is dismissed for lack of standing, the district 25 court cannot exercise supplemental jurisdiction over surviving state-law claims because 26 there was never an Article III case or controversy.”); Salmon Spawning & Recovery All. v. 27 U.S. Customs & Border Prot., 550 F.3d 1121, 1133 (Fed. Cir. 2008) (“[S]upplemental 28 jurisdiction cannot be exercised when a court does not have original jurisdiction over at 1 least one claim in the suit.”). Thus, for Blackhawk to proceed on its state-law claims, 2 those claims must have an independent jurisdictional basis. Blackhawk argues that they 3 do, and that the claims come within the Court’s original jurisdiction, because they “arise 4 under” federal patent law. (Doc. 63 at 14–15.) 5 Federal courts have exclusive jurisdiction over all suits “arising under any Act of 6 Congress relating to patents.” 28 U.S.C. § 1338(a). A case can “arise under” federal patent 7 law in two ways. Gunn v. Minton, 568 U.S. 251, 257 (2013).6 First, a case arises under the 8 federal patent laws when those laws create the cause of action asserted. Id.; see also Am. 9 Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916) (“A suit arises under 10 the law that creates the cause of action”). This is commonly referred to as the “creation” 11 test. Second, “even where a claim finds its origins in state rather than federal law,” the 12 Supreme Court has “identified a ‘special and small category’ of cases in which arising 13 under jurisdiction still lies.” Gunn, 568 U.S. at 258. The contours of this category have not 14 always been clear. Id. (“In outlining the contours of this slim category, we do not paint on 15 a blank canvas. Unfortunately, the canvas looks like one that Jackson Pollock got to first.”). 16 In 2013, however, the Court clarified that “federal jurisdiction over a state law claim will 17 lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) 18 capable of resolution in federal court without disrupting the federal-state balance approved 19 by Congress. Id. (citing Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 20 U.S. 308, 314 (2005)). 21 Analyzed under this standard, it is clear that Blackhawk’s state-law claims do not 22 “arise under” the federal patent laws for purposes of § 1338. Even assuming the claims 23 necessarily raise a federal patent law issue, and the issue is actually disputed, the Court 24 lacks jurisdiction because the issue is not “substantial” in the relevant sense. The 25 substantiality inquiry is focused not “on the importance of the issue to the plaintiff’s case

26 6 For a reason unknown to the Court, the parties’ briefs both fail to mention, much less argue, Gunn, the Supreme Court’s recent (and controlling) case addressing arising-under 27 jurisdiction in the context of § 1338. Instead, the parties’ briefs cite primarily Federal Circuit cases predating (and in some instances explicitly invalidated by) Gunn. E.g., Air 28 Measurement Techs., Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007). 1 and to the parties before it,” but rather on “the importance of the issue to the federal system 2 as a whole.” Id. at 260 (“[I]t is not enough that the federal issue be significant to the 3 particular parties in the immediate suit; that will always be true when the state claim 4 ‘necessarily raise[s]’ a disputed federal issue.” (second alteration in original)). The patent 5 law issues implicated in this case carry no such significance. Id. at 261. 6 In Gunn, the petitioner, Minton, had his patent declared invalid in federal district 7 court under the “on sale” bar, 35 U.S.C. § 102(b), which prevents an inventor from 8 obtaining a patent on an invention that was “on sale in [the United States], more than one 9 year prior to the date of the application.” Gunn, 568 U.S. at 254. Minton believed his 10 attorneys’ failure to timely raise an “experimental use” argument cost him the suit and 11 his patent.7 Id. at 255. Accordingly, he sued his former attorneys for legal malpractice in 12 Texas state court. The causation element of Minton’s malpractice claim required the Texas 13 court to adjudicate a “case within a case” involving the experimental use exception. The 14 court ultimately held in the attorneys’ favor on the merits, and Minton appealed. On 15 appeal, he argued that because his malpractice claim was based on an alleged error in a 16 patent case, it “arose under” federal patent law for purposes of § 1338 and was subject to 17 the exclusive jurisdiction of the federal courts. Id. at 255. 18 The Supreme Court disagreed. Although the state malpractice claim necessarily 19 required application of federal patent law, and although the patent issue was actually 20 disputed, the Court held that the federal issue in the case was not “substantial” with 21 respect to the federal system as a whole. Id. at 259–60. The Court gave several reasons for 22 this conclusion. First, allowing the Texas court to resolve the patent issue would not 23 “undermine the development of a uniform body of patent law,” because “federal courts 24 are of course not bound by state court case-within-a-case patent rulings.” Id. at 262. 25 Second, even if a novel question of patent law arose in the state court proceeding, it would 26 still “at some point be decided by a federal court in the context of an actual patent case, 27 7 The “experimental use” exception permits “an inventor who seeks to perfect his discovery 28 [to] conduct extensive testing without losing his right to obtain a patent for his invention.” Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 64 (1998). 1 with review in the Federal Circuit.” Id. Third, even if the state court’s adjudication was 2 “preclusive under some circumstances, the result would be limited to the parties and patents 3 that had been before the state court.” Id. at 263. Fourth, that the federal courts are more 4 familiar with patent law does not mean all state-law cases raising patent law issues belong 5 in federal court. “[T]he possibility that a state court will incorrectly resolve a state claim is 6 not, by itself, enough to trigger the federal courts’ exclusive patent jurisdiction, even if the 7 potential error finds its root in a misunderstanding of patent law.” Id. 8 Consistent with the Supreme Court’s holding in Gunn, the Federal Circuit has 9 adopted a three-factor framework to inform the substantiality determination. See Inspired 10 Dev. Grp., LLC v. Inspired Prod. Grp., LLC, 938 F.3d 1355, 1364 (Fed. Cir. 2019); 11 NeuroRepair, Inc. v. The Nath Law Grp., 781 F.3d 1340, 1345 (Fed. Cir. 2015). 12 A substantial federal issue is more likely to be present if: 13 a) a pure issue of federal law is dispositive of the case, b) the court’s resolution of the issue will control 14 numerous other cases, [and] 15 c) the Government has a direct interest in the availability of a federal forum to vindicate its own 16 administrative action. 17 Inspired Dev. Grp., 938 F.3d at 1364 (cleaned up). Each of these factors—commonly 18 referred to as the “NeuroRepair” factors—counsels against the exercise of federal 19 jurisdiction in this case. 20 Blackhawk argues its breach of contract claims “arise under” federal patent law 21 because § 10 of the Distribution Agreement prohibits the use or sale of Blackhawk’s 22 “intellectual property,” which is defined to include “patents, patent rights, copyrights, trade 23 secrets, [and] trademarks,” among other things.8 (Doc. 47 at 13.) Therefore, determining 24 whether Defendants breached § 10 of the parties’ Agreement necessarily requires 25 8 While the Second Amended Complaint also alleges that Defendants breached § 8 of the 26 Distribution Agreement, which prohibits the use of Blackhawk’s confidential information, Blackhawk does not argue that resolution of that claim necessarily involves substantial 27 questions of patent law. Instead, Blackhawk appears to argue that because the Court has original jurisdiction over its claim involving § 10 of the Distribution Agreement, the Court 28 has supplemental jurisdiction over its remaining state-law claims and its section 256 claims. (Doc. 63 at 16.) 1 comparing Blackhawk’s patents and intellectual property to Defendants’ patents and 2 intellectual property—an analysis involving the application of federal patent law.9 (Doc. 3 63 at 15–16.) 4 First, the patent law issue embedded in the § 10 claim is not dispositive of whether 5 Blackhawk is entitled to relief. Rather, the claim “involves a question of federal law, at 6 most, as only one of several elements needed to prevail.” Inspired Dev. Grp., 938 F.3d at 7 1364 (quoting NeuroRepair, 781 F.3d at 1346). To succeed on the § 10 claim, Blackhawk 8 must also prove that the Distribution Agreement is valid and controlling on Defendants 9 (particularly Defendants ICI and e2, who were not parties to the Agreement), and that 10 Defendants alleged use of QuickTicket constitutes an impermissible “use” under the 11 Agreement. Should Blackhawk fail to do so, it will not prevail on its § 10 claims. 12 Accordingly, the first NeuroRepair factor weighs against § 1338 jurisdiction. 13 Second, to the extent Blackhawk’s breach of contract claims raise an embedded 14 patent issue, adjudication of that issue, as in Gunn, will take the form only of a “case 15 within a case.” Regardless of how a state court may ultimately resolve this hypothetical 16 “case within a case,” its decision will have no real-world impact on the validity, scope, or 17 ownership of the parties’ patents. See Gunn, 568 U.S. at 261; see also Inspired Dev. Grp., 18 938 F.3d at 1365 (“[A] state court cannot invalidate patents. . . . [A] state court’s 19 determination of patent validity does not have precedential effect on a district court.”). 20 Thus, although determining whether Defendants breached § 10 of the Distribution 21 Agreement may require assessment of whether the subject matter claimed in the 561 and 22 812 Patents was claimed previously in the 135 and 894 Patents, there is little to suggest a 23 state court’s hypothetical analysis on this issue will affect “uniformity in patent law.” See 24 Inspired Dev. Grp., 938 F.3d at 1364, 1366; see also Gunn, 568 U.S. at 261–62 (“Congress 25 ensured such uniformity by vesting exclusive jurisdiction over actual patent cases in the 26 federal district courts and exclusive appellate jurisdiction in the Federal Circuit. In 27 9 Blackhawk did not make this jurisdictional argument in the Complaint. Instead, the 28 Complaint alleges only that the breach of contract claims are justiciable as an exercise of the Court’s supplemental jurisdiction. (Doc. 46 ¶ 26.) 1 resolving the nonhypothetical patent questions those cases present, the federal courts are 2 of course not bound by state court case-within-a-case patent rulings.”). Further, 3 Blackhawk’s breach of contract claims do not present novel questions of patent law that 4 could impact other cases. Inspired Dev. Grp., 938 F.3d at 1366; see also Gunn, 568 U.S. 5 at 262 (“If the question arises frequently, it will soon be resolved within the federal system, 6 laying to rest any contrary state court precedent; if it does not arise frequently, it is unlikely 7 to implicate substantial federal interests.”). 8 Third, “the government has no direct interest in this contract dispute between private 9 parties.” Inspired Dev. Grp., 938 F.3d at 1368–69. The embedded patent law issues 10 implicated in this case are “fact-bound” and case specific; they involve comparing the 11 claims of four particular patents to determine whether this particular invention was 12 impermissibly used by these particular Defendants. The government’s particular interest in 13 having this case—or any other single patent action—heard in a federal forum is limited. 14 Id. at 1369. Thus, the final NeuroRepair factor also favors dismissal. 15 “There is no doubt that resolution of a patent issue in the context of a state[-law 16 breach of contract] action can be vitally important to the particular parties in that case. But 17 something more, demonstrating that the question is significant to the federal system as a 18 whole, is needed. That is missing here.” Gunn, 568 U.S. at 263–64. Absent such federal 19 significance, this Court lacks subject matter jurisdiction over Blackhawk’s state-law 20 claims. Dismissal under Rule 12(b)(1) is warranted. 21 IV. CONCLUSION 22 Accordingly, 23 IT IS ORDERED granting Defendants’ motions to dismiss for lack of subject 24 matter jurisdiction (Docs. 58, 59), without leave to amend. 25 // 26 // 27 // 28 // 1 IT IS FURTHER ORDERED directing the Clerk of the Court to enter judgment 2|| and close this case. 3 Dated this 9th day of March, 2022. 4 ° Wichal T. Hburde 6 Michael T. Liburdi 7 United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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