Camsoft Data Systems, Inc. v. Southern Electronics Supply, Inc.

638 F. App'x 255
CourtCourt of Appeals for the Fifth Circuit
DecidedSeptember 21, 2015
Docket15-30133
StatusUnpublished
Cited by7 cases

This text of 638 F. App'x 255 (Camsoft Data Systems, Inc. v. Southern Electronics Supply, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Camsoft Data Systems, Inc. v. Southern Electronics Supply, Inc., 638 F. App'x 255 (5th Cir. 2015).

Opinion

PER CURIAM: *

CamSoft Data Systems, Inc. (CamSoft) filed a motion to remand to state court for lack of subject-matter jurisdiction. 1 In a previous appeal, we held that the district court erred by denying the motion for remand. 2 CamSoft subsequently moved for costs and attorney’s fees under 28 U.S.C. § 1447(c), which the district court denied. We affirm.

I

When determining subject-matter jurisdiction, we accept as true the allegations stated in the complaint. 3 Because the availability of attorney’s fees and costs under § 1447(c) turns on whether the removing party had an “objectively reasonable basis” for believing the district court had subject-matter jurisdiction, 4 our recitation of the facts also relies on the allegations set forth in OamSoft’s state-court petition.

CamSoft became a licensed provider of a wireless internet system owned by Tropos Networks, Inc. (Tropos), which allowed for seamless wireless internet access on a citywide scale. After successfully deploying *257 free wireless internet access in downtown Baton Rouge, CamSoft’s owner, Carlo MacDonald, learned that New Orleans was interested in implementing a city-wide video surveillance system. CamSoft began working with Active Solutions, LLC (Active) and Southern Electronics Supply, Inc. (Southern) to develop such a system. CamSoft was responsible for, inter alia, integrating the wireless internet technology into the system.

CamSoft, Active, and Southern deployed the surveillance system in a successful pilot project in New Orleans. The three entities then “formed a joint venture for the future sale of said wireless surveillance system” and submitted proposals to install the system in Baton Rouge and on a larger scale in New Orleans.

Shortly before the New Orleans proposal was submitted, Dell, Inc. (Dell) arranged a meeting with Active, Southern, and New Orleans officials without Cam-Soft’s knowledge. Dell had an existing contract to provide technology to the State of Louisiana and could use that contract to circumvent bidding requirements for public projects. Dell allegedly sought to replace CamSoft in the joint venture and provide cameras and the Tropos wireless internet technology for the surveillance system. Southern and Active executed non-disclosure agreements with Dell and provided Dell with proprietary information belonging to CamSoft.

Former New Orleans officials who had worked on the pilot project formed Net-Methods, LLC (NetMethods). NetMeth-ods eventually joined forces with Dell and Tropos to market a wireless surveillance system, allegedly using intellectual property that belonged to Southern, Active, and CamSoft. In other words, after attempting to cut CamSoft out of the joint venture, Southern and Active were themselves cut out of their arrangement with Dell and replaced by NetMethods.

Active and Southern filed suit against Dell. CamSoft- alleges that Active and Southern’s complaint “erroneously failed to acknowledge the ownership rights of CamSoft to the wireless video surveillance system.”

After unsuccessfully attempting to intervene in the suit against Dell, 5 CamSoft filed suit against Active and Southern in Louisiana state court, seeking to have its ownership rights in the surveillance system declared and seeking a share of the proceeds of Active and Southern’s suit against Dell. CamSoft’s state-court petition also alleged that Active and Southern filed a patent application for the wireless surveillance system, which failed to acknowledge CamSoft or MacDonald as an inventor of the system. The petition did not seek relief under any cause of action provided by the federal patent laws. Rather, CamSoft relied on various statutory causes of action in Louisiana state law as well as breach of fiduciary duty and breach of contract. CamSoft later filed an amended petition, adding several defendants including Dell, Tropos, and NetMethods. No party contends that the claims added in the amended petition are relevant in the present appeal.

On December 14, 2009, the defendants removed CamSoft’s suit to federal district court. They alleged that the dispute over the ownership of the surveillance system necessarily required the resolution of a substantial question of federal patent law—inventorship of the surveillance system.

CamSoft timely filed a motion to remand for lack of federal subject-matter jurisdiction. The magistrate judge entered *258 a report that recommended denial of the motion for remand. The magistrate concluded that CamSoft’s claim of ownership of the surveillance system, while grounded in Louisiana state law, necessarily required resolution of the question of inven-torship under federal patent law. The magistrate further concluded that Cam-Soft did not allege any alternative theories of ownership. The district court accepted the magistrate’s analysis without comment and denied the motion for remand.

Pursuant to 28 U.S.C.' § 1292(b), Cam-Soft moved for permission to file an interlocutory appeal of the order denying its motion to remand. The district court denied this motion.

CamSoft contends that because it was unable to obtain interlocutory review, it feared it would have had to spend several years litigating the case to final judgment in the district court, only to have that judgment vacated on appeal for lack of subject-matter jurisdiction. Therefore, to ensure that the district court had subject-matter jurisdiction, CamSoft filed an amended complaint adding claims under federal antitrust laws and the federal RICO statute. CamSoft’s amended complaint also alleged an alternative basis for ownership of the surveillance system. Although the CamSoft’s state court petition alleged that it had formed a joint venture with Southern and Active, the amended federal complaint expressly maintained that the joint venture also gave CamSoft an ownership interest in the surveillance system.

The district court dismissed CamSoft’s claims based on a joint venture as well as the RICO and federal antitrust claims. The district court initially concluded that the remaining claims still required resolution of a substantial question of patent law. But the court later asked the parties to outline their remaining claims. After reviewing the parties’ outlines, the district court concluded that although it originally had federal question jurisdiction, all of the federal causes of action had been dismissed. The court then sua sponte declined to exercise supplemental jurisdiction over the remaining state-law claims, pursuant to 28 U.S.C. § 1367(c), and remanded the ease to state court. The disposition of the purported question of patent law that was initially critical to the district court’s jurisdiction is not clear from the record.

The parties then filed cross appeals in the Federal Circuit. CamSoft sought to appeal,

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Cite This Page — Counsel Stack

Bluebook (online)
638 F. App'x 255, Counsel Stack Legal Research, https://law.counselstack.com/opinion/camsoft-data-systems-inc-v-southern-electronics-supply-inc-ca5-2015.