Addressing a decision by California district court denying a motion to remand a trade secret case back to the California state court where it was originally filed, the US Court of Appeals for the Federal Circuit held that the removal to federal court was improper and vacated the district court’s decision. Intellisoft Ltd. v. Acer America Corp., Case No. 19-1522 (Fed. Cir. Apr. 3, 2020) (Dyk, J.).

Intellisoft and its president, Bruce Bierman, sued Acer in California state court alleging various state law claims, including a trade secret misappropriation claim premised on an Acer patent allegedly containing Intellisoft trade secrets conceived by Bierman. During the case, Acer filed an untimely counterclaim, without seeking leave of court, requesting declaratory judgment that Bierman was not an inventor of its patent. Acer then removed the case to federal court based on the assertion that the inventorship issues arose under the patent laws. Intellisoft moved the district court to remand the case back to state court. After the motion was denied, both Intellisoft and Bierman appealed.

On appeal, the Federal Circuit found the remand denial to be improper. The Court found no basis for removal of Intellisoft’s trade secret misappropriation action and explained that the claim did not necessarily raise patent law issues, even though Intellisoft’s theory was solely premised on Bierman’s alleged inventorship of Acer’s patent. The Court further ruled that Acer’s inventorship counterclaim did not support removal because Acer had not moved for leave to file its counterclaim out of time, and thus, the assertion in issue was not made in an operative pleading. The Court remanded the case to the district court with instructions to remand to California state court.