It's the sad truth that patent lawyers aren't often found haunting the halls of a state courthouse. Like bankruptcy and ERISA litigation, patent infringement cases cannot be filed in state court. As a result, patent lawyers are often uncomfortable with state court litigation. And state court judges are sometimes uncomfortable adjudicating issues of federal patent law, mostly because of the rarity with which they arise in the state system. But state court is just where you might have to head for certain patent law disputes involving licensing agreements.

That was what the Federal Circuit recently held in Inspired Development Group v. Inspired Products Group, d/b/a KidsEmbrace. The Inspired Development Group owned a series of design patents covering children's car seats shaped like cartoon and comic book characters, the most important of which was one in the shape of Batman. A dispute arose over royalty payments between Inspired and its exclusive licensee, KidsEmbrace. Inspired filed its lawsuit in federal court, alleging claims for breach of contract and unjust enrichment. After KidsEmbrace won a summary judgment, Inspired, perhaps drawing inspiration from the Joker, challenged the jurisdiction of the federal court and ultimately won a do-over in state court on appeal.

In dismissing the case, the Federal Circuit relied on a 2013 decision from the U.S. Supreme Court holding that federal jurisdiction is lacking over a claim of legal malpractice arising from a federal patent infringement trial. This was so, even if the state court would be required to adjudicate federal patent law issues to determine whether malpractice was committed. And, according to the Federal Circuit, the same held true for Inspired's claim for unjust enrichment. Even if the state court would need to determine whether KidsEmbrace sold infringing Batman car seats to determine whether it was unjustly enriched, a sufficiently "significant" federal question was still lacking.

The court, however, left the federal courthouse door potentially open for slightly different cases. It emphasized the traditional contractual relationship existing between Inspired and KidsEmbrace, lest a creative litigant try to disguise an ordinary patent infringement claim as one for "unjust enrichment." It also suggested that a federal forum might be available for state-law claims that seek prospective relief and which raise an issue of patent infringement. The court expressed concern about a possible clash between a state court injunction and potential future federal cases in which the federal court's determination might conflict with the state court's judgment. However, since Inspired's lawsuit sought only backward-looking damages, such concerns were not raised.

While not dictating any specific outcome, the Inspired opinion suggests two potential strategies for litigants seeking to avoid a state-court forum for a licensing dispute raising issues of patent infringement or validity. First, on the transactional side, one might consider including a clause in the license agreement stating that a material breach by the licensee will automatically terminate the license. That way, the licensor may be able to join a federal claim for patent infringement along with its claim for breach of contract to obtain a federal venue. Second, if a federal claim for infringement is unavailable, one might consider asserting a state-law claim authorizing injunctive relief. In Connecticut, for example, a court may enter injunctive or other equitable relief to remedy a violation of the Connecticut Unfair Trade Practices Act.

Depending on the circumstances of the case, such a claim may present a sufficiently "significant" federal issue to open the federal courthouse doors.

The nuances of federal question jurisdiction are complex enough to land even normally savvy litigators in a padded room at Arkham Asylum. But hopefully this article will place a few helpful tools in your utility belt to avoid allowing your opponent to snatch victory from the jaws of defeat, as in this recent decision of the Federal Circuit.

John L. Cordani Jr. is a partner at Robinson & Cole in Hartford.