Case Name: Nanoprecision Products, Inc. v. Avago Technologies Limited, USA, et al.
Case No.: 2015-1-CV-277012

Plaintiff nanoPrecision Products, Inc. (“nPP”) brings this action for breach of contract and misappropriation of trade secrets against defendants Avago Technologies Limited, USA (“Avago Limited”), Avago Technologies U.S., Inc. (“Avago Inc.”), Avago Technologies General IP (Singapore), Pte. Ltd. (“Avago IP”) (collectively the “Avago Defendants”), and Laurence R. McColloch (“McColloch”) (collectively “Defendants”).

According to the allegations of the operative first amended complaint (“FAC”), nPP is a leader in complex material forming, particularly using nanoprecision metal stamping to form “benches” for fiber optic communications. (FAC, ¶ 2.) In July 2010 and May 2012, nPP entered into non-disclosure agreements (“NDAs”) with Avago Limited and Avago Inc. to facilitate discussions regarding nPP’s “capabilities to precision stamp various components for fiber optic applications, including optical benches,” and the development of a stamped Micro Optical Bench (“MOB”) product for the Avago Defendants. (Id., at ¶¶ 8-36.) At the outset of the parties’ discussions, Defendants were not knowledgeable about the precision stamping process. (Id., at ¶¶ 11-13, 21.) Moreover, nPP’s precision stamping process was a substantial improvement over the silicon bench product manufactured by the Avago Defendants. (Ibid.) Pursuant to the NDAs, nPP disclosed highly confidential and proprietary information to Defendants regarding its precision stamping techniques as well as the structure of precision stamped components/products. (Id., at ¶¶ 11-12, 14-15, 17-21, 23-25, 27, 34.) At all times, nPP treated such information as trade secrets. (Id., at ¶¶ 8-9.) nPP also provided Defendants with a stamped flat mirror surface, results of testing regarding the use of the mirror surface, documents marked confidential and proprietary, designs of a MOB, and solid models of a MOB. (Id., at ¶¶ 14-15, 17, 19, 22-24.)

After several years of discussions, the parties appeared to reach a deal regarding the development of a stamped MOB product for the Avago Defendants. (FAC, ¶¶ 34-37.) However, nPP’s efforts to memorialize the deal were rebuffed and Defendants abruptly, and without explanation, advised nPP that “there would be no deal.” (Id., at ¶¶ 37-38.) After August 2012, nPP never heard from Defendants again concerning the stamped MOB project. (Id., at ¶ 37.)

Unbeknownst to nPP, shortly after the parties’ first meeting in 2010, Defendants “began to work on a patent application for a Stamped Metal Optic for Use in an Optical Communications Module” (the “Application”). (FAC, ¶¶ 39, 41.) “Avago IP and McColloch brazenly used nPP’s propriety [sic] and confidential information as the primary basis to prepare the application.” (Ibid.) The Application “included the concepts developed by nPP and provided to [Defendants] under the NDA[s], which were clearly marked and identified as confidential and proprietary … including: a stamped bench with a curved mirror or a flat mirror, a fiducial for a pick-and-place operations with visual alignment, gussets for structural integrity of the mirror surface, pockets for locating a ball lens, and pockets with alignment edges for accurately locating electro-optical chips such as edge-emitting lasers or photodiodes.” (FAC, ¶ 40.) The Application was filed on October 23, 2012, assigned to Avago IP, and listed McColloch as the sole inventor. (Id., at ¶ 39.) In 2014, the United States Patent and Trademark Office (“USPTO”) published the Application. (Id., at ¶ 40.) “After learning of the publication, nPP … notified [the Avago Defendants] of the improper misappropriation, disclosure, and use of [its] confidential and proprietary information in connection with the patent filing,” but the Avago Defendants “refused to return by assignment the misappropriated confidential and proprietary information.” (Id., at ¶ 42.)

Based on the foregoing, nPP filed the FAC against Defendants, asserting causes of action for: (1) breach of written contract (against Avago Limited and Avago Inc.); (2) misappropriation of trade secrets in violation of Civil Code section 3426, et seq. (against Defendants); (3) intentional interference with contractual relations (against Avago IP and McColloch); (4) unfair competition in violation of Business and Professions Code section 17200 (against Defendants); (5) conversion (against the Avago Defendants); (6) specific recovery of personal property (against Avago IP); (7) breach of fiduciary duty (against Avago Limited, Avago Inc., and McColloch); (8) fraud (against Defendants); and (9) declaratory relief (against Defendants).

Currently before the Court are Defendants’ demurrer to and motion to strike the FAC. On September 28, 2015, nPP filed papers in opposition to the demurrer and motion to strike. Defendants filed reply papers on October 7, 2015.

I. Request for Judicial Notice

Defendants’ request for judicial notice of the complaint, FAC, and Petition to Institute Derivation Proceeding Pursuant to U.S.C. § 135 is GRANTED. (See Evid. Code, § 452, subds. (c) [permitting judicial notice of official acts of the executive departments of the United States], (d) [permitting judicial notice of court records].)

II. Demurrer

Defendants demur to the third through ninth causes of action of the FAC on the grounds of failure to allege facts sufficient to constitute claim and lack of subject matter jurisdiction. (See Code Civ. Proc., § 430.10, subds. (a), (e).)

A. Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’ ” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

B. Failure to Allege Facts Sufficient to Constitute a Cause of Action

Defendants argue that the third through ninth causes of action fail to state a claim because they are preempted by the California Uniform Trade Secrets Act (“CUTSA”).

1. Applicable Law Regarding CUTSA Preemption

The CUTSA is codified in Civil Code sections 3426 through 3426.11 and provides for the civil recovery of “actual loss” or other injury caused by the misappropriation of trade secrets. Under the CUTSA, misappropriation means improper acquisition, or non-consensual disclosure or use of another’s trade secret. (Civ. Code,
§ 3426.1, subd. (b).) The CUTSA “has been characterized as having a ‘comprehensive structure and breadth.’ ” (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 954 (“K.C. Multimedia”), quoting AccuImage Diagnostics Corp. v. Terarecon, Inc. (N.D. Cal. 2003) 260 F.Supp.2d 941, 953 (“Acculmage”).) The Sixth District Court of Appeal has held that the breadth of the statute “suggests a legislative intent to preempt the common law.” (Id.) In other words, “[a]t least as to common law trade secret misappropriation claims, ‘UTSA occupies the field in California.’” (Id., quoting AccuImage, supra, 260 F.Supp.2d at p. 954.)

The CUTSA includes a specific provision concerning preemption, which provides, in pertinent part, as follows: “(a) Except as otherwise expressly provided, this title does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets. [¶] (b) This title does not affect (1) contractual remedies, whether or not based upon misappropriation of a trade secret, (2) other civil remedies that are not based upon misappropriation of a trade secret, or (3) criminal remedies ….” (Civ. Code, § 3426.7.)

The preemption inquiry for those causes of action not specifically exempted by section 3426.7 focuses on whether the common law claims are based on the same “nucleus of facts” that would be used to support a claim for misappropriation of trade secrets. (K.C. Multimedia, supra, 171 Cal.App.4th at pp. 958-959.) A claim cannot simply depend on a “different theory of liability” to avoid the CUTSA’s preemptive effect. (Id., at p. 957-959 & fn. 7.) Rather, a claim avoids preemption only if it is “based on facts [independent] [and] distinct from the facts that support the misappropriation claim.” (Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 499 (“Angelica”).) While the determination of whether a claim is based on trade secret misappropriation is largely factual and determined on a case-by-case basis, the courts have held that preemption applies to claims for conversion, unjust enrichment, negligence, unfair competition both under common law and under the UCL, breach of confidence, fraud, and interference with contract. (See e.g., Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 236 (“Silvaco”) [holding that claims for conversion, common count, common law unfair business practices, intentional and negligent misrepresentation were superseded by the CUTSA] disapproved on other grounds in Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 337; see also K.C. Multimedia, supra, 171 Cal.App.4th at p. 960 [concluding that the plaintiff’s breach of confidence claim was superseded because “the conduct at the heart of” both the breach of confidence claim and the CUTSA claim was “the asserted disclosure of trade secrets”].)

Moreover, the CUTSA preempts claims based on the misappropriation of confidential and/or proprietary information, whether or not that information meets the statutory definition of trade secret, unless the plaintiff can identify some other law that confers property rights protecting the information. (Mattel, Inc. v. MGA Entm’t, Inc. (2010) 782 F.Supp.2d 911, 986-987 (“Mattel”); Loop AI Labs Inc v. Gatti (N.D. Cal., Sept. 2, 2015, No. 15-CV-00798-HSG) 2015 WL 5158461, at *3 (“Loop”) [“the Court agrees with the vast majority of courts that have addressed this issue, and finds that CUTSA supersedes claims based on the misappropriation of information that does not satisfy the definition of trade secret under CUTSA, absent a property interest conferred on that information by some other provision of law”]; SunPower Corp. v. SolarCity Corp. (N.D. Cal., Dec. 11, 2012, No. 12-CV-00694-LHK) 2012 WL 6160472, at *3-5 (“SunPower”) [“In order for the taking of information to constitute wrongdoing, the information must be property. Information is not property unless some ‘positive law’ makes it so. [Citation.] Thus, … in order to state a claim based on the taking of information, a plaintiff must show that he has some property right in such information (i.e. that the information is proprietary). [Citation.] If the basis of the alleged property right is in essence that the information is that it is ‘not … generally known to the public,’ [citation] then the claim is sufficiently close to a trade secret claim that it should be superseded notwithstanding the fact that the information fails to meet the definition of a trade secret. To permit otherwise would allow plaintiffs to avoid the preclusive effect of CUTSA (and thereby plead potentially more favorable common-law claims) by simply failing to allege one of the elements necessary for information to qualify as a trade secret.”]; see also Silvaco, supra, 184 Cal.App.4th at p. 239, fn. 22 [“We emphatically reject the … suggestion that the uniform act was not intended to preempt ‘common law conversion claims based on the taking of information that, though not a trade secret, was nonetheless of value to the claimant.’ ”].)

With that in mind, the Court turns to the question of whether the third through ninth causes of action are based on the same “nucleus of facts” as nPP’s claim for trade secret misappropriation.

2. The Third, Fourth, Sixth, Seventh, Eighth Causes of Action are Preempted by the CUTSA

Upon review of the FAC, the Court finds that the third, fourth, sixth, seventh, and eighth causes of action are based on the same nucleus of facts as the claim for trade secret misappropriation.

In its claim for trade secret misappropriation, nPP incorporates the general allegations of the FAC and specifically alleges that the Avago Defendants acquired its “confidential and proprietary trade secret information” pursuant to the NDAs; the NDAs required the Avago Defendants to maintain the secrecy of such information; the Avago Defendants took its confidential and proprietary information, without its consent, and included such information in the Application; thereafter, the Application was published, which destroyed the confidentiality and secrecy of the information; Defendants knew that the information included in the Application was confidential and proprietary; it took reasonable measures to protect its confidential and proprietary information; and it suffered damages as a result of the use and publication of its confidential and proprietary information. (FAC, ¶¶ 49-53.) Thus, this claim is based on the fact that Defendants wrongfully obtained and used nPP’s confidential and proprietary information, regarding its precision stamping process and the structure of precision stamped components/products, to prepare the Application under the guise of wanting to develop a business relationship with nPP and a stamped MOB.

The third, fourth, sixth, seventh, and eighth causes of action expressly incorporate the general allegations of the FAC and the claim for trade secret misappropriation. Furthermore, each claim is based on the same facts regarding Defendants’ alleged misappropriation of nPP’s confidential and proprietary information. The Court will address each cause of action in turn.

In the third cause of action for intentional interference with contractual relations, nPP alleges that Avago IP and McColloch were aware of the existence of the NDAs; Avago IP and McColloch committed intentional acts designed to induce a breach or disruption of the NDAs; and, as a result of Avago IP and McColloch’s actions, Avago Limited and Avago Inc. failed to perform their obligations under the NDAs. (FAC, ¶¶ 54-58.) These specific allegations do not set forth any wrongful conduct by Avago IP and McColloch other than the alleged misappropriation of nPP’s confidential and proprietary information as described in the general allegations of the FAC. In opposition, nPP asserts in a conclusory manner that “Avago IP and McColloch engaged in acts to induce the breach of the NDAs that do not implicate [its] trade secret information.” (Opp’n., p. 5.) However, nPP fails to articulate the specific acts taken by Avago IP and McColloch that do not implicate the alleged misappropriation of its confidential and proprietary information. Moreover, based on facts set forth in the FAC, the Court is unable to discern any other interference with nPP’s contractual relations with Avago Limited and Avago Inc. apart from Avago IP and McColloch’s alleged use of nPP’s confidential and proprietary information to prepare the Application. Thus, this claim is preempted by the CUTSA.

With regard to the fourth cause of action for unfair competition in violation of Business and Professions Code section 17200, nPP alleges that the Avago Defendants “deceived [it] to enter into the [NDAs] in order for Defendants to obtain [its] confidential information;” Defendants “misrepresented and deceived [it] regarding a potential business relationship in order to eventually file [the Application] which wrongfully attributes nPP’s confidential information as the sole invention of McColloch;” Defendants “engaged in unfair or fraudulent business acts or practices by deceiving [it];” and it “suffered damage by this deception and misrepresentation as well as being deprived of its own right if elected to seek patent protection for such information.” (FAC, ¶¶ 60-62.) It is readily apparent from these allegations that the fourth cause of action is based on the same nucleus of facts as the claim for trade secret misappropriation, i.e., Defendants wrongfully obtained and used nPP’s confidential and proprietary information to prepare the Application under the guise of wanting to develop a business relationship with nPP and a stamped MOB. In opposition, nPP merely asserts in a conclusory manner that Defendants’ misrepresentations and deceptions “are separate and distinct from Defendants’ misappropriation ….” (Opp’n., p. 6.) This argument is not well-taken as nPP does not allege any independent or distinct facts in support of the fourth cause of action.

Next in the sixth cause of action for specific recovery of personal property, nPP alleges that it is the owner of information provided to Defendants under the NDAs; the Avago Defendants are wrongfully in “possession of [its] materials and documents marked confidential and disclosed under [the NDAs];” it is “entitled to possession of any property rights in such information, including any patent rights arising from such property rights;” the Avago Defendants “have taken [its] confidential information and placed it in the Application assigned to and owned by Avago IP;” it is entitled to “possession of any property rights in that Application, including any patent rights;” “[t]he confidential information taken by [the Avago Defendants] is very valuable and … any patent that may issue from such information is of very high value;” and it “has suffered damage by the use and publication of its confidential and proprietary information as well as being deprived of its own right if elected to seek patent protection for such information in whole or in part.” (FAC, ¶¶ 68-72.) Based on these allegations, it is clear that this cause of action is based entirely upon Avago IP’s alleged misappropriation of nPP’s confidential and proprietary information.

In opposition, nPP argues that this claim is not preempted because it is based on tangible property (e.g., documents, designs, and solid models), in which it has property rights independent of any alleged trade secret. (Opp’n., p. 7.) A claim for conversion or specific recovery of tangible personal property (as opposed to intangible confidential information) is based on facts independent and distinct from a claim of trade secret misappropriation. (See Angelica, supra, 220 Cal.App.4th at p. 508 [holding that a conversion claim against a former employee who took documents with him upon leaving the plaintiff’s employ was not displaced by the CUTSA, where the conversion claim could be based on the taking of “tangible property” that was not a trade secret]; see also Loop, supra, 2015 WL 5158461, at *3 [“No reasonable application of CUTSA’s savings clause precludes a cause of action based on an … alleged theft of a piece of tangible property.”].) However, nPP’s argument that the sixth cause of action alleges such a claim is not well-taken. While the sixth cause of action mentions that Avago IP is in possession of “materials and documents,” which could reasonably be construed to mean physical property, the claim seeks to recover only “possession of any property rights in [nPP’s] information,” as opposed to the documents or materials themselves. (FAC, ¶¶ 69-72, emphasis added.) Consequently, the sixth cause of action is preempted by the CUTSA.

With respect to the seventh cause of action for breach of fiduciary duty, nPP alleges that a fiduciary relationship existed between it and Avago Limited, Avago Inc., and McColloch “whereby [they] were to preserve the confidential and proprietary status as well as trade secret status of all nPP information;” Avago Limited, Avago Inc., and McColloch “breached their fiduciary duty by communicating nPP’s confidential and proprietary information to Avago IP for inclusion in [the Application];” nPP did not consent to the communication or disclosure of its information; and nPP “suffered damage by the improper communication of its confidential and proprietary information as well as being deprived of its own right to elected [sic] to seek patent protection for such information.” (FAC, ¶¶ 73-76.) Based on these allegations, the fiduciary duty imposed by the NDAs was limited to Avago Limited, Avago Inc., and McColloch’s obligation to maintain the “confidential and proprietary status as well as trade secret status of all nPP information.” (FAC, ¶ 74.) Consequently, this claim is based on nothing more than the alleged misappropriation of nPP’s confidential and proprietary information. (See Mattel, supra, 782 F.Supp.2d at p. 989.)

Finally, in the eighth cause of action for fraud, nPP alleges that McColloch, Avago Limited, and Avago Inc. falsely represented that the Avago Defendants were “interested in working together with nPP for the development of a stamped MOB product which would be supplied by nPP to [the Avago Defendants];” McColloch, Avago Limited, and Avago Inc. did not intend to enter into any working relationship with nPP and encouraged nPP to disclose its confidential, proprietary, and trade secret information to them; in reliance on the misrepresentations, nPP disclosed its confidential, proprietary, and trade secret information to McColloch, Avago Limited, and Avago Inc.; and nPP “suffered damage by the use, disclosure and publication of its confidential and proprietary information and trade secrets as well as being deprived of its own right if elected to seek patent protection for such information.” (FAC, ¶¶ 77-84.) These allegations do not set forth any facts independent or distinct from the facts supporting nPP’s claim for trade secret misappropriation. Thus, the claim is preempted by the CUTSA.

3. The Fifth and Ninth Causes of Action are not Preempted by the CUTSA

The Court finds that the fifth and ninth causes of action are not based on the same nucleus of facts as nPP’s claim for trade secret misappropriation.

In the fifth cause of action, nPP alleges that it is the owner of “confidential and proprietary information and trade secrets provided to [Defendants] under the [NDAs];” the Avago Defendants are in possession of its “documents and files marked confidential and proprietary;” Avago IP and McColloch “placed [its] confidential information in the Application;” it “is entitled to possession of any property right in such withheld information and [the Application];” the Avago Defendants “improperly took [its] property, without [its] consent, in the form of improperly withheld documents and the right to file or refrain from filing a patent application;” it “demanded return of its property by asking for the return of confidential documents and filed disclosed under the [NDAs] and for the assignment of the pending [Application], but [the Avago Defendants] refused to do both;” “[a]s a result of this misconduct, nPP has suffered damage by the improper possession, use, and publication of its confidential and proprietary information as well as being deprived of its own right if elected to seek patent protection for such information.” (FAC, ¶¶ 63-67.) Here, nPP claim for conversion seeks damages based, in part, on Avago IP’s wrongful possession of its physical property (i.e., documents). Thus, unlike the sixth cause of action for recovery of specific property, the fifth cause of action is based on facts that are independent and distinct from the claim for trade secret misappropriation. (See Angelica, supra, 220 Cal.App.4th at p. 449 [“Plaintiff also asserted that upon the employee’s resignation, the employee retained thousands of pages of documents that plaintiff owns. Plaintiff asked that the employee return the documents, and the record shows he failed to do so. Although the documents may have little if any value in light of the jury’s finding defendants did not appropriate any trade secrets, the defendant employee’s possession of them will support a conversion claim independent of any trade secret.”]; see also Loop, supra, 2015 WL 5158461, at *3.)

Next, the ninth cause of action for declaratory relief general seeks a declaration of nPP’s rights under the NDAs and nPP’s property rights in the Application. (FAC, ¶¶ 86-89.) The request for a declaration of nPP’s rights under the NDAs is necessarily based on the terms of the NDAs and is independent of any trade secret misappropriation claim. While Defendants assert that the claim is duplicative of the claim for breach of contract to the extent it seeks a declaration of nPP’s rights under the NDA, the fact that the ninth cause of action may be duplicative of the first cause of action is not a ground on which a demurrer may be sustained. (See Blickman Turkus, L.P. v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 890.)

4. Conclusion

In light of the foregoing, the demurrer on the ground of failure to allege facts sufficient to state a claim is OVERRULED as to the fifth and ninth causes of action and SUSTAINED, with 10 days’ leave to amend, as to the third, fourth, sixth, seventh, and eighth causes of action.

C. Subject Matter Jurisdiction

Defendants argue that the Court lacks subject matter jurisdiction over the fifth and ninth causes of action because, as pleaded, they require the Court to decide the issue of inventorship. Specifically, Defendants contend that to the extent the claims seek to have the Court determine ownership of the Application, the Court would necessarily be required to make a determination with regard to the issue of inventorship and the USPTO has exclusive jurisdiction to hear such a dispute. (Mem. Ps. & As., pp. 12-13.)

Defendants’ argument is not well-taken because it attacks only part of the remaining causes of action and a defendant cannot demur generally to part of a cause of action. (Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778; PH II, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682; Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274.) With respect to the fifth cause of action for conversion, that claim is predicated, in part, on Avago IP’s wrongful possession and retention of physical documents that are owned by nPP. To the extent the claim is based on Avago IP’s conversion of the physical documents, the Court need not make any determination as to the ownership of the Application, let alone inventorship. Additionally, with respect to the ninth cause of action, nPP seeks a declaration of its rights under the NDA. It does not appear that the Court must make any determination regarding the ownership of the Application in order to rule on that portion of nPP’s claim for declaratory relief.

Accordingly, the demurrer on the ground of lack of subject matter jurisdiction is OVERRULED.

III. Motion to Strike

Defendants move to strike portions of the FAC in which nPP asks the Court to determine that it is entitled to ownership of and/or property rights in the Application. (Ntc. Mtn., pp. 2-3.) Defendants contend that a determination of ownership (i.e., that nPP has property rights in the Application) necessarily requires a determination of inventorship (i.e., who invented the technology described in the Application) and the USPTO has “exclusive jurisdiction over such a determination and the resulting remedy.” (Mem. Ps. & As., p. 2.) Defendants contend that nPP’s sole basis for seeking ownership of the Application is that it was the source of the ideas and/or information behind the invention rather than Defendants and that allegation goes to the heart of the question of inventorship. Defendants further assert that questions of inventorship are not justifiable outside the USPTO until a patent has actually issued and, “[e]ven after [a] patent issues, any questions concerning inventorship remain within the exclusive jurisdiction of federal courts.” (Mem. Ps. & As., p. 6.) Defendants point out that nPP has filed a petition with the USPTO that seeks the same relief as the FAC with respect to the Application.

In opposition, nPP asserts that the Court has subject matter jurisdiction to determine whether it is entitled to property rights in the Application because it asks the Court to determine ownership, not inventorship, and its ownership of the Application does not necessarily depend on the resolution of an issue of federal patent law (i.e., inventorship).

As nPP persuasively argues, the FAC seeks a judgment declaring it the owner of the provisional patent application, not a determination that it was the inventor of the technology described in the Application. nPP’s request is based on Defendants’ allegedly fraudulent misappropriation of its confidential and proprietary information and breach of the NDAs when it filed the Application. It is well-established that “[c]laims concerning patent ownership do not create federal jurisdiction.” (Quest Nutrition, LLC v. Board of Supervisors of LSU Agricultural and Mechanical College (C.D. Cal., July 8, 2014, No. CV 14-02005 SJO EX) 2014 WL 3362061, at *3, quoting Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1264 (9th Cir.1999), superseded by statute on other grounds as explained in Abrego Abrego v. Dow Chem. Co. (9th Cir.2006) 443 F.3d 676, 681.) “While ‘[i]t may seem strange at first blush that the question of whether a patent is valid and infringed ordinarily is one for federal courts, while the question of who owns the patent rights and on what terms typically is a question exclusively for state courts … [, i]t is well settled that if the patentee pleads a cause of action based on rights created by a contract, or on the common law of torts, the case is not one ‘arising under’ the patent laws.’ ” (Ibid. quoting Jim Arnold Corp. v. Hydrotech Sys., Inc. (Fed.Cir.1997) 109 F.3d 1567, 1572.) Because nPP’s claims concerning patent ownership are based on rights created under state law, the claims do not arise under the patent laws. That nPP’s remedy for some of these state law claims may “tangentially involve issues of patent ownership does not convert the state causes of action into federal law claims.” (Ibid. citing Prize Frize, Inc. v. Matrix (U.S.) Inc. (9th Cir. 1999) 167 F.3d 1261, 1264; see also HIF Bio, Inc. v. Yung Shin Pharm. Indus. Co. (Fed.Cir.2010) 600 F.3d 1347, 1355–1357 [holding that claims for conversion, intentional interference with contractual relations, fraud, unfair competition, breach of implied contract, and ownership did not arise under patent law].)
Accordingly, the motion to strike is DENIED.