Summary of Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., U.S. Supreme Court (2002)
Cause of action: The following is a cause of action for dispute over patent claim.
Procedural History: Trial court ruled in favor of petitioner on its complaint and held it was unnecessary to decide the counterclaim on the merits.
Issue(s): Under federal rules rules of civil procedure, does a federal court have appellate jurisdiction over a case in which the complaint does not allege a claim arising under federal patent law, but the answer contains a patent-law counterclaim?
Does a counterclaim arising under federal patent law give rise to removal to a federal court?
Court’s Rationale/Reasoning: Prior cases have only went on the basis of whether federal defenses could establish “arising under” jurisdiction, but those cases were under the premise of whether the complaint itself was based on a properly pleaded complaint. This is new ground, as the Court deals with the answer to a complaint. Nonetheless, a counterclaim is not an appropriate means of trying to remove venue in a particular case. The PL is the master of the complaint, and this would seriously shift the power in such a historically entrenched rule of procedure. Additionally, the potential for expanding the amount of cases with removability. Also, this would confuse the “well-pleaded complaint doctrine.”
Respondent argues that by allowing a counterclaim under federal patent law to give rise to federal jurisdiction, the legislative goal of enforcing patent law would be furthered. Irregardless, the Court says it is not their responsibility.
Rule: U.S.C. § 1338(a): “…whether a case “arises under” patent law “must be determined from what necessarily appears in PL’s statement of his own claim in the bill or declaration.”
Holding: No. A PL’s well-plead complaint (as it pertains to patent law) must “establish either that federal patent law creates the cause of action or that the PL’s right to relief necessarily depends on resolution of a substantial question of federal patent law.” Here the respondent improperly argued a counterclaim to serve as its basis for a district court’s “arising under” jurisdiction.
Concurring: Since patent law has its own federal rules, the counterclaim should be able to stand as a counterclaim in which “rising under” jurisdiction would allow the case to be removed to federal court. The Court here, touches on District Court jurisdiction, which is left untouched by Congress.