Chapter §13.01 U.S. District Courts

JurisdictionUnited States

§13.01 U.S. District Courts

[A] Subject Matter Jurisdiction over Patent Cases

[1] Statutory Basis: 28 U.S.C. §1338

The fundamental substance of subject matter jurisdiction concerns the types of cases that courts may hear. Congress has determined that the federal district courts have original and exclusive subject matter jurisdiction in claims for relief that arise under the patent laws.1 Title 28 ("Judiciary and Judicial Procedure") of the United States Code provides:

§1338. Patents, plant variety protection, copyrights, mask works, designs, trademarks, and unfair competition

(a) The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights. For purposes of this subsection, the term "State" includes any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, American Samoa, Guam, and the Northern Mariana Islands. 2

The America Invents Act of 2011 (AIA) amended the wording of §1338(a) to "more fully preclud[e] state court jurisdiction over patent legal claims."3

[2] "Arising Under" Jurisdiction

In accordance with 28 U.S.C. §1338(a), the U.S. district courts have original subject matter jurisdiction, exclusive of state courts, over claims for relief that "aris[e] under" the patent laws, in whole or in part.4 In Christianson v. Colt Indus. Operating Corp.,5 the Supreme Court explicated the operation of §1338 through the "well-pleaded complaint rule" for patent cases. The Court held that §1338 "arising under" subject matter jurisdiction extends only to those cases in which a well-pleaded complaint establishes that (1) federal patent law creates the cause of action, or (2) the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.6 Each of these categories of cases is further examined below.

The federal district courts lack §1338 jurisdiction, however—that is, a claim for relief does not arise under the patent laws—"if there is a theory of liability for each of the asserted claims for which it is not necessary to resolve an issue of federal patent law."7 Thus, lawsuits that raise, but do not turn on, patent issues may be brought in state court. For example, a state court might adjudicate a dispute over a patent license, which is a type of contract.8 As the Supreme Court recognized more than a century ago, " '[t]he Federal courts have exclusive jurisdiction of all cases arising under the patent laws, but not of all questions in which a patent may be the subject-matter of the controversy.' "9

Legal malpractice actions, for example, are tort actions traditionally brought in state courts.10 Nevertheless, until 2013 the Federal Circuit held the view that the federal courts had exclusive jurisdiction over patent-related legal malpractice actions "when the adjudication of the malpractice claim requires the court to address the merits of the plaintiff's underlying patent infringement lawsuit."11 As discussed infra, the Supreme Court rejected the Federal Circuit's view in an important 2013 decision, Gunn v. Minton.12

[a] "Creation" Test

Section 1338(a) subject matter jurisdiction most directly exists through satisfaction of the so-called "creation" test, "when federal law creates the cause of action asserted."13 Patent infringement lawsuits brought by a patent owner against one or more accused infringers,14 as well as declaratory judgment actions in which a party threatened with infringement liability seeks a declaration of noninfringement and/or patent invalidity,15 clearly satisfy the creation test and fall within category (1) of the Christianson well-pleaded complaint rule. The creation test "admits of only extremely rare exceptions" and "accounts for the vast bulk of suits that arise under federal law."16

[b] "Serious Federal Interest" Test

[i] Christianson (U.S. 1988)

More problematic are cases such as Christianson, an antitrust lawsuit that tangentially raised patent law issues.17 In such cases, the Christianson Court explained, courts must decide whether the dispute falls within category (2) of the well-pleaded complaint rule; that is, does the plaintiff's right to relief necessarily depend on resolution of a patent law issue, even though the complaint does not assert a patent law cause of action per se.18 The Court held that Christianson's lawsuit, which only "obliquely" raised an issue of patent law,19 did not satisfy category (2).20

It should also be noted that as a case brought under the federal antitrust laws,21 Christianson did not involve a state-versus-federal jurisdictional question. Rather, the issue in Christianson was whether appeal from the federal district court's decision should be taken to the relevant regional (Seventh) Circuit or to the Federal Circuit.22

[ii] Gunn (U.S. 2013)

In contrast to the entirely federal dispute in Christianson, the Supreme Court most recently examined §1338(a) subject matter jurisdiction through the lens of a state court case alleging legal malpractice in the handling of a patent infringement lawsuit. Reversing the Texas Supreme Court (which had relied on Federal Circuit authority), the Court in Gunn v. Minton23 unanimously held that §1338(a) jurisdiction did not exist over Minton's patent-related malpractice action because it raised no "serious federal issue."24 Thus, the malpractice action did not belong in federal court.

In 2000, Minton, a former securities broker, obtained a patent on a system for interactive securities trading known as the Texas Computer Exchange Network (TEXCEN). When Minton sued NASD (National Association of Securities Dealers, Inc.) and NASDAQ for infringement in federal district court, the accused infringers succeeded in invalidating Minton's patent under the on sale bar of 35 U.S.C. §102(b) (pre-AIA)25 based on Minton's pre-critical date lease of TEXCEN to a third-party securities brokerage. The Texas federal district court hearing the infringement suit refused to grant Minton's motion for reconsideration. In that motion Minton argued for the first time that the lease did not place the invention on sale because it had been executed for experimental purposes, thus negating §102(b).26

After the Federal Circuit affirmed the district court's invalidation of Minton's patent,27 Minton sued his former litigation counsel in Texas state court for malpractice. Minton argued that if counsel had earlier raised the experimental use defense,28 the patent would not have been invalidated and Minton would have prevailed in the infringement lawsuit. Granting summary judgment of no malpractice, the state court agreed with Minton's counsel that the lease was not for purposes of experimental use as defined by the patent laws. Thus Minton's patent was still invalid under §102(b) and Minton could not have prevailed on infringement even if the experimental use argument had been timely raised.29

Minton appealed through the Texas state courts, raising yet another new argument that the state trial court did not have subject matter jurisdiction over Minton's malpractice action because it was based on an alleged error in a patent litigation. Thus, Minton contended, his malpractice action was one "arising under" federal patent law under 28 U.S.C. §1338(a). As such, Minton contended that the action should have been heard by a federal district court rather than the Texas state court. Although the Texas Court of Appeals rejected Minton's argument, a majority of the Supreme Court of Texas agreed, relying primarily on Federal Circuit authority.30

Granting certiorari, the Supreme Court in Gunn reversed the Texas Supreme Court. Federal subject matter jurisdiction under §1338(a) did not lie. As a threshold matter, Minton's state law malpractice claim indisputably was not created by federal patent law and thus did not arise under §1338(a) by virtue of the "creation" test described supra. Rather, the issue in Gunn was whether Minton's malpractice claim fit within a "special," "small," and "slim" category of state law-originated cases that nevertheless have been considered to arise under federal law because they invoke a "serious federal interest."31

Because the doctrine delimiting this narrow category had become "unruly,"32 the Supreme Court in Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg.33 condensed its earlier pronouncements on the doctrine into the following inquiry: "[d]oes the 'state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities' "?34 Parsing the Grable inquiry, the Gunn Court explained that

federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Where all four of these requirements are met . . . jurisdiction is proper because there is a "serious federal interest in claiming the advantages thought to be inherent in a federal forum," which can be vindicated without disrupting Congress's intended division of labor between state and federal courts. 35

No such "serious federal interest" justified the exercise of federal jurisdiction over Minton's malpractice claim, the Gunn Court concluded. Concededly, the first and second requirements of Grable were satisfied; that is, Minton's malpractice case required resolution of a federal patent question (i.e., Minton's experimental use argument for negating §102(b) invalidity of his...

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