The Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.: the return of patent appeals to the regional circuits.

• Author: Huang, Peter O.

1. INTRODUCTION

   When Congress created the Federal Circuit in 1982, it gave the new court appellate jurisdiction over patent appeals from district courts around the nation. (1) That jurisdictional grant remained essentially exclusive for twenty years, but the Supreme Court recently opened the door for the return of at least some patent appeals to the regional courts of appeal in The Holmes Group v. Vornado Air Circulation Systems. (2)

   In Holmes, the Court held that the Federal Circuit does not have jurisdiction to decide a case in which the complaint does not state a claim based on patent law, even if the defendants subsequently raise a counterclaim of patent infringement. Jurisdiction for such a case now lies with the regional court of appeal for the district court that originally heard the case. Although it is still too early to tell if patent cases will once again become commonplace in the regional circuits, patent cases have begun to flow from the Federal Circuit back to the regional courts of appeal.

   These patent cases may pose serious challenges to appellate practitioners who have developed general practices in the regional circuits. Patent cases often involve extremely arcane technology and complex legal issues. They are also often high stakes, "bet the company" cases involving heavy investments in litigation. In order to successfully meet these challenges, general appellate practitioners handling patent appeals should plan to take advantage of existing sources of specialized knowledge in patent law.

2. THE HOLMES CASE

   1. Background: The District Court and Federal Circuit Litigation

      Vornado Air Circulation Systems and The Holmes Group are competing manufacturers of fans and heaters who have litigated against each other several times. (3) At one point, Holmes filed an action in the United States District Court for the District of Kansas seeking declaratory relief on various trade dress claims. (4) In response, Vornado filed a compulsory counterclaim alleging patent infringement. (5)

      The district court granted Holmes's request for declaratory relief regarding trade dress. (6) It also stayed all proceedings related to Vornado's patent counterclaim and stated that the patent counterclaim would be dismissed if the declaratory judgment on the trade-dress claims were upheld on appeal. (7)

      Vornado appealed to the Federal Circuit. (8) Holmes challenged the Federal Circuit's jurisdiction over that appeal. (9) The Federal Circuit vacated the district court judgment. (10) The Supreme Court then granted certiorari to consider whether the Federal Circuit had jurisdiction over the appeal. (11)

   2. The Supreme Court's Decision

      1. Justice Scalia's Opinion for the Majority

         Justice Scalia wrote the opinion of the Court and was joined by Justices Rehnquist, Kennedy, Souter, Thomas and Breyer. (12) He began his analysis with 28 U.S.C [section] 1295(a)(1), which states that the Federal Circuit has exclusive jurisdiction over any appeal from a federal district court decision based, "in whole or in part, on [28 U.S.C. [section] 1338]." (13) Section 1338 provides in turn that "the district courts shall have jurisdiction of any civil action arising under any Act of Congress relating to patents." (14)

         Justice Scalia then focused on how to construe the word "arising." He turned to 28 U.S.C. [section] 1331, the statute that confers general federal-question jurisdiction on the district courts, for guidance, and determined that section 1331 federal-question jurisdiction and section 1338 patent jurisdiction are both to be construed under the well-pleaded-complaint...