Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.

PETITIONER: Holmes Group, Inc.
RESPONDENT: Vornado Air Circulation Systems, Inc.
LOCATION: United States District Court Eastern District of Michigan

DOCKET NO.: 01-408
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: 535 US 826 (2002)
ARGUED: Mar 19, 2002
DECIDED: Jun 03, 2002

ADVOCATES:
David W. Long - for the Patent, Trademark, and Copyright Section of the Bar Association of the District of Columbia as amicus curiae
James W. Dabney - Argued the cause for the petitioner
Peter W. Gowdey - Argued the cause for the respondent

Facts of the case

Vornado Air Circulation Systems, Inc., is a manufacturer of patented fans and heaters. In 1992, Vornado sued Duracraft Corp., claiming that Duracraft's use of a spiral grill design in its fans infringed Vornado's trade dress. Ultimately, the Court of Appeals found that Vornado had no protectible trade-dress rights in the grill design. Later, Vornado filed a complaint with the U.S. International Trade Commission, claiming that Holmes Group, Inc.'s sale of fans and heaters with a spiral grill design infringed Vornado's trade dress. Subsequently, Holmes filed a federal-court action, seeking a declaratory judgment that its products did not infringe Vornado's trade dress and an injunction restraining Vornado from accusing it of such infringement. In response, Vornado asserted a compulsory patent-infringement counterclaim. The District Court ruled in Holmes's favor. Vornado appealed to the Court of Appeals for the Federal Circuit, which, notwithstanding Holmes's challenge to its jurisdiction, vacated the District Court's judgment and remanded the case.

Question

Does the Court of Appeals for the Federal Circuit 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?

Media for Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.

Audio Transcription for Oral Argument - March 19, 2002 in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.

Audio Transcription for Opinion Announcement - June 03, 2002 in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.

William H. Rehnquist:

The opinion of the Court in No. 01-408 Holmes Group, Inc. versus Vornado Air Circulation Systems will be announced by Justice Scalia.

Antonin Scalia:

This case comes to us on writ of certiorari to the United States Court of Appeals for the Federal Circuit.

It involves a rather technical question concerning the jurisdiction of that court.

Petitioner filed a Federal Court action seeking a declaratory judgment that its products did not infringe respondent’s trade dress and in an injunction restraining respondent from accusing it of such infringement.

Respondent’s answer asserted a compulsory patent infringement counterclaim.

The District Court ruled in favor of the petitioner.

Respondent then appealed to the Federal Circuit instead of the Regional Court of Appeals, which in this case would have been the Tenth Circuit.

The Federal Circuit, notwithstanding the petitioner’s challenge to its jurisdiction, vacated the District Court’s judgment and remanded the case.

We granted certiorari and now vacate and remand with instructions to transfer this case to the Court of Appeals to the Tenth Circuit.

Pursuant to 28 U.S.C. Section 1295(a)(1), the Federal Circuit has exclusive jurisdiction over “an appeal from a final decision of a District Court of the United States if the jurisdiction of that court was based in whole or in part on 28 U.S.C. Section 1338.

28 U.S.C. Section 1338(a) gives District Courts jurisdiction over civil actions “arising under", magic words to lawyers, "arising under federal patent law.”

Because 1338(a) uses the same operative language, arising under, as 28 U.S.C. Section 1331 which confers general federal question jurisdiction on the District Courts.

We held in a case called Christianson versus Colt Industries Operating Corporation that the well-pleaded complaint rule governing whether a case arises under 1331 also governs whether a case arises under Section 1338(a).

As adapted to Section 1338(a), that well-pleaded complaint rule provides that whether a case arises under patent law is determined by what appears in the plaintiff’s well-pleaded complaint.

That is a complaint that does not have surplus agenda.

Because petitioner’s well-pleaded complaint asserted no claim arising under federal patent law but just the trade dress claim, the Federal Circuit erred in asserting jurisdiction over this appeal.

We are not persuaded by respondent’s argument that the well-pleaded complaint rule allows a counterclaim to serve as the basis for a District Courts arising under jurisdiction.

To accept this argument would contravene the face of the complaint principle set forth in our prior cases and the long standing policies furthered by that principle.

It would leave acceptance or rejection of a State Forum to the master of the counterclaim rather than to the plaintiff.

It would radically expand the class of removable cases, and it would undermine the clarity and ease of administration of the well-pleaded complaint doctrine.

We are also not persuaded by respondent’s alternative argument that reading Section 1295(a)(1) and Section 1338(a) to confer appellate jurisdiction on the Federal Circuit whenever a patent law counterclaim is raised is necessary to effect congress’ goal of promoting patent law uniformity.

This Court’s task is not to determine what would further congress’ goal but to determine what the statute’s words must fairly be understood to mean.

It would be impossible to say that section 1338(a)’s arising under language means the well-pleaded complaint rule when read on its own, but means respondent’s complaint or counterclaim rule when it is referred to by Section 1295(a)(1).

Justice Stevens has filed an opinion concurring in part and concurring in the judgment; Justice Ginsburg has filed an opinion concurring in the judgment in which Justice O’Connor has joined.