Courts should consider the possible future effects in cases even if they present claims for legal malpractice, or are based on narrow technical issues.[1]Gunn v. Minton, ___ U.S. ___, 133 S. Ct. 1059, 185 L. Ed. 2d 72 (2013).[2]Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808 (1988).
On appeal, the Federal Circuit concluded that removal was improper because the district court lacked original subject matter jurisdiction under § 1338. The Court reasoned that for a state law cause of action to qualify for jurisdiction under § 1338, it must “involve[] a patent law issue that 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.’” Slip op. at 6-7 (quoting Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013)). The Court distinguished the Supreme Court’s recent decision in Gunn that the legal malpractice claim did not involve a substantial question of patent law from two Federal Circuit decisions that disparagement claims for false statements about U.S. patent rights did involve substantial questions of patent law.
“[A] case arises under federal law when federal law creates the cause of action asserted.” Gunn v. Minton, 133 S. Ct. 1059, 1064 (2013) (citing Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916)). The Supreme Court has also “identified a ‘special and small category’ of cases in which arising under jurisdiction still lies,” even though only state law claims are being pursued.
Federal question means that the federal law (as opposed to state law) “creates the cause of action asserted.” Gunn v. Minton, 568 U.S. 251, 257 (2013). To seek to vacate an arbitral award under Section 10, the applicant “must identifya grant of jurisdiction apart from Section 10 itself, conferring ‘access to a federal forum.’
The Court observed that absent circumstances not present, “a case arises under federal law when federal law creates the cause of action asserted.” Prather Plumbing, 2021 U.S. App. LEXIS 20083, at *8-*9 (quoting Gunn v. Minton, 568 U.S. 251, 257 (2013)). In the absence of such a federal cause of action, § 1331 is not satisfied and the court lacks jurisdiction.
The Federal Circuit explained that while it had ultimately acquiesced to jurisdiction in Xitronix it had not backed down from its view that the appeal had actually belonged in the Fifth Circuit. The Federal Circuit defended its reasoning in Xitronix I, noting that in Gunn v. Minton 568 U.S. 251 (2013), the Supreme Court held that a state court had jurisdiction over a malpractice suit because it did not “arise under” federal patent law, despite requiring a patent law issue to be resolved. Drawing on Gunn, the Chandler court re-stated its position that “the risk of another circuit making an erroneous or inconsistent patent law decision within a Walker Process claim is not enough to trigger [Federal Circuit] jurisdiction over federal patent law cases.”What will happen next in Chandler?
Instead, they preferred resolution of the patent issues in a Middle District of North Carolina action they filed shortly after plaintiffs sought leave to amend the state court action.The issue before the Business Court was whether a contract dispute over patent enforcement rights nonetheless arose under federal law. The Court noted the United States Supreme Court’s guidance that only a “special and small category” of actions would meet the test for federal jurisdiction to lie over a state law claim, when 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.”Id. ¶ 12 (quoting Gunn v. Minton, 568 U.S. 251, 258 (2013)).The Business Court acknowledged the defendants identified issues regarding the construction and assignability of the patents that were governed by federal law. ¶¶ 13-14.
xxivFinally, the Federal Circuit found that should the district court find that AntennaSys’s claim for patent infringement should be dismissed, the lower court would have no independent jurisdiction over the remaining state law counts in AntennaSys’s complaint.xxv Under Gunn v. Minton, 568 U.S. 251, 258 (2013), federal jurisdiction can extend to causes of action based outside of federal law in only a “special and small category” of cases in which a “federal law 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.”xxvi The Federal Circuit found that AntennaSys could not meet the “substantiality” prong of the analysis.
If the federal claim failed, then the federal district court may lack subject matter jurisdiction. That said, some instances — even where the federal hook failed — will not prevent a federal court from hearing state law claims, such as when “a federal law 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.” (quoting Gunn v. Minton, 568 U.S. 251, 258 (2013)). The Court noted that AntennaSys at least failed the “substantial” prong since patent infringement merely applies facts to federal law. “This case does not present a context-free interpretation of a patent statute, but requires merely that the court apply patent law to the facts of the case.”
Id. at 936.In its appeal to the Supreme Court, penned by retired Federal Circuit Chief Judge Randall R. Rader, Acer argues that the Federal Circuit turned a blind eye to Supreme Court precedent in Gunn v. Minton, 568 U.S. 251 (2013), ignoring the district court’s finding that Intellisoft’s single theory “necessarily raises” patent issues, thus qualifying the case for removal under 28 U.S.C. § 1441. Acer also chides the Federal Circuit for rejecting removal under 28 U.S.C. § 1454 by departing from the plain language and purpose of section 1454, equating the statutory term “assert” with the more restrictive term “brought” to reject Acer’s “cross-complaint” that had been lodged but not yet accepted by the state court and holding that the “cross-complaint” claims did not meet the statutory requirement of being in an operative pleading.