Amicus Curiae Brief — Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.

No. 01-408

IN THE

SUPREME COURT OF THE UNITED STATES

THE HOLMES GROUP, INC.,

Petitioner,

Vv.

VORNADO AIR CIRCULATION SYSTEMS, INC.,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FEDERAL CIRCUIT

BRIEF OF THE PATENT, TRADEMARK &

COPYRIGHT SECTION OF THE BAR ASSOCIATION

OF THE DISTRICT OF COLUMBIA AS AMICUS

CURL4 IN SUPPORT OF THE RESPONDENTS

DAVID W. LONG

Counsel of Record

HowREY SIMON ARNOLD & WuiTe, LLP

1299 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

(202) 783-0800

Attorney for Amicus Curia

i

Questions Presented

Does 28 U.S.C. § 1295(a)(1) divest regional

Circuits of jurisdiction to decide appeals of

final decisions of district courts in cases

wherein the well-pleaded complaint of the

prevailing plaintiff does not allege any claim

arising under federal patent law?

Did the Court of Appeals for the Federal

Circuit err in concluding that this action arises

under federal patent law for purposes of 28

U.S.C. §§ 1295(a)(1) and 1338(a)?

TT ccereitacrenatanscinntetenstneemsessenéesstaseseesensscssesese i

ee ili

The Interest Of Amicus Curiae ...........cscsccscsersrcersossesersorseseeeees l

Statement Of The CA8e.ccacssecvsvsnsvsnsstnsenesesietetnetete 2

Summary Of The Argusent.........0..c.ccsecsscssrsereseeresssseseesseerees 3

EEE 5

I. A Claim For Relief Pled in a Counterclaim

Should Be Considered When Determining

Appellate Jurisdiction Under The Well-Pleaded

AT 5

A. The well-pleaded complaint rule focuses on

claims for relief and not the form of the

TE ee 5

B. A claim for relief in a counterclaim should be

considered when determining jurisdiction. ................ 7

II. Even if counterclaims are not typically considered

under the well-pleaded complaint rule, they

should be in determining Federal Circuit

jurisdiction over patent Claims. .................:c..cceseeeeeeeeees 12

EE 15

Table Of Authorities

CASES

Aerojet-General Corp v. Machine Tool Works,

Ocrlikon-Buehrle Lid.,

S95 F.2d 736 (Fed. Cit. 1990).........c.ccscccecscsecsessesees 7, 8, 15

Caterpillar Inc. v. Williams,

a ae ee ancicerenteensesicnstennpsinennaiinnipuanianitadiis 12

Christianson v. Colt Indus. Operating Corp.,

SD es Ge ccrsicnenntenncnatsnentinetacseracnnennies 5, 6, 12

Cook v. Georgetown Steel Corp.,

770 F.2d 1272 (4™ Cir. 1985) .....c.ccccccceccecsesseecsecesennees 9, 10

Franchise Tax Board v. Construction Laborers

Vacation Trust,

| ee Ree 11, 12,13

Gully v. First National Bank in Meridian,

ARR PEC 10, 12

Louisville & Nashville R. Co. v. Mottley,

ER Zt Tt ee 11

Pioche Mines Consol., Inc. v. Fidelity-Philadelphia

Trust Co., 206 F.2d 336 (9" Cir.),

cert. denied, 346 U.S. 899 (1953) ....ccccccccecsescsessecsesseseesees 9

Rath Packing Co. v. Becker, 530 F.2d 1295 (9" Cir.

1975),

aff'd sub nom. Jones v. Rath Packing Co.,

RIE SESE a 10

Rengo Co. v. Molins Mach. Co. 657 F.2d 535 (3

Cir.),

cert. denied, 454 U.S. 1055 (1981) ....cc.cccsccessssesssesseeesesens 8

Rivet v. Regions Bank of Louisiana,

RST ce 10, 11, 12

Shannon v. Shannon,

Le Lgl eS, 9,11

Takeda v. Northwestern Mut. Life Ins. Co.,

Se 9, 10

Texas v. Walker,

SEB BOOED Cle, BD acecccccccccccccsececnncencenccnnnies 9, 10

U.S. Valves Inc. v. Dray,

RT TE ao SS 8

Xeta Inc. v. Atex Inc.,

825 F.2d 604 (1* Cir. 1987),

transferred to, 852 F.2d 1280 (Fed. Cir. 1988).............-+. 8

STATUTES

28 U.S.C. § 1331 ......cececcecsessscessecsssessecnsensssensensensnsensenssnseese 5,7

Se | 5,7, 15

Federal Courts Improvement Act,

Pub. L. No. 97-164, 96 Stat. 25 (1982) ..........ccccccseeeseees 13

OTHER AUTHORITIES

Hearings on H.R. 6033, H.R. 6934, H.R. 3806 and

H.R. 2414, Before the Subcomm. On Couyrts,

Civil Liberties and the Admin. Of Justice of the

House Comm. On the Judiciary,

96" Cong., 2d Sess. 797 (1980) ......c-ue-ccvecssuesesueseneeesneee

S. Rep. No. 97-275 (1982),

reprinted in 1982 U.S.C.A.N.N, 15 .scossssssssssssssssssss0ss000

iv

14

RULES :

Fed. R. Civ. P. 13(a)

IN THE

SUPREME COURT OF THE UNITED STATES

THE HOLMES GRovwpP, INC.,

Petitioner,

Vv.

VORNADO AIR CIRCULATION SYSTEMS, INC.,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FEDERAL CIRCUIT

BRIEF OF THE PATENT, TRADEMARK &

COPYRIGHT SECTION OF THE BAR ASSOCIATION

OF THE DISTRICT OF COLUMBIA AS AMICUS

CURIZ IN SUPPORT OF THE RESPONDENTS

The Interest Of Amicus Curiz

The Bar Association of the District of Columbia

(“BADC”) is a non-profit organization with voluntary

membership. Membership is not restricted to any segment of

' This brief amicus curiae is presented by the Bar

Association of the District of Columbia under Rule 37.3 of

this Court. No counsel for a party authored any part of this

brief. Only amicus curia made a monetary contribution to

the preparation and submission of this brief; counsel for

amicus curiae prepared this brief on a pro bono basis.

2

the profession and, thus, the members and their clients

represent widely diverging interests and views. Members

include attorneys in private practice as well as those

employed by corporations and those in government.

The Patent, Trademark & Copyright Section of the

BADC includes members of the bar regularly practicing in

and interested in patent law. Members frequently represent

patent applicants, patent owners, and accused patent

infringers in various matters, including those before the

United States Court of Appeals for the Federal Circuit (“the

Federal Circuit”). Members are thus concerned with the

procedure for obtaining Federal Circuit appellate review of

cases involving patent law claims.

The BADC has no stake in either of the parties or the

result of this case, other than an interest in seeking correct

at ss interpretation of intellectual property law.

Petitioner and the Respondent have consented to

BADC filing this brief. -

Statement Of The Case

This case involves the question of whether (1) the

Federal Circuit or (2) the regional circuit—i.e., the Tenth

Circuit—has appellate jurisdiction over an action in which

the plaintiff's complaint does not plead any claim for relief

arising under patent law, but the defendant files a

counterclaim that includes a claim of patent infringement.

The complaint filed by the Petitioner, the Holmes

Group, Inc. (“the Holmes Group”), includes a request for

declaratory judgment that its products did not violate any

trade dress of the Respondent, Vornado Air Circulation

Systems, Inc. (“Vornado”). Vornado filed an answer and a

counterclaim that the products at issue infringed Vornado’s

oe

patent. The district court entered a Rule 54(b) judgment on

the trade dress issue in favor of the Holmes Group.

Vornado appealed that judgment to the Federal

Circuit, asserting that the Federal Circuit had appellate

jurisdiction under 28 U.S.C. § 1295(a)(1) based on the patent

infringement claim in its counterclaim. The Federal Circuit

accepted jurisdiction, vacated the judgment and remanded the

case to the district court.

The Holmes Group filed a petition for certiorari

seeking review by this Court whether the Federal Circuit had

proper appellate jurisdiction to review the district court’s

judgment where the “well-pleaded” complaint itself did not

include any claim for relief within the Federal Circuit’s

appellate jurisdiction.

Summary Of The Argument

Under the well-pleaded complaint rule, jurisdiction

over an action is determined from the claims for relief raised

in the pleadings, and not from the form of the specific

pleadings themselves. Therefore, a claim for relief raised in

a counterclaim should be considered when determining

appellate jurisdiction. This is consistent with this Court's

well-pleaded complaint jurisprudence. Prior decisions of this

Court refer to the face of the plaintiff's complaint because, in

each of those cases, the complaint was the only pleading that

raised affirmative causes of action. But this Court has never

held that jurisdiction cannot be based on a claim for relief

contained in a counterclaim.

In this case, there is no dispute that a claim for relief

raised in Vornado’s counterclaim—i.e., a claim of patent

infringement—falls squarely within the Federal Circuit's

appellate jurisdiction. Therefore, the Federal Circuit has

appellate jurisdiction over the entire action—including the

non-patent issues—just as it does in actions where a patent

infringement claim is raised in the original complaint along

with other non-patent issues.

Even if this Court determines that a claim for relief

raised in a counterclaim should not be considered when

determining appellate jurisdiction in all cases, this Court

should make an exception for cases, such as this, where a

claim for relief in the counterclaim arises under patent law

and otherwise would be subject to review by the Federal

Circuit. Congress took the extraordinary measure of creating

the Federal Circuit with exclusive appellate jurisdiction over

patent cases—even those that include non-patent claims—in

order to ensure uniform application of patent laws so that

patent rights would be stronger and more predictable. Thus,

Congress has determined that the national interest in having

the Federal Circuit review all actions that include patent

claims substantially outweighs a particular litigant’s or

regional circuit’s interests in having the regional circuit

review a particular action, even if that action includes non-

patent claims. Thus, both Congressional policy and judicial

economy support Federal Circuit jurisdiction over an entire

action if a claim for relief arising under patent law is raised in

any pleading, whether in the complaint or a counterclaim.

Argument

I. A Claim For Relief Pled in a Counterclaim

Should Be Considered When Determining

Appellate Jurisdiction Under The Well-

Pleaded Complaint Rule.

A. The well-pleaded complaint rule focuses

on claims for relief and not the form of

the pleadings per se.

The well-pleaded complaint rule is typically used to

determine whether federal question jurisdiction exists over an

action under 28 U.S.C. § 1331 based on the action “arising

under the Constitution, laws, or treaties of the United States.”

In Christianson, this Court referred to this § 1331 “arising

under” jurisprudence to guide its decision on Federal Circuit

jurisdiction based on 28 U.S.C. § 1338(a) for actions “arising

under any Act of Congress relating to patents.” In

Christianson, the plaintiff brought antitrust and state law

claims against the defendant, who responded with a patent

law defense.” This Court ultimately ruled that the Federal

Circuit did not have appellate jurisdiction over the action

under the well-pleaded complaint rule, because the patent

law question was not one of the well-pleaded claims.

* Christianson v. Colt Indus. Operating Corp., 486 U.S.

800, 809 n.2 (1988).

° Christianson, 486 U.S. at 809 n.2.

* Id. at 805.

* Id. at 809.

oud The Christianson Court focused its jurisdictional

inquiry on the claims of relief sought in the action. For

example, the Court distinguished (1) the affirmative claims

for relief, upon which jurisdiction may be based, and

(2) mere defenses to those claims, upon which jurisdiction

would not be based. The Court also distinguished between

claims for relief and the underlying theories that support the

claims, stating that “[t]he well-pleaded complaint rule ...

focuses on claims, not theories.”” The Court’s inquiry

looked beyond the actual wording of the pleading itself,

stating that “a plaintiff may not defeat § 1338(a) jurisdiction

by omitting to plead necessary patent-law questions.”” In his

concurrence, Justice Stevens also acknowledged that the

well-pleaded complaint rule separates claims from issues and

does so without limitation to the original complaint.”

oi In sum, the principal focus of the jurisdictional

inquiry is on the claim for relief that the court is being asked

to grant in order to determine whether that court properly has

authority to grant it.

° Id. at 808-809.

" Id. at 811.

* Id. at 809 n.3.

” Id. at 820 (J. Stevens, concurring).

B. A claim for relief in a counterclaim

should be considered when determining

jurisdiction.

A counterclaim asserts affirmative claims for relief,

and should be considered when determining whether a court

has authority to grant the relief requested in the action. This

Court has not decided whether claims for relief in a

counterclaim should be considered in determining

jurisdiction under either § 1331 “arising under” federal

question actions in the regional circuits or § 1338 “arising

under” patent actions in the Federal Circuit. But the Federal

Circuit and several regional circuits have considered this

issue and ruled that claims for relief in counterclaims should

be considered when determining jurisdiction under the well-

pleaded complaint rule.

In Aerojet-General, the Federal Circuit ruled that a

claim for relief of patent infringement in a counterclaim was

a proper basis for § 1338 “arising under” jurisdiction. The

Federal Circuit looked beyond the labels of “complaint” and

“counterclaim” in determining what claims for relief were

involved in the action, stating:

[i]t would seem at best incongruous to hold

that we have appellate jurisdiction when a

well-pleaded patent infringement claim is the

basis of the pleading labeled “complaint” but

not when the identical well-pleaded claim is

Fed. R. Civ. P. 13(a).

: Aerojet-General Corp v. Machine Tool Works,

Oecrlikon-Buehrle Ltd., 895 F.2d 736, 742 (Fed. Cir. 1990).

_ the basis of a _ pleading labeled

At least two other circuits also have acknowledged

the Federal Circuit’s authority to base its jurisdiction on

questions of patent law raised in a counterclaim. And other

circuits have relied on a counterclaim to support their own

§ 1331 “arising under” jurisdiction when the counterclaim

presents an independent basis for jurisdiction.”

12

Id.

” See Xeta Inc. v. Atex Inc., 825 F.2d 604, 607 (1" Cir,

1987), transferred to, 852 F.2d 1280 (Fed. Cir. 1988)

(nonfrivolous patent counterclaim supports transfer of

appellate jurisdiction to the Federal Circuit); U.S. Valves Inc.

v. Dray, 190 F.3d 811, 813 n.6 (7 Cir. 1999) (the court’s

determination that the case arises under patent law “does not

change when the possible basis for Federal Circuit

jurisdiction resides in a counterclaim”).

“ See Rengo Co. v. Molins Mach. Co..657 F.2d 535, 539

(3™ Cir.), cert. denied, 454 U.S. 1055 (1981) (counterclaim

supported federal jurisdiction despite jurisdictional defect in

complaint); Pioche Mines Consol., Inc. v. Fidelity-

Philadelphia Trust Co., 206 F.2d 336, 336-37 (9" Cir.), cert.

denied, 346 U.S. 899 (1953) (counterclaim supported federal

jurisdiction despite court’s dismissal of complaint); /senberg

v. Biddle, 125 F.2d 741, 743 (D.C. Cir. 1941) (counterclaim

with independent jurisdictional basis “is sustainable without

regard to ... the original complaint”).

A few circuits have concluded that a counterclaim

eae

cannot be the basis for arising under jurisdiction. But those

conclusions erroneously relied on case law distinguishing

claims and defenses without distinguishing claims in

complaints and counterclaims. For example, the Fourth

Circuit in Cook relied on this Court's opinion in Gully v.

First National Bank in Meridian to reject federal

jurisdiction over the defendant’s counterclaim, but the

Gully Court denied removal jurisdiction based on a defense

and made no mention of a counterclaim. Similarly, the

Fifth Circuit’s decision in Walker relied on Rivet v. Regions

Bank of Louisiana for the premise that “([t]here has never

been a suggestion that a defendant could, by asserting an

artful counterclaim, render a case removable in violation of

'S See Cook v. Georgetown Steel Corp., 770 F.2d 1272,

1275 (4" Cir. 1985); Texas v. Walker, 142 F.3d 813, 816 n.2

(5" Cir. 1998); Shannon v. Shannon, 965 F.2d 542, 545-46

(7 Cir. 1992); Takeda v. Northwestern Mut. Life Ins. Co.,

765 F.2d 815, 822 (9 Cir. 1985).

© 299 U.S. 109 (1936).

” Cook, 770 F.2d at 1275, citing Gully, 299 U.S. at 112.

* See Gully, 299 U.S. at 116-17. The Ninth Circuit’s

decision in Takeda also relied on its prior and erroneous

interpretations of Gully and its progeny in concluding that

“removability cannot be created by defendant pleading a

counter-claim presenting a federal question.” Takeda, 765

F.2d at 822, citing Rath Packing Co. v. Becker, 530 F.2d

1295, 1303 (9" Cir. 1975), aff'd sub nom. Jones v. Rath

Packing Co., 430 U.S. 519 (1977).

? 522 U.S. 470 (1998).

10

the well-pleaded complaint rule.” But the Rivet Court held

only that the defense of federal-law claim preclusion does not

support removal jurisdiction, and makes no mention of

counterclaims. And the Seventh Circuit’s decision in

Shannon relied on both Takeda and Louisville & Nashville R.

Co. v. Mottley for the premise that “a defense based on the

United States Constitution or federal law does not make the

suit removable, and neither does a counterclaim or other

similar filing based on federal law.” But Takeda draws an

erroneous inference regarding counterclaims from Gully,

which did not consider counterclaims, and Mottley held only

that an anticipated federal law defense did not transform a

state-law complaint into a case arising under the United

States Constitution.” Thus, in each instance where a

regional circuit did not consider the counterclaim in

determining jurisdiction, the circuit court narrowly

interpreted the well-pleaded complaint rule to exclude

counterclaims based on an overbroad and erroneous

application of this Court’s precedents.

Those narrow interpretations rely on the links this

Court has historically made between the well-pleaded

” Walker, 142 F.3d at 816, n.2.

*" Rivet, 522 U.S. at 478.

* |, sisville & Nashville R. Co. v. Mottley, 211 U.S. 149

(1961).

* Shannon, 965 F.2d at 545-46,

* Mottley, 211 U.S. at 153.

11

complaint rule and the formal complaint of the plaintiff. As

noted above, however, such links merely reflect the fact that

those specific cases involved well-pleaded claims that

appeared only in the plaintiff's complaint. This Court has

not specifically interpreted the well-pleaded complaint rule to

exclude well-pleaded claims in counterclaims from supplying

the basis for “arising under” jurisdiction. Indeed, this Court

has recognized that a counterclaim might provide an

independent basis for jurisdiction under the correct

circumstances.” In Franchise Tax Board, this Court

considered whether a defendant’s motion to dismiss the

complaint might be treated as a counterclaim for a

declaratory judgment “which might then provide an

independent basis for reaching the merits of the ... case.”

2s

Franchise Tax Board v. Construction Laborers

Vacation Trust, 463 U.S. 1, 9 (1983) (“a defendant may not

remove a case to federal court unless the plaintiff's complaint

establishes that the case ‘arises under’ federal law”); Rivet,

522 U.S. at 474, citing Caterpillar Inc. v. Williams, 482 U.S.

386, 392 (1987) (“federal jurisdiction exists only when a

federal question is presented on the face of the plaintiff's

properly pleaded complaint”); Gully, 299 U.S. at 111 (“To

bring a case within the statute, a right or immunity created by

the Constitution or laws of the United States must be an

element, and an essential one, of the plaintiffs cause of

action”); Christianson, 486 U.S. at 809 (“jurisdiction ...

extends over ‘only those cases in which a well-pleaded

complaint establishes either that federal law creates the cause

of action or that the plaintiff's right to relief necessarily

depends on resolution of a substantial question of federal

law””).

*® Franchise Tax Board, 463 U.S. at 22 n.24.

12

The Court ultimately did not reach that issue for other

procedural reasons.

Il. Even if counterclaims are not typically

considered under the well-pleaded complaint

rule, they should be in determining Federal

Circuit jurisdiction over patent claims.

Even if the well-pleaded complaint rule typically does

not permit consideration of claims for relief pled in a

counterclaim, this Court should make an exception for

—— iction over claims arising under patent

w.

Congress created the Federal Circuit in the Federal

Courts Improvement Act of 1982 based on the substantial

need | for uniform judicial development of federal patent

law. Congress determined that a centralized national court

with exclusive appellate jurisdiction over patent-related cases

was necessary “for ensuring a more uniform interpretation of

the patent laws an thus contributing meaningfully and

27

Id.

" Id. (The defendant did not file an answer or a

counterclaim, but allowed the district court to treat its motion

to dismiss as a cross-motion for summary judgment.

Therefore, this Court declined to construe the defendant’s

pleadings as a counterclaim. ).

29

Federal Courts Improvement Act, Pub. L. No. 97-164,

96 Stat. 25 (1982) (merging the Court of Customs and Patent

Appeals with the United States Court of Claims to create the

United States Court of Appeals for the Federal Circuit).

13

positively to predicting the strength of patents.” ~ Thus,

Congress specifically created the Federal Circuit to provide

“a forum that will increase the doctrinal stability in the field

of patent law,” stating:

law as an area in which the application of the

law to the facts of a case often produces

different outcomes in different courtrooms in

substantially similar cases. Furthermore, ...

created by the lack of national law precedent

was a significant problem. ... The creation of

.. the Federal Circuit will produce desirable

uniformity in this area of the law.

Congress had a specific, express and national purpose

when it created the Federal Circuit and granted it exclusive

appellate jurisdiction over any action raising claims under the

patent laws of the United States, even if the action includes

other non-patent claims for relief. Thus, Congress has

determined that the national interest in having the Federal

Circuit review all claims for relief arising under patent law

outweighs any interest a particular litigant or regional circuit

may have in having the regional circuit review even the non-

” Hearings on H.R. 6033, H.R. 6934, H.R. 3806 and H.R.

2414, Before the Subcomm. On Courts, Civil Liberties and

the Admin. Of Justice of the House Comm. On the Judiciary,

96" Cong., 2d Sess. 797 (1980).

* §. Rep. No. 97-275 (1982), reprinted in 1982

US.CANN. 15.

» See 28 U.S.C. §§ 1295(aX(1), 1338

14 15

patent issues raised in an action that includes patent claims.

Thus, any ruling by this Court regarding the Federal Circuit’s = Gee

jurisdiction should give weight and deference to Congress’ Amicus curi@ respectfully requests this Court to rule

determination on this issue, as the Federal Circuit recognized that the Federal Circuit has appellate jurisdiction over an

in Aerojet-General: action under 28 U.S.C. § 1331(a) and § 1295(a)(1) if a claim

i isi the law is in a

tistincti ' lai _ for wr Parana under patent pled

counterclaims can be important in other

contexts, but can have no meaningful role in ;

ine Ge Gimatien of On » on Respectfully submitted,

the unique statute that created this court when

DAVID W. LONG

laws. Counsel of Record

HowREY SIMON ARNOLD &

In sum, if the Court concludes that claims for relief Wuire, LLP

pled in a counterclaim generally are not considered in 1299 Pennsylvania Avenue, N.W.

determining jurisdiction under the well-pleaded complaint .

tule, the Court should at least make an exception to such a mo

rule where, as here, the counterclaim includes a claim for

relief arising under the patent law, which should be reviewed

by the Federal Circuit. Attorney for Amicus Curia

” Aerojet 895 F.2d at 742.