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

• Decision Date: 03 June 2002
• Docket Number: No. 01-408.,01-408.
• Parties: HOLMES GROUP, INC. <I>v.</I> VORNADO AIR CIRCULATION SYSTEMS, INC.
• Court: U.S. Supreme Court

Page 826

535 U.S. 826

HOLMES GROUP, INC.

v. VORNADO AIR CIRCULATION SYSTEMS, INC.

No. 01-408.

Supreme Court of the United States.

Argued March 19, 2002.

Decided June 3, 2002.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

Petitioner filed a federal-court action, seeking, inter alia, a declaratory judgment that its products did not infringe respondent's trade dress and an injunction restraining respondent from accusing it of such infringement. Respondent's answer asserted a compulsory patentinfringement counterclaim. The District Court ruled in petitioner's favor. Respondent appealed to the Federal Circuit, which, notwithstanding petitioner's challenge to its jurisdiction, vacated the District Court's judgment and remanded the case.

Held: The Federal Circuit cannot assert jurisdiction over a case in which the complaint does not allege a patent-law claim, but the answer contains a patent-law counterclaim. Pp. 829-834.

(a) The Federal Circuit's jurisdiction is fixed with reference to that of the district court, 28 U. S. C. § 1295(a)(1), and turns on whether the action is one "arising under" federal patent law, § 1338(a). Because § 1338(a) uses the same operative language as § 1331, which confers general federal-question jurisdiction, the well-pleaded-complaint rule governing whether a case arises under § 1331 also governs whether a case arises under § 1338(a). As adapted to § 1338(a), the rule provides that whether a case arises under patent law is determined by what appears in the plaintiff's well-pleaded complaint. Christianson v. Colt Industries Operating Corp., 486 U. S. 800, 809. Because petitioner's well-pleaded complaint asserted no claim arising under patent law, the Federal Circuit erred in asserting jurisdiction over this appeal. Pp. 829-830.

(b) The well-pleaded-complaint rule does not allow a counterclaim to serve as the basis for a district court's "arising under" jurisdiction. To rule otherwise would contravene the face-of-the-complaint principle set forth in this Court's prior cases, see, e. g., Caterpillar Inc. v. Williams, 482 U. S. 386, 392, and the longstanding 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. Pp. 830-832.

(c) As for respondent's alternative argument, that reading §§ 1295(a)(1) and 1338(a) to confer appellate jurisdiction on the Federal Circuit whenever a patent-law counterclaim is raised is necessary to effectuate Congress's goal of promoting patent-law uniformity: This Court's task is not to determine what would further Congress's goal, but to determine what the statute's words must fairly be understood to mean. It would be impossible to say that § 1338(a)'s "arising under" language means the well-pleaded-complaint rule when read on its own, but respondent's complaint-or-counterclaim rule when referred to by § 1295(a)(1). Pp. 832-834.

13 Fed. Appx. 961, vacated and remanded.

SCALIA, J., delivered the opinion of the Court, in which Rehnquist, C. J., and KENNEDY, SOUTER, THOMAS, and BREYER, JJ., joined, and in which STEVENS, J., joined as to Parts I and II-A. STEVENS, J., filed an opinion concurring in part and concurring in the judgment, post, p. 834. GINSBURG, J., filed an opinion concurring in the judgment, in which O'CONNOR, J., joined, post, p. 839.

James W. Dabney argued the cause for petitioner. With him on the brief were Paul Izzo, Timothy P. Gallogly, Arthur R. Miller, Marcia H. Sundeen, and Carol M. Wilhelm.

Peter W. Gowdey argued the cause for respondent. With him on the brief were Christopher P. Murphy, Janine A. Carlan, Kenneth W. Starr, and Daryl L. Joseffer.^*

JUSTICE SCALIA delivered the opinion of the Court.

In this case, we address whether the Court of Appeals for the Federal Circuit has 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.

I

Respondent, Vornado Air Circulation Systems, Inc., is a manufacturer of patented fans and heaters. In late 1992 respondent sued a competitor, Duracraft Corp., claiming that Duracraft's use of a "spiral grill design" in its fans infringed respondent's trade dress. The Court of Appeals for the Tenth Circuit found for Duracraft, holding that Vornado had no protectable trade-dress rights in the grill design. See Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F. 3d 1498 (1995) (Vornado I).

Nevertheless, on November 26, 1999, respondent lodged a complaint with the United States International Trade Commission against petitioner, The Holmes Group, Inc., claiming that petitioner's sale of fans and heaters with a spiral grill design infringed respondent's patent and the same trade dress held unprotectable in Vornado I. Several weeks later, petitioner filed this action against respondent in the United States District Court for the District of Kansas, seeking, inter alia, a declaratory judgment that its products did not infringe respondent's trade dress and an injunction restraining respondent from accusing it of trade-dress infringement in promotional materials. Respondent's answer asserted a compulsory counterclaim alleging patent infringement.

The District Court granted petitioner the declaratory judgment and injunction it sought. 93 F. Supp. 2d 1140 (Kan. 2000). The court explained that the collateralestoppel effect of Vornado I precluded respondent from relitigating its claim of trade-dress rights in the spiral grill design. It rejected respondent's contention that an intervening Federal Circuit case, Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F. 3d 1356 (1999), which disagreed with the Tenth Circuit's reasoning in Vornado I, constituted a change in the law of trade dress that warranted relitigation of respondent's trade-dress claim. The court also stayed all proceedings related to respondent's counterclaim, adding that the counterclaim would be dismissed if the declaratory judgment and injunction entered in favor of petitioner were affirmed on appeal.

Respondent appealed to the Court of Appeals for the Federal Circuit. Notwithstanding petitioner's challenge to its jurisdiction, the Federal Circuit vacated the District Court's judgment, 13 Fed. Appx. 961 (2001), and remanded for consideration of whether the "change in the law" exception to collateral estoppel applied in light of TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U. S. 23 (2001), a case decided after the District Court's judgment which resolved a Circuit split involving Vornado I and Midwest Industries. We granted certiorari to consider whether the Federal Circuit properly asserted jurisdiction over the appeal. 534 U. S. 1016 (2001).

II

Congress vested the Federal Circuit with 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. § ] 1338 ...." 28 U. S. C. § 1295(a)(1) (emphasis added). Section 1338(a), in turn, provides in relevant part that "[t]he district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents ...." Thus, the Federal Circuit's jurisdiction is fixed with reference to that of the district court, and turns on whether the action arises under federal patent law.¹

Section 1338(a) uses the same operative language as 28 U. S. C. § 1331, the statute conferring general federalquestion jurisdiction, which gives the district courts "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." (Emphasis added.) We said in Christianson v. Colt Industries Operating Corp., 486 U. S. 800, 808 (1988), that "[l]inguistic consistency" requires us to apply the same test to determine whether a case arises under § 1338(a) as under § 1331.

The well-pleaded-complaint rule has long governed whether a case "arises under" federal law for purposes of § 1331.² See, e. g., Phillips Petroleum Co. v. Texaco Inc., 415 U. S. 125, 127-128 (1974) (per curiam). As "appropriately adapted to § 1338(a)," the well-pleaded-complaint rule provides that whether a case "arises under" patent law "must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration ...." Christianson, 486 U. S., at 809 (internal quotation marks omitted). The plaintiff's well-pleaded complaint must "establis[h] either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law ...." Ibid. Here, it is undisputed that petitioner's well-pleaded complaint did not assert any claim arising under federal patent law. The Federal Circuit therefore erred in asserting jurisdiction over this appeal.

A

Respondent argues that the well-pleaded-complaint rule, properly understood, allows a counterclaim to serve as the basis for a district court's "arising under" jurisdiction. We disagree.

Admittedly, our prior cases have only required us to address whether a federal defense, rather than a federal counterclaim, can establish "arising under" jurisdiction. Nevertheless, those cases were decided on the principle that federal jurisdiction generally exists "only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U. S. 386, 392 (1987) (emphasis added). As we said in The Fair v. Kohler Die & Specialty Co., 228 U. S. 22, 25 (1913), whether a case arises under federal patent law "cannot depend upon the answer." Moreover, we have declined to adopt proposals that "the answer as well as the...