Supreme Court Addresses Federal Circuit Jurisdiction, Reaffirms 'Well-Pleaded Complaint Doctrine' as Limit on Federal Circuit Jurisdiction in Cases Involving Compulsory Patent Counterclaims

On Monday, June 3, 2002, the U.S. Supreme Court rendered a decision in The Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., reversing the Court of Appeals for the Federal Circuit's ("CAFC") decision exercising CAFC jurisdiction in a trade dress case involving a patent counterclaim. The majority of the Supreme Court justices held that where plaintiff had not asserted claims arising under the patent laws of the United States, but defendant filed a compulsory counterclaim for patent infringement, the CAFC did not have appellate jurisdiction. Two of the Justices, Ginsberg and O'Connor, concurred in the result, but noted that the appeal at issue did not involve the patent counterclaim. If the appeal had involved questions of patent law, they would have affirmed CAFC appellate jurisdiction.

Summary of the Decision

The majority opinion, written by Justice Scalia, held that the appellate jurisdiction of the CAFC was to be determined by the "well pleaded complaint" of the plaintiff, i.e., by reference only to the claims asserted in the plaintiff's complaint, regardless of any counterclaims that may assert claims otherwise subject to the exclusive jurisdiction of the federal courts in cases arising under the patent laws. The majority based its decision on the language of the CAFC's jurisdictional statute 28 U.S.C.A. ß 1295(a)(1) which, even though it grants appellate jurisdiction in cases based, in whole or in part, on the patent laws, still defines patent cases by referring to 28 U.S.C.A. ß 1338, the statute which confers exclusive jurisdiction on the district courts in cases "arising under" the patent laws of the United States. Thus, unless the district court's jurisdiction is based upon 28 U.S.C.A. ß 1338, asserting a claim arising under the patent laws of the United States under the "well pleaded complaint doctrine," the appellate jurisdiction of the CAFC is likewise limited under 28 U.S.C.A. ß 1295(a)(1).

Justice Stevens concurred in the result, but did not agree with all the reasons for the majority's decision, pointing out that jurisdiction also might arise by amendments or be lost by the voluntary dismissal of the patent claim, issues that the majority expressly declined to decide.

Justices Ginsberg and O'Connor disagreed with the majority's reliance on the "well pleaded complaint doctrine," but concluded that in this case the CAFC did not have jurisdiction over the appeal because the district court's decision under review...