by Dennis Crouch
Predator Int’l v. Gamo Outdoor (10th Cir. 2015)
In this decision, the Court of Appeals for the Tenth Circuit (10th Cir.) has held that it has jurisdiction over an appeal of a would-be patent case because the complaint was amended prior to final judgment to drop the patent claim.
Federal Circuit jurisdiction over patent appeals is an exception to the usual rule that district court decisions are appealed to the respective regional circuit court of appeal. Under pre-AIA statute, the Federal Circuit takes jurisdiction over appeals of final decisions in “any civil action arising under any Act of Congress relating to patents.” 28 U.S.C. 1338; 28 U.S.C. 1295. So called “arising-under” jurisdiction is a term of art in civil procedure and follows the “well-pled complaint rule” by requiring the patent law question appear on the face of the plaintiff’s complaint as outlined in the Supreme Court’s 2002 decision on point. Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 534 U.S. 826 (2002).
The question here though was – what happens when the patent claim appears in original complaint but not the amended complaint. The 10th Circuit panel decided that the amendment robbed the Federal Circuit of Jurisdiction:
Section 1295(a)(1) might seem to deprive this court of jurisdiction because a claim for patent infringement was included in Predator’s original complaint. . . . But at the time of Cogswell’s notice of appeal, the most recent complaint was Predator’s fourth amended complaint, . . . which did not contain a patent-infringement claim. And it is that complaint which governs our jurisdiction.
In a parallel situation, the Federal Circuit also held that it lacked lacked jurisdiction over an appeal where the patent claim had been voluntarily dismissed without prejudice prior to final judgment. Gronholz v. Sears, Roebuck & Co., 836 F.2d 515 (Fed. Cir. 1987). In Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826 (2002), Justice Stevens wrote a concurring opinion also arguing for the same result – that “if the only patent count in a multicount complaint was voluntarily dismissed in advance of trial, it would seem . . . clear that the appeal should be taken to the appropriate regional court of appeals rather than to the Federal Circuit.”
However, the majority opinion in Holmes Group leaves the question open — expressly indicating that “this case does not call upon us to decide whether the Federal Circuit’s jurisdiction is fixed with reference to the complaint as initially filed or whether an actual or constructive amendment to the complaint raising a patent-law claim can provide the foundation for the Federal Circuit’s jurisdiction.” (note 1).
An odd element of this result is that the appellate jurisdiction of a multi-claim case will be malleable up until final judgment.
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AIA Changes to Jurisdiction: The AIA amended the jurisdiction statutes to (1) ensure district court’s have jurisdiction over all cases involving “any claim for relief” arising under the US patent laws; and (2) provide the appellate court with jurisdiction when cases either “arise under” the patent law or where a party “has asserted a compulsory counterclaim arising under” the patent law. These changes were seen as overruling the prior rule from Holmes Group that the existence of a patent law counterclaim in the answer-pleading (rather than claim in the complaint).
These changes don’t appear to directly impact the outcome except that the language “has asserted” could suggest that jurisdiction is created if the patent counterclaim is ever asserted (even if later dropped). And, that difference in language seems to me to suggest that Congress was thinking about the scope of the original complaint defining appellate jurisdiction – though quite implicitly.
In any event, the policy goal behind all of this is to maintain a single appellate court for deciding patent issues, and the outcome decided by the 10th Circuit here very much continues that goal.
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Predator v. Gamo began when Predator filed its patent infringement lawsuit against Gamo, asserting infringement of U.S. Patent No. 6,526,893 (covering a lead air-rifle pellet with polymeric tip) along allegations of trade dress and copyright infringement. Fairly soon thereafter, a glaring problem emerged with the patent claim. One of the listed co-inventors (Lee Phillips) came forward claiming that he retained partial ownership of the patent rights. At that point, the patentee voluntarily dismissed the patent claim in order to to fight a state-court battle over patent ownership, which then became more complicated when Gamo purchased Phillips purported interest and intervened in the state court action.
With the state-court case going south (including a failed motion to recuse that judge), the patentee returned to Federal Court with a motion to supplement and amend its complaint — by both reviving its original infringement complaint and adding a challenge to Gamo’s claimed ownership rights. However, the district court refused to permit the changes and also awarded $10,000 in sanctions against Predator’s attorney John Cogswell for improperly gaming the system, the district court awarded $10,000 in sanctions. Cogswell then appealed that ruling to the 10th Circuit Court of Appeals.
After determining that it had jurisdiction (as discussed above), the court then reversed the lower court’s sanctions order — finding that Predator had properly justified its delay in seeking to add the claims and thus were not sanctionable.
Ironically, if, on remand the district court reconsiders and allows the complaint to be amended again to add the patent claim then suddenly apparent appellate jurisdiction would shift again to the Federal Circuit.