Federal Courts,  Jurisdiction,  Patent

A Trip Down a “Dark Corridor”

In Linear Technology Corp v. Applied Materials, Inc., case no. H028343 (June 18, 2007), the Sixth District Court of Appeal offers a primer on determining whether a case is one “arising under any Act of Congress relating to patents” within the meaning of that language in Title 28 United States Code section 1338(a).

Linear purchased equipment from the three defendants and was sued for patent infringement by a third party, with whom it settled.  Linear alleged its use of the equipment led to the patent infringement suit and sought indemnity from the sellers by suing them in state court on multiple causes of action.  The superior court dismissed the case in its entirety, finding that the complaint failed to state a claim as to two of the causes of action and that it lacked jurisiction over the remainder because section 1338(a) conferred exclusive jurisdiction over them to the federal district court.

The claims dismissed for lack of jurisdiction were for breach of contract, breach of the implied covenant of good faith and fair dealing, implied equitable indemnity, and breach of statutory warranty.  The Sixth District finds that the claims do not “arise under” the patent laws, and therefore reverses as to those claims (though it affirms the dismissal of fraud and unfair competition claims on non-jurisdictional grounds).  The decision makes for a good read in part because Linear wins the jurisdictional argument despite the court’s disagreement with it over the nature of the third party action.

The single best line of the opinion is this quotation from Arthur Young & Co. v. City of Richmond (4th Cir. 1990) 895 F.2d 967, 969 fn.2, which the court uses to set the stage for its jurisdictional analysis:

The line between cases that “arise under” [the patent laws] and those that present only state law contract issues is “a very subtle one,” [citation] and the question leads down “one of the darkest corridors of the law of federal courts and federal jurisdiction.” [Citation.]

Makes it sound creepy, doesn’t it?