State of Vermont v. Mphj Technology Investments
803 F.3d 635
Fed. Cir.2015Background
- Vermont sued MPHJ in state court under the Vermont Consumer Protection Act (VCPA), alleging deceptive patent-demand letters to Vermont businesses and seeking injunctive relief.
- MPHJ removed the original complaint to federal court; the district court remanded, and this Court held the remand order unreviewable under 28 U.S.C. § 1447(d).
- After amendment of Vermont’s complaint (deleting one broad injunction request), MPHJ answered and asserted counterclaims including a compulsory preemption/invalidity counterclaim challenging application of the VCPA.
- MPHJ filed a second removal based principally on 28 U.S.C. § 1442(a)(2), arguing that Vermont’s suit (as amended) sought relief that would require MPHJ to comply with Vermont’s BFAPIA, a statute it claimed conflicts with federal patent law.
- The district court remanded again, concluding the amended complaint did not seek relief under the BFAPIA and that removal under § 1442(a)(2) therefore was unsupported (and was untimely in any event).
- On appeal, the Federal Circuit found it had jurisdiction (based on MPHJ’s compulsory counterclaim alleging preemption of the VCPA by federal patent law) but affirmed the remand because the amended complaint did not encompass the BFAPIA and so § 1442(a)(2) did not authorize removal.
Issues
| Issue | Plaintiff's Argument (Vermont) | Defendant's Argument (MPHJ) | Held |
|---|---|---|---|
| Whether the amended complaint seeks injunctional relief under the BFAPIA (i.e., whether "Vermont law" in the injunction request includes BFAPIA) | The amended complaint only alleges violations of the VCPA; it never invokes or seeks relief under the BFAPIA. | The amendment, occurring after BFAPIA enactment, implicitly broadened "Vermont law" to include BFAPIA—so removal under §1442(a)(2) is proper. | Held: Vermont conceded at oral argument and the court concluded the amended complaint does not seek relief under the BFAPIA; "Vermont law" refers only to the VCPA. |
| Whether removal under 28 U.S.C. §1442(a)(2) (federal-officer/patent-holder removal) is authorized here | N/A (Vermont’s position: no §1442(a)(2) basis because BFAPIA not at issue) | §1442(a)(2) permits removal because enforcement of BFAPIA would affect federal patent rights and patent statutes. | Held: No basis for §1442(a)(2) removal because the amended complaint does not implicate BFAPIA; court need not decide wider §1442(a)(2) scope questions. |
| Timeliness of the second removal under 28 U.S.C. §1446(b)(3) | The state argues the amended complaint did not create a new ground for removal; removal is untimely. | MPHJ contends removal was timely after amendment/grant of leave. | Held: District court found removal untimely even if BFAPIA were implicated; on appeal the dispositive ground was that BFAPIA was not in the amended complaint, so §1446(b)(3) removal did not apply. |
| Federal Circuit jurisdiction over the appeal | Vermont argued this Court lacks jurisdiction and appeal should be dismissed. | MPHJ argued the Court has jurisdiction under 28 U.S.C. §1295(a)(1) because a compulsory counterclaim (preemption of the VCPA by patent law) "arises under" patent laws. | Held: The Federal Circuit has jurisdiction based on MPHJ’s compulsory counterclaim 5 asserting patent-law preemption of the VCPA under the AIA amendments and Gunn framework. |
Key Cases Cited
- Gunn v. Minton, 133 S. Ct. 1059 (2013) (framework for when a state-law claim "arises under" federal patent law)
- Grable & Sons Metal Prods. v. Darue Eng'g, 545 U.S. 308 (2005) (substantial federal issue in state-law claim supports federal jurisdiction)
- Biotechnology Indus. Org. v. Dist. of Columbia, 496 F.3d 1362 (D.C. Cir. 2007) (patent preemption claim may "arise under" patent laws)
- Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367 (Fed. Cir. 2004) (patent-law preemption and objective-baselessness standards)
- Vaden v. Discover Bank, 556 U.S. 49 (2009) (limits on basing federal jurisdiction on defenses or counterclaims pre-AIA)
- Holmes Group, Inc. v. Vornado Air Circulation Sys., 535 U.S. 826 (2002) (counterclaims generally do not confer "arising under" jurisdiction prior to AIA amendments)