T-MOBILE US, INC. v. KAIFI LLC
Before Taranto, Schall, and Chen. Appeal from the United States District Court for the Eastern District of Texas.
Summary: A contractual dispute does not “arise under” patent law if the contract merely includes terms referencing patent reexamination.
KAIFI sued T-Mobile US for patent infringement. T-Mobile requested an ex parte reexamination (EPR) of the asserted patent. The parties settled, and T-Mobile agreed to make an additional payment to KAIFI if any asserted claims survived the EPR. The Patent Office issued a reexamination certificate confirming the patentability of several asserted claims without amendment.
Instead of making the payment, T-Mobile sued for declaratory judgment that no asserted claim “survived” the EPR because the scope of the confirmed claims was limited by statements KAIFI made during the proceeding. KAIFI counterclaimed for breach of contract. KAIFI filed a motion for summary judgment, which the district court granted because at least one claim was confirmed as patentable in the reexamination certificate, thus “surviv[ing]” the EPR. T-Mobile appealed.
The Federal Circuit held that it lacked appellate jurisdiction and transferred the appeal to the Fifth Circuit. Under Gunn v. Minton, a state law claim arises under federal law when a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance. The Federal Circuit held that the breach of contract claim did not “necessarily raise” a patent law issue since the district court could simply read the reexamination certificate to determine whether the Patent Office found any asserted claims patentable. Interpreting the term “survives” did not necessarily require resolving patent issues such as prosecution disclaimer or inequitable conduct. The Federal Circuit also held that the allegedly federal issue was not substantial to the federal system as a whole. Thus, the case did not arise under patent law, and the Federal Circuit lacked appellate jurisdiction.
Editor: Sean Murray
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