United States: For A Suit Filed Pre-AIA, A Counterclaim Related To Patent Law Does Not Confer Federal Question Jurisdiction

In Wawrzynski v. H.J. Heinz Co., No. 12-1624 (Fed. Cir. Sept. 6, 2013), the Federal Circuit held that, under the law that applied when the suit was filed, it lacked subject matter jurisdiction over the merits of the appeal and transferred the appeal to the U.S. Court of Appeals for the Third Circuit.

In 1997, David Wawrzynski patented a method for dipping and wiping a food article in a specially configured condiment package, U.S. Patent No. 5,676,990 ("the '990 patent"). In a March 2008 letter to H.J. Heinz Company ("Heinz"), Wawrzynski sent promotional materials that depicted and described a condiment container similar to the condiment container depicted in the '990 patent. The materials also contained information not disclosed in the '990 patent, including the "Little Dipper" name, a slogan, a discussion of a "pull tab" design, and various graphical representations of the Little Dipper with the Heinz logo. In a meeting with Heinz, Wawrzynski contends that he shared the idea of creating a "dual function" product, one that permitted a consumer to either dip a food article into the condiment or separately squeeze out the condiment. Heinz responded to Wawrzynski that it was not interested in his product ideas. Months later, Heinz released its new "Dip & Squeeze®" packet that allowed a user to either pull a tab to reveal a well of sauce for dipping, or rip off an end of the packet to dispense sauce by squeezing.

On October 5, 2010, Wawrzynski filed a lawsuit against Heinz in Michigan state court asserting claims relating to the Dip & Squeeze®. Heinz countered by removing the action to the U.S. District Court for the Eastern District of Michigan on the basis of diversity jurisdiction. Wawrzynski then filed an amended complaint, including two counts: (1) breach of an implied contract, and (2) unjust enrichment based on Heinz's alleged use of Wawrzynski's ideas for condiment packaging, and for use in advertising and promoting the Dip & Squeeze®. The amended complaint referenced the '990 patent.

Heinz filed a counterclaim alleging that Heinz did not infringe the '990 patent and that the '990 patent was invalid. Wawrzynski filed a motion to dismiss Heinz's counterclaim on the ground that the complaint was asserting state law claims, not patent infringement. Concluding that the case implicated the '990 patent, the district court denied the motion to dismiss and transferred the case to the Western District of Pennsylvania's Patent Pilot Program.

On March 16, 2012, Wawrzynski answered Heinz's counterclaim, stating that he was not suing Heinz for infringement of the '990 patent. He followed this with a covenant not to sue Heinz on the basis of the '990 patent. Wawrzynski filed a second motion to dismiss Heinz's counterclaim, arguing that he had admitted in his answer that he was not suing Heinz for patent infringement, and had provided Heinz with a covenant not to sue. The district court denied the motion.

Heinz filed a motion for SJ, arguing that Wawrzynski's other claims were preempted by federal patent law. The district court granted the motion, and Heinz moved for SJ on its counterclaim of noninfringement. Finding that it had jurisdiction to decide the matter, the district court granted Heinz's motion for SJ of noninfringement. Wawrzynski appealed both of the district court's rulings.

The Federal Circuit asked the parties to address (1) whether the pre- or post-America Invents Act ("AIA") version of 28 U.S.C. § 1295(a)(1) governed the case, and (2) whether the Court had jurisdiction under the governing version of § 1295(a)(1). Both parties argued that the Federal Circuit had jurisdiction but for different reasons. The Court addressed each party's arguments in turn, ultimately deciding that it did not have jurisdiction.

Wawrzynski argued that the post-AIA version of § 1295 governed the case, because even though the suit was filed before the effective date of the AIA, Heinz filed the counterclaim asserting noninfringement of the '990 patent after the effective date. He argued that, based on the Sixth Circuit's decision in Static Control, the Federal Circuit has jurisdiction in certain "evolving circumstances," and that Heinz's counterclaim presents such circumstances. Slip op. at 7-8 (citing Static Control Components, Inc. v. Lexmark Int'l, Inc., 697 F.3d 387, 398-99 (6th Cir. 2012), cert. granted, No. 12-873, 2013 WL 182751 (U.S. June 3, 2013)). The Court disagreed, holding that the "evolving circumstances" standard only applies when the court deems a claim to be part of the pleadings because the parties have consented, expressly or implicitly, to litigate that claim. The Court held that Wawrzynski's two motions to dismiss the counterclaim for lack of jurisdiction, combined with his admission in his pleadings that Heinz did not infringe and his covenant not to sue, clearly indicated that he did not consent to litigating a claim for patent infringement.

The Federal Circuit also held that even if both parties had consented to litigate patent infringement, the AIA version of § 1295 applies to lawsuits "commenced" on or after the effective date, and that a lawsuit "commences" upon the filing of the complaint. The Court therefore held that the post-AIA version of § 1295 only governs a case if the complaint was filed after the effective date, September 16, 2011.

The Federal Circuit also dismissed Heinz's reasoning for why it believed the Court had jurisdiction in this case. Heinz argued that the Court had jurisdiction under the pre-AIA version of § 1295, because the original complaint asserted a claim of patent infringement. The Court focused on the "well-pleaded complaint" rule, stating that "federal question jurisdiction extends over 'only those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.'" Id. at 10 (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808 (1988)). The Court held that the complaint in this case was not well pleaded for patent infringement and that to construe it to the contrary "would turn the well-pleaded complaint rule on its head." Id. at 12-13.

In determining that the complaint was not well pleaded, the Court first noted that it did not contain the language of a typical patent allegation, i.e., the complaint did not contain even a single variation of the word "infringe." Further, the complaint only articulated two counts (state law allegations of "Breach of Implied Contract" and "Unjust Enrichment"), neither of which was related to patent law. As evidence, the complaint alleged that Wawrzynski provided Heinz with ideas not found in the '990 patent, including the "Little Dipper" name, a slogan, a discussion of a "pull tab" design, and representations of the Little Dipper with the Heinz logo. Further, the Court held that the procedural context in which Wawrzynski filed his original complaint indicated he intended to eschew federal law and invoke state law, because if he wanted to assert patent infringement, Wawrzynski would have filed in federal court. The Court thus determined that the complaint was not well pleaded for patent infringement. "Because federal law does not create Mr. Wawrzynski's cause of action, we lack subject matter jurisdiction over his appeal under the pre-AIA version of § 1295." Id. at 13.

The Court found that the case was governed by the pre-AIA version of § 1295, because the date a complaint is filed, not the date a counterclaim is filed, determines which version applies. Under the pre-AIA version of § 1295, the complaint did not contain allegations of patent infringement. As a result, the Federal Circuit lacked jurisdiction and ordered a transfer to the Third Circuit.

Judges: Newman, Plager (author), Prost

[Appealed from W.D. Pa., Judge Schwab]

This article previously appeared in Last Month at the Federal Circuit, October 2013.

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