American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257 (1916)
The federal courts cannot hear an action based on damages caused to a business by a threat to sue for patent infringement, since this is not an action under patent laws.
American Well Works Co. produced and sold a type of pump that was allegedly the best pump on the market. Layne & Bowler threatened to sue American and its customers, arguing that the pump resembled parts of the pump that it sold. Layne actually did sue some of American's customers, so American brought an action for damages based on the harm caused to its business by Layne's intimidation tactics. American's lawsuit was initially filed in state court but removed to federal district court. American requested it to be remanded to state court, but the lower court rejected the motion on the grounds that state courts lack jurisdiction over patent actions. The lower court also held that it could not exercise removal jurisdiction because the state court never had proper jurisdiction in the first place. American argued on appeal that there was no federal question because the claim was not actually based on patent laws.Opinions
- Oliver Wendell Holmes, Jr. (Author)
- Edward Douglass White
- William Rufus Day
- Willis Van Devanter
- Mahlon Pitney
- James Clark McReynolds
The proper source of the cause of action is not the patent but the damage caused to the patent holder's business. This means that the lawsuit does not arise under a federal question, and state law should determine whether there is an actionable claim based on a business tort.
- Joseph McKenna (Author)
This case in fact does implicate the patent laws and thus should be resolved in a federal court.Case Commentary
Although federal courts have authority over patent cases, state courts still retain authority over certain actions that relate to patent law, so there is a significant overlap between their spheres of jurisdiction. This allows parties some freedom of choice in where to file suit.
U.S. Supreme CourtAmerican Well Works Co. v. Layne & Bowler Co., 241 U.S. 257 (1916)
American Well Works Company v.
Layne & Bowler Company
Argued May 5, 1916
Decided May 22, 1916
241 U.S. 257
A suit for damages to business caused by a threat to sue under the patent law is not, in itself, a suit under the patent law, of which the state court cannot take jurisdiction.
Whether a wrong is committed by one making statements to effect that an article sold by another infringes the former's patent depends upon the law of the state where the act is done, and not upon the patent law of the United States, and, in this case, held that the state court had jurisdiction of a suit for libel or slander based on such statements.
The facts, which involve the jurisdiction of the district court, are stated in the opinion.