American Well Works Co. v. Layne & Bowler Co
In American Well Works Co. v. Layne & Bowler Co. (1916) 241 U.S. 257, 36 S.Ct. 585, 60 L.Ed. 987, the action sounded in tort, although plaintiff could just as easily have sued for infringement.
The plaintiff initiated the action in state court, charging that it had a valid patent on a certain pump, that defendants asserted that plaintiff's patent infringed defendants' pump patent, and that defendants were suing and threatening to sue plaintiff's licensees for infringement.
Defendants removed the case to federal court as an action arising under the patent laws.
The Supreme Court reversed, holding that the case did not arise under the patent laws. 'Of course,' said the Court, 'the question depends upon plaintiff's declaration.' (241 U.S. at 258, 36 S.Ct. 585.)
The Court later observed:
'What makes the defendants' act a wrong is its manifest tendency to injure the plaintiff's business; and the wrong is the same whatever the means by which it is accomplished. But whether it is wrong or not depends upon the law of the state where the act is done, not upon the patent law, and therefore the suit arises under the law of the state. A suit arises under the law that creates the cause of action. The fact that the justification may involve the validity and infringement of a patent is no more material to the question under what law the suit is brought than it would be in an action of contract.' (241 U.S. at 260, 36 S.Ct. at 586.)