April 1, 2016

If You Want to Contest Jurisdiction, Don’t File a Counterclaim

In Microsoft Corporation v, GeoTag, Inc., [2015-1140] (April 1, 2016), the Federal Circuit affirmed the district court’s exercise of jurisdiction (although on different grounds) and affirmed summary judgment of non-infringement.

In response to suits against their customers in the Eastern District of Texas, Microsoft and Google brought a declaratory judgment action against GeoTag for a declaration that U.S. Patent No. 5,930,474 is invalid and not infringed.  GeoTag filed a motion to dismiss and an answer and counterclaim for infringement of the ‘474 patent, arguing that the infringement action was a compulsory counterclaim which could not confer jurisdiction on the original declaratory judgment action. The district court, applying Third Circuit law, found jurisdiction because the counterclaim was not a compulsory counterclaim.  The Federal Circuit agreed that there was jurisdiction, but applying Federal Circuit, rather than Third Circuit law, and finding jurisdiction based upon GeoTag’s counterclaim, regardless of whether or not it was compulsory.  The Federal Circuit found that the district court retained subject matter jurisdiction over GeoTag’s patent infringement counterclaims pursuant to § 1338(a), such that it need not determine whether the District Court properly found that it had jurisdiction over Google’s First Amended Complaint.