Micron Battle Reveals Need for Clear Patent Jurisdiction Rules

As state “anti-troll” statutes become more commonly used in patent disputes, courts need a jurisdictional rule that is clear and respects the difference between federal patent cases and state-law cases that simply have patents in them.

The US Court of Appeals for the Federal Circuit will hear arguments June 5 in Micron Technology, Inc. v. Netlist, Inc., which involves Micron’s claim that Netlist violated an Idaho statute prohibiting bad-faith assertions of patent infringement. The case is the latest salvo in an ongoing battle over which courts may hear cases that involve patents but don’t include infringement claims.

Federal district courts have exclusive jurisdiction over cases “arising under” patent law. State courts can’t hear those cases, and appeals go to the Federal Circuit, not the regional circuits.

The jurisdiction question is easy when a patent owner sues for infringement. The question is harder when a plaintiff brings a state-law claim that happens to involve a patent.

In Gunn v. Minton, the US Supreme Court held in 2013 that a state-law malpractice case against patent lawyers didn’t arise under patent law, even though the court would need to apply patent law to decide whether the lawyers had been negligent. A patent issue embedded in a state-law claim creates jurisdiction only when deciding it would be important “to the federal system as a whole,” the justices said. That wasn’t true of the backward-looking application of patent law to the specific facts of Gunn.

Gunn overturned Federal Circuit precedent holding that patent-related malpractice claims arose under patent law. But disputes have continued. As I’ve written before, the Federal Circuit sometimes has read Gunn narrowly, upholding jurisdiction when the relevant patent remained in force. Other decisions have rejected jurisdiction in similar circumstances.

Micron v. Netlist shows why the issue matters so much right now. State statutes prohibiting bad-faith patent assertions, including Idaho’s, aren’t the curiosities they were when more than 30 states passed them about a decade ago. The video-game company Valve Corp. recently won a jury trial against prolific patent asserter Leigh Rothschild under Washington’s statute. (Disclosure: I served as an expert witness for Valve in that case.)

Micron likewise has filed multiple suits under Idaho’s statute, including one in which the Federal Circuit refused to disturb a district court order requiring the patent owner to post an $8 million bond before continuing an infringement suit.

The more state statutes are used, the more courts will have to decide whether the cases belong in state court or federal court, and in the Federal Circuit or a regional circuit.

The facts of Micron are tangled, but the jurisdictional issue is simple enough. Netlist sued Micron for patent infringement in Texas federal court. Micron later sued Netlist in Idaho state court, alleging that Netlist acted in bad faith by asserting patents Netlist knew or should have known were invalid. Netlist removed the Idaho case to federal court, claiming that it arose under patent law. The District of Idaho remanded the case to Idaho state court. Netlist appeals that remand order.

Netlist’s main argument in favor of federal jurisdiction is that Micron can win on its claim under Idaho’s statute only by showing that Netlist’s patent assertions were objectively baseless, meaning no reasonable litigant could have expected success. Netlist says that inquiry necessarily turns on the patent-law question of whether its patents were plausibly valid and infringed.

Micron responds in two ways. First, it argues that objective baselessness enters the case only because Netlist raised it as part of a federal preemption defense. Under the well-pleaded complaint rule, a defense can’t create arising-under jurisdiction.

Second, Micron argues that objective baselessness isn’t the kind of “substantial” patent issue Gunn requires. Questions about plausible validity, infringement, and litigation conduct are case-specific questions that don’t matter much to the patent system as a whole, Micron says.

The first argument is tricky. Although Netlist relies on preemption as a defense, the Federal Circuit has said that it’s the plaintiff’s burden to prove objective baselessness. But the Federal Circuit doesn’t need to address that argument because any patent issue in the case is not substantial under Gunn.

A state court decision about whether Netlist acted in bad faith might require the court to apply patent law to evaluate Netlist’s infringement allegations. But Gunn required a similar analysis: whether the patent owner would have won an earlier infringement case had his attorneys not been negligent. The Supreme Court held that such a “backward-looking” and “fact-bound” inquiry didn’t create arising-under jurisdiction.

The same can be said in Micron. Whether Netlist asserted its patents in bad faith isn’t a dispute about the meaning of federal patent law. It’s a fact-driven dispute about Netlist’s past enforcement conduct.

Netlist’s best argument is the risk of inconsistent rulings. Some federal patent proceedings between Netlist and Micron remain ongoing, and a state court ruling could be in tension with federal rulings on validity, infringement, fees, or sanctions.

But a jurisdictional rule based on the risk of inconsistency would be hard to administer. In Micron, the relevant patent claims have been held unpatentable, but appeals in some—though not all—of those proceedings are ongoing. Having jurisdiction turn on litigation timing invites the maneuvering that procedural law should try to avoid.

The better rule is that state-law claims challenging patent enforcement don’t arise under patent law merely because a court must consider patent validity, infringement, or litigation conduct. Arising-under jurisdiction over a state-law claim should exist only when the case presents a genuine dispute about what patent law means, or about the validity or interpretation of the patent statute.

That approach respects Gunn, reduces jurisdictional litigation, and gives states room to regulate abusive business conduct.

The case is: Micron Technology Inc,. v. Netlist, Inc., Fed. Cir., No. 24-02281, oral arguments 6/5/26.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Paul R. Gugliuzza is a professor at the University of Texas at Austin School of Law whose research focuses on patent law and litigation.

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