v.
Inspired Products Group, LLC
for the Federal Circuit
______________________
INSPIRED DEVELOPMENT GROUP, LLC, A
FLORIDA LIMITED LIABILITY COMPANY,
Plaintiff/Counterclaim Defendant-Appellant
MITCHELL PRINE, INDIVIDUALLY,
Counterclaim Defendant
v.
INSPIRED PRODUCTS GROUP, LLC, A
CALIFORNIA LIMITED LIABILITY COMPANY,
DBA KIDSEMBRACE, LLC,
Defendant/Counterclaimant-Appellee
______________________
2018-1616
______________________
Appeal from the United States District Court for the
Southern District of Florida in No. 9:16-cv-80076-RLR,
Judge Robin L. Rosenberg.
______________________
Decided: September 18, 2019
______________________
STEVEN L. BRANNOCK, Brannock & Humphries, Tampa,
FL, argued for plaintiff/counterclaim defendant-appellant.
Also represented by JOSEPH T. EAGLETON.
THOMAS A. DYE, Cozen O’Connor, West Palm Beach,
FL, argued for defendant/counterclaimant-appellee. Also
2 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS
GROUP, LLC
represented by JAMES A. GALE, ARTHUR ROBERT WEAVER,
Miami, FL.
______________________
Before PROST, Chief Judge, NEWMAN and STOLL,
Circuit Judges.
PROST, Chief Judge. Appellant Inspired Development Group, LLC (“In- spired Development”) sued Appellee Inspired Products Group, LLC, d/b/a KidsEmbrace, LLC (“KidsEmbrace”) for breach of contract and other related state law claims in fed- eral district court on the basis of diversity jurisdiction un- der 28 U.S.C. § 1332(a). The district court granted summary judgment in KidsEmbrace’s favor on certain claims and Inspired Development appealed to the U.S. Court of Appeals for the Eleventh Circuit. After the Elev- enth Circuit discovered that diversity jurisdiction did not exist, the district court concluded on remand that it re- tained jurisdiction over the suit based on federal question jurisdiction. The Eleventh Circuit transferred the case to this court to determine whether the parties’ claims “aris[e] under” the patent laws pursuant to 28 U.S.C. § 1338(a). For the reasons below, we vacate and remand for dismissal of the lawsuit for lack of jurisdiction. BACKGROUND I This case arose as a business dispute. After developing children’s car seat designs in the shape of cartoon and comic book characters, Mitchell Prine formed Inspired De- velopment. Inspired Dev. Grp. v. Inspired Prods. Grp., No. 9:16-CV-80076, 2017 WL 411997, at *1 (S.D. Fla. Jan. 31, 2017). Mr. Prine obtained several patents for the safety seats. Id. The first design patent issued as U.S. Design Patent No. D524,559, which incorporated a representation of Batman into the car seat. J.A. 2667–72.
INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 3 GROUP, LLC
Inspired Development held the patents as assignee. Inspired Dev. Grp., 2017 WL 411997, at *1. With the help of some investors, Mr. Prine then formed a second com- pany, KidsEmbrace, to manufacture and sell the car seats. Id. Mr. Prine acted as CEO of KidsEmbrace. Id. at *2. In 2007, the two companies entered into an Exclusive Patent Licensing Agreement (“Agreement”), which granted KidsEmbrace an exclusive license to practice the patents to commercialize the car seats in exchange for certain roy- alties. Id. at *1. In 2009, a third company entered the picture. KidsEmbrace sought additional investment from a Bulgarian corporation named Boliari, EAD (“Boliari”). Id. at *2. As a condition of its investment, Boliari made both Inspired Development and KidsEmbrace execute a Binding Letter of Agreement (“Binding Letter”). Id. The Binding Letter required Inspired Development to transfer the patent rights to KidsEmbrace in the event KidsEmbrace was acquired. In exchange, Inspired Development would receive a minimum royalty payment. Id. Shortly after the deal with Boliari was struck, Mr. Prine was removed as CEO of KidsEmbrace. Id. Subsequently, KidsEmbrace began questioning the value of licensing Inspired Development’s patents. Id. Eventually, KidsEmbrace unilaterally terminated the Agreement. Id. Inspired Development believed it was owed outstanding royalties under the Agreement and a lump-sum payment under the Binding Letter. Id. II In 2016, Inspired Development filed suit against KidsEmbrace in the U.S. District Court for the Southern District of Florida, alleging breach of contract and other equitable state law claims. Count I of the complaint alleged that KidsEmbrace breached the written terms of the Agreement.
4 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC
J.A. 98 ¶¶ 34–35 (alleging Section 2 of Agreement required “the greater of $100,000 or one percent (1%)” of yearly “net sales” as well as late fees, which KidsEmbrace failed to pay in the fourth quarter of 2012 and all of 2013). Count II alleged breach of the Binding Letter. J.A. 99 ¶¶ 39–41 (al- leging Section 5 of Binding Letter required “a minimum of $3,000,000 in total royalties during the duration of the Agreement,” which KidsEmbrace refused to pay after “un- justifiably and unilaterally” terminating the Agreement). Count III pled a claim for unjust enrichment in the alter- native to the breach of contract claims. Id. ¶ 43 (“As an alternative to Counts I and II (Breaches of the Agreement and Binding Letter, respectively), Plaintiff brings a cause of action against Defendant for unjust enrichment.”). Count IV pled promissory estoppel. J.A. 100 ¶¶ 50–52. In response, KidsEmbrace asserted counterclaims, which included breach of contract, fraud, negligent misrep- resentation, restitution, and breach of fiduciary duty. Both parties relied on diversity to establish subject matter jurisdiction over their respective claims. See 28 U.S.C. § 1332(a). On summary judgment, the claim for breach of the Agreement (Count I) survived, see Inspired Dev. Grp., 2017 WL 411997, at *3–5, but was later settled. The rest of the case was resolved entirely on state law grounds under Flor- ida contract law. Inspired Development lost on its claim for breach of the Binding Letter (Count II), id. at *8, and equitable claims of unjust enrichment (Count III), id. at *9, and promissory estoppel (Count IV), id. Inspired Develop- ment appealed to the Eleventh Circuit. On appeal, the Eleventh Circuit spotted a potentially fatal problem with the case: diversity of citizenship might not exist. As the Eleventh Circuit explained, “to allege the citizenship of a limited liability company, a party must identify all the members of the limited liability company, and list the citizenship of each member.” Jurisdiction
INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 5 GROUP, LLC
Question, Inspired Dev. Grp. v. Inspired Prods. Grp., No. 17-11072 (11th Cir. Mar. 23, 2017) (discussing Mallory & Evans Contractors & Eng’rs, LLC v. Tuskegee Univ., 663 F.3d 1304, 1305 (11th Cir. 2011)). Neither party had done so in their pleadings. The Eleventh Circuit issued a “Ju- risdictional Question,” finding that “the relevant pleadings did not sufficiently allege the citizenship of any party, as necessary to establish the district court’s subject matter ju- risdiction over the relevant claims in the first instance.” Id. The Eleventh Circuit’s concerns were well founded. Af- ter a closer examination of their respective members, the parties “admitted that they are not diverse.” Limited Re- mand, Inspired Dev. Grp. v. Inspired Prods. Grp., No. 17- 11072 (11th Cir. June 6, 2017); see also 28 U.S.C. § 1332(a)(1) (requiring an amount in controversy exceeding $75,000 and a claim between citizens of different states). At this point, cut loose from its jurisdictional moorings, the dispute appeared to be headed for dismissal. 1 But the case did not end there. KidsEmbrace attempted to anchor jurisdiction on a different basis. KidsEmbrace argued for “the first time on appeal that federal subject matter jurisdiction exists” because the case presented a federal question. J.A. 2550. The Eleventh Circuit remanded to let the district court answer that question in the first instance. Before the district court, Inspired Development opposed the new jurisdictional theory. It argued that because there was no diversity of citizenship and it only alleged state law claims, the case no longer belonged in federal court. KidsEmbrace framed the state law breach of contract and equitable claims in the complaint as “arising
1 Inspired Development filed suit in Florida state court on similar claims. Inspired Dev. Grp. v. Inspired Prods. Grp., No. 2017-CA-004490 (Fla. 15th Jud. Cir.). 6 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC under” federal patent law rather than state law. KidsEmbrace also argued its state law counterclaims— which it had already voluntarily dismissed from the suit— provided a basis for staying in federal court. The district court accepted KidsEmbrace’s arguments, concluding it retained jurisdiction over this breach of con- tract action. See Order on Subject Matter Jurisdiction at 9, Inspired Dev. Grp. v. Inspired Prods. Grp., No. 9:16-CV- 80076 (S.D. Fla. Dec. [4], 2017) (concluding district court had “subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1338(a)”). The case then returned to the Eleventh Circuit for review of that decision. On appeal, however, the Eleventh Circuit revisited KidsEmbrace’s motion to transfer the appeal to this court. In “the interests of justice and judicial economy,” the Elev- enth Circuit granted KidsEmbrace’s motion to transfer, “expressly leav[ing] the question of whether federal subject matter jurisdiction exists under 28 U.S.C. § 1338(a) to be resolved by the Federal Circuit.” Inspired Dev. Grp. v. In- spired Prods. Grp., No. 17-11072, 2018 WL 1282412, at *1 (11th Cir. Feb. 22, 2018). We have jurisdiction to decide whether the district court had subject matter jurisdiction pursuant to 28 U.S.C. § 1338(a). NeuroRepair, Inc. v. The Nath Law Grp., 781 F.3d 1340, 1342 (Fed. Cir. 2015). DISCUSSION I “Subject matter jurisdiction is a question of law that we review de novo.” Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1360 (Fed. Cir. 2008); see also Sec. & Exch. INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 7 GROUP, LLC Comm’n v. Mutual Benefits Corp., 408 F.3d 737, 741 (11th Cir. 2005) (same). 2 “‘Federal courts are courts of limited jurisdiction,’ pos- sessing ‘only that power authorized by Constitution and statute.’” Gunn v. Minton, 568 U.S. 251, 256 (2013) (quot- ing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). “Federal courts may hear only those cases over which they have subject matter jurisdiction.” Semi- conductor Energy Lab. Co. v. Nagata, 706 F.3d 1365, 1368 (Fed. Cir. 2013). Subject matter jurisdiction “may be based upon either diversity of citizenship or federal question ju- risdiction.” Id. at 1369. “Where, as here, [the parties] do not claim diversity of citizenship, there must be federal question jurisdiction.” ExcelStor Tech., Inc. v. Papst Licensing GmbH & Co. KG, 541 F.3d 1373, 1375 (Fed. Cir. 2008). By statute, federal district courts are authorized to exercise original jurisdic- tion in civil actions “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. “Fed- eral courts have exclusive jurisdiction over cases ‘arising under any Act of Congress relating to patents.’” Gunn, 568 U.S. at 253 (quoting 28 U.S.C. § 1338(a)). 2 At oral argument, the parties briefly explored whether we might review this jurisdictional issue under a “plausibility” standard as was used in Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 819 (1988). See, e.g., Oral Arg. at 14:09–15:02, 33:51–34:41, No. 2018- 1616, http://www.cafc.uscourts.gov/oral-argument-record- ings. Christianson applied that standard to questions of “transfer” between federal courts pursuant to 28 U.S.C. § 1631. Id. (“[If] the transferee court can find the transfer decision plausible, its jurisdictional inquiry is at an end.”). The Eleventh Circuit’s transfer decision is not being chal- lenged here. 8 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC For statutory purposes, a case will “arise under” fed- eral law in two ways. Id. at 257. First, the case qualifies if federal law “creates the cause of action asserted.” Id. This category accounts for the “vast bulk of suits” arising under federal law. Id. Second, even if the claim “finds its origins in state ra- ther than federal law,” the Supreme Court has identified a “special and small category” of cases that nonetheless arise under federal law. Id. at 258. For this second “slim cate- gory,” we apply the four-part Gunn test. Id. (applying test articulated in Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005), to 28 U.S.C. § 1338(a)). If the Gunn test is met, then federal question jurisdiction is proper “because there is a ‘serious federal in- terest in claiming the advantages thought to be inherent in a federal forum,’ which can be vindicated without disrupt- ing Congress’s intended division of labor between state and federal courts.” Id. (quoting Grable, 545 U.S. at 313–14). A With regard to the first category, no claims here allege a cause of action created by federal patent law. KidsEm- brace cannot dispute this fact. This is a state law contract case for past due royalties. See Wawrzynski v. H.J. Heinz Co., 728 F.3d 1374, 1380 (Fed. Cir. 2013) (“Breach of im- plied contract and unjust enrichment are state law counts.”). Nonetheless, KidsEmbrace contends that Count III was intended to be a “thinly disguised patent infringement claim” simply “masquerading” as a claim for unjust enrich- ment. Appellee’s Br. 27. KidsEmbrace’s arguments mis- characterize the pleadings. Count III pled a fallback theory of relief sounding in quasi-contract in the event the written contract was deemed unenforceable or not control- ling. J.A. 99 ¶ 43; see also Diamond “S” Dev. Corp. v. Mer- cantile Bank, 989 So. 2d 696, 697 (Fla. Dist. Ct. App. 2008) (“Florida courts have held that a plaintiff cannot pursue a INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 9 GROUP, LLC quasi-contract claim for unjust enrichment if an express contract exists concerning the same subject matter.”). Count III cannot therefore reasonably be viewed as a free- standing claim for patent infringement. Rather, it was a conditional claim for equitable relief under Florida law. Accordingly, KidsEmbrace’s attempt to imply that Inspired Development engineered a claim for patent infringement under an alternative theory for unjust enrichment—which would only be available if the written agreements were un- enforceable—rings hollow. There is simply no support for KidsEmbrace’s position. 3 This matter does not fall into the first category of tra- ditional “arising under” cases under 28 U.S.C. § 1338(a). B Consequently, the central question becomes whether this matter falls within the second category. We turn to the four-part Gunn test to answer that question. Under 3 Though we reach this conclusion based on our re- view of the pleadings in the complaint, we note that the district court’s decision on summary judgment below is en- tirely consistent with our analysis. Indeed, the demise of Count III under Florida law echoes our own view of this claim as seeking traditional state law relief. As the district court concluded, Inspired Development “has not pled its unjust enrichment claim as a claim in addition to the mat- ters addressed by contract in this case.” Inspired Dev. Grp., 2017 WL 411997, at *8. Instead, it “expressly pled Count III as being in the alternative to Count I and Count II.” Id. Because the contracts in Counts I and II were deemed en- forceable and controlling, Count III was precluded. Id. (cit- ing Florida law). In the end, the district court determined that Count III stated an alternative equitable remedy, which so closely mirrored Counts I and II that it was barred in light of the written contracts. 10 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC Gunn, federal jurisdiction over a state law claim will lie if “a federal issue” is: (1) “necessarily raised,” (2) “actually disputed,” (3) “substantial,” and (4) “capable of resolution in federal court without disrupting the federal-state bal- ance approved by Congress.” Gunn, 568 U.S. at 258. All four elements must be satisfied. Id. Because the parties focused the majority of their dispute on Count III for unjust enrichment, we center our discussion on that claim and then address the other claims and counterclaims in due course.
[*1355]We begin with the first requirement of Gunn, which asks whether a federal issue is “necessarily raised.” “[A] patent law issue will be necessarily raised only if it is a necessary element of one of the well-pleaded claims.” Neu- roRepair, 781 F.3d at 1344. Here, a patent law issue was not necessarily raised in Count III. Under Florida law, the “elements of a cause of action for unjust enrichment are: (1) plaintiff has conferred [a] benefit on the defendant, who has knowledge thereof; (2) defendant voluntarily accepts and retains the benefit conferred; and (3) the circumstances are such that it would be inequitable for the defendant to retain the benefit with- out paying the value thereof to the plaintiff.” Peoples Nat’l Bank of Commerce v. First Union Nat’l Bank of Fla., 667 So. 2d 876, 879 (Fla. Dist. Ct. App. 1996) (quoting Hillman Const. Corp. v. Wainer, 636 So. 2d 576, 577 (Fla. Dist. Ct. App. 1994)). To meet these elements, Inspired Development’s allegations hinge on showing that it conferred a benefit on KidsEmbrace in the form of an exclusive license, that KidsEmbrace knew of and benefited from this license, and that principles of equity require KidsEmbrace to pay for the benefit. According to the complaint:
INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 11 GROUP, LLC
45. Plaintiff conferred a benefit on Defendant by licensing and allowing Defendant to use its utility and design Patents in the manufacturing and sale of the KidsEmbraceTM “Human Form” cartoon-and- superhero-themed children’s safety seats. 46. Defendant had knowledge of the benefit con- ferred and voluntarily accepted and retained the benefit conferred. J.A. 100 ¶¶ 45–46 (emphases added); see also J.A. 96 ¶ 25 (“By the end of 2010, Defendant, through the use of Plaintiffs licensed Patents, began selling the ‘Human Form’ children’s car safety seat . . . .”). By these allegations, one way Inspired Development could prove that KidsEmbrace “accepted and retained” a benefit at Inspired Development’s expense was to show that KidsEmbrace used one or more of Inspired Development’s “utility and design Patents” in the car seats it manufactured and sold. Thus, Inspired Development’s unjust enrichment claim potentially raises a question of patent law regarding infringement. Demonstrating infringement, however, is not the only way that Inspired Development could succeed on its claim. It is often the case that a licensee, and in particular an exclusive licensee, benefits from the grant of a license regardless of whether or not an infringing product is actually created. For example, if a product is possibly but not certainly infringing, an entity may procure a license in order to avoid uncertainty and litigation. The benefit in this case is the entity’s ability to invest or have others invest in its products with greater confidence, as well as the avoidance of costs and fees associated with suit. As for an exclusive license, the entity also gains the benefit of ensuring that no other entity has the ability to create competing products that practice the patents at issue. Thus, Inspired Development could succeed on its claim by showing that by conferring the license on KidsEmbrace,
12 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC
KidsEmbrace avoided litigation, acquired investment it may not have otherwise, or succeeded in preventing competition for a certain length of time. In this way, Inspired Development need not demonstrate that KidsEmbrace actually practiced the licensed patents, and the question of infringement is not a “necessary element” of the claim. [4] Though not a necessary element of the claim for unjust enrichment, we note that the issue of whether KidsEmbrace used the patents is “actually disputed” here under the second Gunn requirement. KidsEmbrace denied it manufactured or sold products within the scope of the patents in an infringing manner. See J.A. 96–97 ¶ 25, 127 ¶ 25.
[*1356][*1357]We now turn to the third Gunn requirement, requiring a “substantial” federal issue. Even if the state law claim here “necessarily raised” an issue of patent law that was “actually disputed,” “the federal issue in this case is not substantial in the relevant sense.” Gunn, 568 U.S. at 260. In KidsEmbrace’s view, the issue was substantial be- cause patent infringement was “the gravamen of Inspired Development’s unjust enrichment claim.” Appellee’s Br. 32. But KidsEmbrace’s argument misses the mark. To meet the substantiality requirement under Gunn, “it is not Finally, we assess the fourth requirement of Gunn. In doing so, we consider whether exercising federal jurisdic- tion would upset the “balance of federal and state judicial responsibilities.” Grable, 545 U.S. at 314. Under these cir- cumstances, it would. As discussed, KidsEmbrace invites us to essentially ig- nore Gunn’s clear requirements and read Jang to say that any breach of contract claim or related equitable claim in- volving a patent license agreement must “arise under” the patent laws. The consequences of accepting this invitation for the state-federal balance are clear. Any time such a state law claim “necessarily raises” an embedded patent in- fringement or invalidity question, federal question jurisdic- tion would lie. Many state law claims involve such embedded questions. “To hold that all questions of patent infringement are substantial questions of federal law for
[*1358]INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 23 GROUP, LLC
the purposes of federal patent jurisdiction would sweep a number of state-law claims into federal court.” MDS, 720 F.3d at 843 (concluding breach of contract claim did not satisfy fourth Gunn requirement). Therefore, finding a federal question here merely be- cause this contract implicates a run-of-the-mill question of infringement or validity would undoubtedly impact the wider balance between state and federal courts. Indeed, a plaintiff could create a federal jurisdictional hook to avoid state court in any case involving almost any state law claim by doing little more than pleading allegations that involve an embedded infringement or validity analysis. Clearly, such gamesmanship in non-diversity actions would upset the balance between state and federal courts. Accordingly, “courts considering alleged violations of a variety of state laws have declined to find federal question jurisdiction not- withstanding the presence of an underlying issue of patent law.” NeuroRepair, 781 F.3d at 1348 (collecting cases). For the reasons above, we reverse the district court based on this fourth element of Gunn as well. II KidsEmbrace’s remaining arguments in favor of juris- diction are unavailing. First, KidsEmbrace argues that Counts I and II regarding breach of contract might also confer jurisdiction. Second, KidsEmbrace argues its volun- tarily dismissed state law counterclaims also create “aris- ing under” jurisdiction. 9 With regard to Counts I and II, KidsEmbrace tries to fashion these state law claims into a jurisdictional hook. For similar reasons, that effort fails. KidsEmbrace spends pages of its brief arguing how these claims necessarily
9 KidsEmbrace does not meaningfully argue that Count IV furnishes a basis for jurisdiction. 24 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC require resolution of basic patent issues. See, e.g., Appel- lee’s Br. 36–41. But once again, there is no indication these claims rise to the level of substantial federal issues as re- quired by Gunn. Indeed, KidsEmbrace rehashes the flawed arguments it already advanced under Jang and Hunter Douglas, advocating once more that we essentially collapse the third requirement (“substantial”) into the first requirement (“necessarily raised”) under Gunn. This effort is equally unsuccessful. We are not persuaded that Counts I and II meet either the third or fourth requirements in Gunn. With regard to KidsEmbrace’s counterclaims, these former allegations do not provide an independent basis for federal question jurisdiction either. As an initial matter, KidsEmbrace concedes it did not raise any actual patent counterclaims (e.g., a declaratory judgment of invalidity or non-infringement). Instead, KidsEmbrace’s counterclaims include only state claims based on the contracts between the parties. The counterclaims alleged breach of contract, fraud, negligent misrepresentation, restitution, and breach of fiduciary duty for false contractual warranties in the Agreement, which resulted in KidsEmbrace paying “royal- ties on invalid and otherwise valueless patents.” J.A. 141– 43. In KidsEmbrace’s view, these counterclaims raise sub- stantial questions of embedded inventorship and validity that meet all of Gunn’s requirements. We disagree for at least two separate reasons. First, even if these claims did raise embedded patent issues, they still fail to meet the third and fourth require- ments of the Gunn test. In particular, nothing in the alle- gations here shows that these claims will affect future suits in the federal system. Each of KidsEmbrace’s counterclaim pleadings are based on the warranties made between the parties when entering the specific contractual relationship set out in the Agreement. See, e.g., J.A. 141–43 ¶¶ 31, 37, 48. Based on the relief pled, KidsEmbrace’s counterclaims only expressly seek damages for the royalties it paid under INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS 25 GROUP, LLC the Agreement, see, e.g., J.A. 142–43 ¶¶ 35, 41, 46, not an injunction on “future public claims” about the scope of the patent as in Forrester. Without more, there is little indica- tion that the patentee would be enjoined from patent rights otherwise impacted in future suits in federal court unre- lated to the contracts here. Sweeping these state law con- tract counterclaims as specifically pled here into federal court would upset the state-federal balance. Second, KidsEmbrace voluntarily dismissed its coun- terclaims. “We have repeatedly held that an amendment to the complaint that dismisses the patent law claims with- out prejudice, as here, deprives this court of jurisdiction over the case.” Krauser v. BioHorizons, Inc., 753 F.3d 1263, 1268–69 (Fed. Cir. 2014) (emphasis added). Indeed, in Krauser, we found that “after Krauser’s withdrawal with- out prejudice of his inventorship claims, the Second Amended Complaint did not contain any claims which de- pended ‘on resolution of a substantial question of federal patent law.’” Id. (quoting Christianson, 486 U.S. at 809). Here, KidsEmbrace does not dispute that it has dismissed its counterclaims without prejudice. See also Gronholz v. Sears, Roebuck & Co., 836 F.2d 515, 518 (Fed. Cir. 1987) (“[D]ismissal of the patent claim constituted an amend- ment of his complaint. That amendment left a complaint which consisted of a single, non-patent claim for unfair competition. Applying the well-pleaded complaint rule to the complaint then remaining, we determine that the pre- sent suit does not ‘arise under’ the patent laws for jurisdic- tional purposes.”). We have considered KidsEmbrace’s remaining argu- ments and find them unpersuasive. 26 INSPIRED DEVELOPMENT GROUP v. INSPIRED PRODUCTS GROUP, LLC CONCLUSION Because the district court lacked subject matter juris- diction, we vacate the district court’s judgment and remand for dismissal. VACATED AND REMANDED COSTS The parties shall bear their own costs.