American Well Works Company (American) (plaintiff) had a patent for a specific pump that it owned, manufactured and sold, which was known as the best in the market. American sued its competitor, Layne & Bowler Company (Layne) (defendant), in Arkansas state court, alleging Layne falsely and maliciously slandered American’s patent rights to the pump and falsely claimed the pump and its parts were infringements of Layne’s patented pumps. American further alleged that Layne filed frivolous lawsuits against some of American’s customers who were using the pump and threatened lawsuits against others. Layne removed the case to federal district court on the grounds that it was based in federal patent law. The district court held that the cause of action arose under federal patent law, and dismissed it because the state court where the case originated lacked jurisdiction, and, accordingly, so did the federal court to which the case was removed. The United States Supreme Court granted certiorari on the question of federal jurisdiction.