Writing for the Court, Justice Oliver Wendall Holmes held that “a suit arises under the law that creates the cause of action.”

Applying this to the case, Justice Holmes pointed to the important fact that the claim centered on the Layne & Bowler’s allegedly defamatory actions and statements, not any infringement of federal patent laws. Additionally, American Well Works contended that the Layne & Bowler’s behavior had harmed its business and wasn’t seeking to determine patent ownership, as would be an issue that falls under federal patent law. Holmes ultimately concluded that a lawsuit seeking damages for business harm resulting from the defendant’s accusations of patent infringement and threats of legal action under patent law fell under state law jurisdiction. Therefore, state courts were appropriate venue to hear the case, and it was dismissed for lack of federal jurisdiction.