On July 1, 2014, in Flying Pigs, LLC v. RRAJ Franchising, LLC, the US Court of Appeals for the Fourth Circuit vacated the US District Court for the Eastern District of North Carolina's denial of Flying Pigs' motion to remand to state court Flying Pigs' foreclosure on its equitable lien on certain trademarks ( (4th Cir. July 1, 2014)). The Fourth Circuit found that Flying Pig's foreclosure action was a state law claim, and the Lanham Act did not confer federal question jurisdiction simply because the subject in dispute was a trademark.

As the result of a 2010 state court lawsuit, Flying Pigs, a landlord of commercial property, possessed an equitable lien against certain trademarks and their associated goodwill that had been registered by Chelda, Inc., Flying Pigs' former commercial tenant. The trademarks were used in the operation of a restaurant by Ham's Restaurants, Inc., a company owned by Chelda. After Ham's declared bankruptcy, an affiliate of RRAJ purchased its assets, including any trademarks it owned. RRAJ's affiliate then purported to transfer ownership of the marks to RRAJ. In December 2012, Flying Pigs sued RRAJ in state court to:

Shortly thereafter, RRAJ removed the case to federal court. RRAJ then moved to dismiss the complaint. After Flying Pigs moved to remand based on lack of federal jurisdiction, the district court denied Flying Pigs' motion to remand and dismissed the complaint. Flying Pigs appealed.

Because Flying Pigs and RRAJ were both residents of North Carolina, the appeal considered only whether the district court had federal question jurisdiction. The Fourth Circuit explained that Flying Pigs' effort to foreclose on its equitable lien is "manifestly a cause of action created by state law." Therefore, it analyzed whether there was federal question jurisdiction under the "narrow basis" that the asserted state-law causes of action necessarily implicate a significant federal issue.

Because Chelda federally registered the trademarks, RRAJ argued that Flying Pigs' foreclosure action necessarily raised a significant federal issue because Flying Pigs could not demonstrate that Chelda, its former tenant, owned the trademarks on which it held a lien without invoking the Lanham Act. The Fourth Circuit disagreed, explaining that although Lanham Act registration of trademarks is prima facie evidence of ownership, it is not necessary for trademark ownership, which may be based solely on priority of use. Therefore, a significant federal issue was not necessarily raised, and no federal question jurisdiction attached. As a result, the Fourth Circuit vacated the district court's denial of Flying Pigs' motion, and ordered the district court to remand the case to the state court.

This decision highlights the traditional well-pleaded complaint rule. As the Fourth Circuit recognized, where a plaintiff asserts a state-law claim, the Lanham Act does not confer jurisdiction simply because the subject in dispute is a trademark.