Court Dismisses Copyright Declaratory Judgment Action Finding No “Actual Controversy”

In an April 21, 2014 ruling, Judge Valerie Caproni dismissed the plaintiff’s declaratory judgment action seeking ownership of the copyright in certain computer code, finding that there is no “‘case or controversy’ for the purposes of Article III of the United States Constitution.” The Court first found that there is subject matter jurisdiction because the “Complaint appears to reflect a dispute between the parties over whether and, if so, how the ‘work for hire’ doctrine applies.” Judge Caproni nevertheless dismissed the case because there was no “actual controversy” between the parties, finding that regardless “of this lawsuit, [the plaintiff] can exercise ownership rights unencumbered by [the defendant] and without fear of legal action for anything other than delivery of allegedly non-conforming goods – a suit that has already been filed in New York state court.” The Court also denied an award of attorneys’ fees to the defendant, finding that “both parties bear the blame” for litigating the case.

Court Declines to Dismiss Trademark Infringement Declaratory Judgment Action on Subject Matter Jurisdiction Grounds

In an April 15, 2014 ruling, Judge P. Kevin Castel denied defendant Eveready Battery’s motion to dismiss Gelmart Industries’ declaratory judgment action over the trademark “Skintimate” based on lack of subject matter jurisdiction. Judge Castel imported the Rule 12(b)(6) standard under which a complaint must state a claim that is plausible on its face. Noting that even though Gelmart was not yet in the market with its product, Eveready had sent two cease and desist letters, and opposed Gelmart’s application to register “Skintimate,” the Court wrote:

Here, the Complaint and its annexed exhibits allege the existence of adverse legal interest between the parties, with sufficient immediacy to allege a case of actual controversy under the Declaratory Judgment Act. First, Eveready’s own statements in its cease-and-desist letter and its public filing with the USPTO establish ‘adverse legal interests’ under the Declaratory Judgment Act. . . . While stopping short of using the words “infringement” and “dilution,” Eveready has, in sum and substance, asserted that the proposed Gelmart mark is infringing and dilutive. . . .

Judge Castel rejected Eveready’s contention that the action was not ripe because Gelmart was not yet in the market, finding it “sufficient that Gelmart has alleged that it solicited retailers, designed branding materials, is capable of commencing manufacture of products within weeks, and was ‘poised’ to commence a product launch before Eveready asserted infringement.

The Court Denied Plaintiff's Motion for Summary Judgment Dismissing Defendant's Trademark Infringement Counterclaims

In a March 21, 2014 Decision and Order, Judge George B. Daniels denied in its entirety Plaintiff Bath & Body Works Brand Management, Inc.’s motion for summary judgment to dismiss defendant Summit Entertainment, LLC’s counterclaims and for declaratory judgment concerning the right to use the marks "Twilight Woods" and "Twilight Crush" for personal care products.

Plaintiff sought a declaratory judgment to establish "(1) non-infringement of the trademark for Twilight Woods, (2) that it had not engaged in unfair competition, (3) that it had not falsely designated the origin of its goods, (4) non-infringement of trade dress, and (5) that its activities did not constitute dilution of Summit's mark." Defendant is the producer and distributor of the motion picture "Twilight" and, while no evidence was presented that defendant's Twilight marks were strong in the field of personal care products, the Court found defendant's Twilight Motion Pictures marks to be very strong. Applying the summary judgment standard and viewing the evidence in the light most favorable to defendant, the Court denied plaintiff's request for declaratory judgment and did not dismiss any of defendant's claims of trademark infringement, trademark dilution, trade dress, and cancellation.

Court Dismisses Declaratory Judgment Counterclaims as Redundant

In a March 18, 2014 ruling, Judge Andrew L. Carter, Jr. dismissed as redundant Barnesandnoble.com, LLC’s declaratory judgment counterclaims of non-infringement of the plaintiff’s copyrights. The plaintiff moved under Rule 12(f), which provides “that ‘the court may strike from a pleading . . . any redundant matter.’” Judge Carter wrote that a court should dismiss a “counterclaim if it is clear that there is a complete identity of factual and legal issues between the complaint and the counterclaim,” and quoted Second Circuit precedent holding that “‘a counterclaim is not duplicative or redundant if it asserts an independent case or controversy that survives the dismissal of plaintiff’s claim.’” In dismissing the counterclaims, the Court found that the “Defendant’s counterclaims seek to resolve legal and factual issues indistinguishable from those raised by Plaintiff’s complaint,” and that none of them “would survive adjudication of the issues in Plaintiff’s complaint.”

Court Dismisses Copyright Declaratory Judgment Action for Failing to Plead Plausible Claim

In a February 6, 2014 ruling, Judge P. Kevin Castel dismissed plaintiff Newlight Eyewear, LLC’s action seeking a declaration that it does not infringe defendant Art-Optic, Ltd.’s copyrights and asserting claims for Art-Optic’s interference with Newlight’s contractual relations with its customers. Both parties currently sell hand-painted eyeglass frames. Newlight had previously distributed Art-Optics’ frames. After the relationship ended, Art-Optics sued Newlight for copyright infringement, but discontinued the action after it was assured that Newlight’s sales were merely disposing of left over inventory from the distributorship relationship. In its complaint, Newlight alleges that Art-Optics is nevertheless still informing Newlight’s customers that Newlight’s products infringe its copyrights and that they should not do business with Newlight.

Judge Castel dismissed the claim to declare non-infringement of Art-Optics’ copyrights, writing that the “Complaint does not describe [Newlight’s] product line, or the differences and similarities between [Newlight’s] eyeglass frames and the” Art-Optics frames. The Court added that the Complaint “is silent as to the design of the [Newlight] product line and how the design and how the design elements compare with those of” Art-Optics, and that “Newlight has offered no examples of its products and does not allege that it has registered copyrights for any of its designs.” Judge Castel concluded that the Complaint “is so lacking in detail as to which of Newlight’s products are at issue and the design elements of those products as to fail to state a claim for relief.” The Court also dismissed Newlight’s claim to declare Art-Optics’ copyright registrations invalid, finding that Newlight did not make any “allegations that plausibly contend that defendant’s copyrights for the [Art-Optics] frames are somehow invalid and/or unenforceable.” And having dismissed the federal claims, Judge Castel declined to exercise supplemental jurisdiction over Newlight’s common law claims, and dismissed the entire action.

Declaratory Judgment Action of Patent Non-Infringment Transferred After Finding of Forum Shopping

In an August 2, 2013 ruling, Judge Colleen McMahon sua sponte transferred a declaratory judgment action of patent non-infringement to the Eastern District of Texas to be consolidated with already pending litigation in that District.  After Blue Calypso, Inc. started an infringement action against Foursquare Labs, Inc. in the Eastern District of Texas, it was advised by the USPTO that additional related patents would issue.  Blue Calypso asked Foursquare to consent to an amended complaint adding the new patents.  Foursquare then started the declaratory judgment action in this District to declare its non-infringement of the newly issued patents.  Judge McMahon ruled that the "filing of this complaint is plainly an effort to forum shop by Foursquare," and transferred the action to the Eastern District of Texas.

Federal Circuit Affirms Judge Buchwald's Dismissal of Patent DJ Action for Lack of Controversy

In a June 10, 2013 decision, the Federal Circuit affirmed Judge Naomi Reice Buchwald’s dismissal of a patent non-infringement and invalidity declaratory judgment action because there was not justiciable controversy.  At issue in the action were twenty-three of Monsanto’s patents for “Roundup Ready” genetically modified seeds (that were also the subject of a recent Supreme Court decision).  A “coalition of farmers, seed sellers, and agricultural organizations” had sued Monsanto out of a concern that their crops or seeds could inadvertently become contaminated with Monsanto’s genetically modified seeds, and that they could therefore be accused of infringement.  As a result of this concern, some of the plaintiff’s used costly “buffer zones” to protect their crops from contamination and others refrained from planting certain crops altogether.  After the lawsuit was started, the plaintiffs asked Monsanto to “‘expressly waive any claim for patent infringement [Monsanto] may ever have against [the plaintiffs] and memorialize that waiver by providing a written covenant not to sue.’”  Monsanto declined to provide a formal covenant not to sue, but it did point the plaintiffs toward a statement on its website that it has never been Monsanto’s intention to sue over trace amounts of seeds that are present through inadvertent means.  Monsanto’s counsel also assured the plaintiffs’ counsel that “Monsanto is unaware of any circumstances that would give rise to any claim for patent infringement or any lawsuit against your clients.  Monsanto therefore does not assert and has no intention of asserting patent-infringement claims against your clients.”  Judge Buchwald dismissed the action, holding that “these circumstances do not amount to a substantial controversy and . . . there has been no injury traceable to defendants.”