Subject Matter Jurisdiction

Lothan Van Hook DeStefano Arch. LLC v. SB Yen Mgm’t. Group, Inc., No. 18 C 275, Slip Op. (N.D. Ill. Dec. 10, 2018) (Lee, J.).

Judge Lee denied defendants’ Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction, but granted defendants’ motion to compel mediation and arbitration, and stayed this

PSN Pharma, LLC v. Niazi, No. 14 C 6865, Slip Op. (N.D. Ill. Apr. 1, 2016) (Coleman, J.).

Judge Coleman granted declaratory judgment defendant’s (“Defendant”) Fed. R. Civ. P. 12(b) motion to dismiss for lack of subject matter jurisdiction after providing declaratory judgment plaintiffs (collectively “PSN Pharma”) a covenant not to sue on the

Mindy’s Restaurant, Inc. v. Watters, No. 08 C 5448, Slip Op. (N.D. Ill. Jun. 9, 2009) (Der-Yeghiayan).
Judge Der-Yeghiayan granted defendants’ Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction even though plaintiff brought a federal Lanham Act trademark infringement claim. While Lanham Act claims are generally considered federal questions creating subject matter jurisdiction, plaintiffs claims were in essence breach of contract claims. Plaintiff was a franchisor of Mindy’s Restaurants. Defendants were franchisees, until they allegedly stopped making required franchise payments and plaintiff terminated the franchise agreement. While plaintiff’s claims were for use of plaintiff’s trademarks when defendants allegedly continued operating their restaurant after the franchise agreement was canceled. As a result, the Court held that the parties dispute and plaintiff’s claims sounded in contract, not the Lanham Act. The reason the trademarks were allegedly infringed was the termination of the franchise agreement.

Continue Reading Trademark Claims Dismissed Because Dispute Sounds in Contract

SourceOne Global Partners, LLC v. KGK Synergize, Inc., No. 08 C 7403, Slip Op. (N.D. Ill. May 13, 2009) (Schenkier, Mag. J.).
Judge Schenkier denied declaratory judgment defendant KGK’s motion to dismiss plaintiff SourceOne’s declaratory judgment claims of noninfringement and invalidity of KGK’s patents. KGK allegedly asserted its patents against SourceOne’s cholesterol fighting drug Cholesstrinol. KGK argued that the Court lacked subject matter jurisdiction because SourceOne did not, and could not name the co-owner of KGK’s patent, the United States government. The Court held that it had subject matter jurisdiction over SourceOne’s patent declaratory judgment claims, reasoning that otherwise the government’s co-ownership of a patent would strip accused infringers of ever seeking declaratory actions.
The Court also held that, while the government was a required party pursuant to Fed. R. Civ. P. 19(a), the Rule 19(b) factors weighed in favor of allowing SourceOne’s case to proceed despite its inability to join the government. The Court held that allowing KGK to prevent a declaratory suit because it was not possible to name the government would give KGK too much power as a patent holder:
The approach urged by KGK (and the Government) would allow KGK to threaten legal action against SourceOne (or others) with impunity. For those who gave into those threats, KGK would receive the benefit of the patent (a cessation of the alleged infringing conduct and perhaps compensation) without the need to do anything more. For those who might rear up and seek a judicial resolution, KGK could retreat behind the Government’s cloak of immunity and prevent the infringement or validity of the ‘125 Patent from ever being tested in court.

Continue Reading Patentholder Cannot Use Government Co-Owner to Avoid Declaratory Suits

MacLean-Fogg Co. v. Edge Composites, L.L.C., No. 08 C 6367, Slip Op. (N.D. Ill. Apr. 14, 2009) (Conlon, J.).
Judge Conlon granted defendants’ motion to dismiss. Plaintiffs (collectively “MacLean”) alleged that defendant Edge Composites (“Edge”) violated plaintiffs’ carbon fiber bicycle wheel patent and together with the individual defendant, a former MacLean employee and current Edge employee, violated MacLean’s trade secrets, as well as breaching the individual defendant’s nondisclosure agreement with MacLean. First, the Court held that the MacLean entities that lacked an ownership in the patent when the complaint was filed lacked standing. It was not sufficient that the MacLean entities entered an agreement creating joint ownership amongst them after the complaint was filed.
The Court also held that it lacked supplemental jurisdiction over MacLean’s state law trade secret and breach of contract claims. The patent infringement claims were based upon manufacture and sale of carbon fiber wheels. The trade secret and breach of contract claims were based upon defendants’ alleged use of MacLean’s trade secrets. Because MacLean never met its burdens of showing how the claims overlapped factually, the Court dismissed the state law claims for lack of subject matter jurisdiction.
The Court also held that it lacked personal jurisdiction over the individual defendant because MacLean did not respond to that part of defendants’ summary judgment argument. The Court also held that it lacked personal jurisdiction over Edge. Edge was not registered to do business in Illinois, had no facilities in Illinois, had no assets in Illinois, did not advertise in Illinois, and did not do business with Illinois residents. The only Illinois sales MacLean proved were by its representatives for purposes of this suit. And Edge’s website did not allow viewers to purchase products.
Finally, the Court dismissed MacLean’s trade secret claim for failure to state a claim. MacLean’s trade secret misappropriation allegations were all made on information and belief. The Court held that information and belief alone was not enough, unless the facts were inaccessible to MacLean and MacLean had a reasonable basis to believe the facts were true. Because MacLean did not provide any grounds for its suspicion, information and belief was not sufficient.

Continue Reading Post-Filing Patent Assignement Cannot Create Standing

24 Hour Fitness USA, Inc. v. Bally Total Fitness Holding Corp., No. 08 C 3853, 2008 WL 4671748 (N.D. Ill. Oct. 21, 2008).
Judge Lefkow granted defendants’ Fed. R. Civ. P. 12(b)(1) motion to dismiss plaintiff 24 Hour Fitness’s (“24”) trade secret misappropriation complaint for lack of subject matter jurisdiction. 24 alleged that defendant Bally Total Fitness (“Bally) and the individual defendant (“Defendant”) misappropriated 24’s trade secrets when Defendant resigned his position as 24’s COO and became Bally’s CEO. But defendants argued that the Court lacked subject matter jurisdiction over 24’s state law trade secret claims because there was no diversity of citizenship – both 24 and Defendant were California citizens. 24 argued that Defendant was, in fact, a citizen of Illinois because he worked at Bally’s Illinois headquarters and because Defendant’s contract with Bally required that he move to Illinois before the case was filed.
Looking at the totality of the circumstances, the Court held that Defendant remained a citizen of California, where he had lived while employed by 24. Defendant had put his California home for sale and did have a contract requiring that he become domiciled in Illinois, although the particulars of the contract were disputed. But the most significant factor in the analysis was that Defendant’s family remained in California. And Defendant had not purchased or rented a home in Illinois or gotten an Illinois driver’s license, bank account or voter registration card.
Finally, the Court denied 24’s request to file an amended complaint adding a federal Computer Fraud and Abuse Act claim. A complaint cannot be amended to create subject matter jurisdiction. The case, therefore, had to be dismissed.

Continue Reading Location of Family Major Factoring in Determining Citizenship

Hyperquest, Inc. v. N’Site Solutions, Inc., et al., No. 08 C 483, __ F. Supp. 2d __, 2008 WL 2446206 (N.D. Ill. Jun. 18, 2008) (Shadur, Sen. J.)
Judge Shadur granted defendants’ motion for attorney’s fees pursuant to 17 U.S.C. § 505, after previously dismissing plaintiffs’ copyright claims for lack of standing – click here for the Blog’s post about that opinion. Plaintiff agreed that defendants were not § 505 “prevailing parties” because the case was dismissed for lack of subject matter jurisdiction. But the Court explained that its opinion and the parties’ underlying briefs used imprecise language, citing an Abraham Lincoln pearl of wisdom:
If you call a tail a leg, how many legs has a dog? Five? No, calling a tail a let don’t make it a leg.
The case was not dismissed for lack of a properly registered copyright (subject matter jurisdiction), but because plaintiff lacked sufficient right to assert the copyright (standing). Because the case was dismissed with prejudice for lack of standing, defendants were prevailing parties and an attorney’s fee award was warranted.

Continue Reading Attorney’s Fees Awarded After Dismissal for Lack of Standing

HyperQuest, Inc. v. N’Site Solutions, Inc., No. 08 C 483, 2008 WL 1968554 (N.D. Ill. May 1, 2008) (Shadur, Sen. J.).
Judge Shadur dismissed plaintiff’s copyright infringement case for lack of subject matter jurisdiction. Plaintiff argued that it was the exclusive licensee of the copyright. But the Court held that plaintiff’s license was nonexclusive because licensor retained various rights, including, the rights to:
Make derivative works;
Reproduce the work; and
Sell the copyrighted software.
But the Court’s adoption of defendants’ reply was its most notable feature:
To that end [defendants’] Reply addressed fully every aspect of [plaintiff’s] attempt to characterize itself as an exclusive licensee . . . and it completely scotched HQ’s position. Because the Reply has covered the waterfront so thoroughly and persuasively, this Court finds it unnecessary to reiterate the analysis there piece by piece-instead it simply adopts [defendants’] presentation as proffered in the Reply.

Continue Reading Court Adopts Defendants’ Reply and Denies Jurisdiction

Prominent Consulting LLC v. Allen Bros., Inc., No. 07 C 6357, 2008 WL 373217 (N.D. Ill. Feb. 11, 2008) (Dow, J.).
Judge Dow held that the Court had jurisdiction over plaintiff Prominent Consulting’s (“PC”) copyright claim and denied defendant Allen Brothers’ motion to stay based upon Colorado River abstention. The Court had subject matter jurisdiction over PC’s copyright infringement claim – based on source code PC wrote for Allen Brothers’ websites – because the claim was not controlled solely by the parties’ contract. At least some of PC’s copyrights existed before the parties entered the contract because PC wrote some of the code before signing the contract.
The case appeared ripe for Colorado River abstention: the parties were involved in state court proceedings paralleling the federal case; both cases arose out of the parties’ website-related agreement; and PC’s available relief was identical in each case because PC’s late federal registration prevents statutory copyright damages. But the Court’s exclusive jurisdiction over the copyright claim prevented abstention. The Court cited Colorado River for the proposition that district courts lack discretion to stay cases involving exclusively federal claims.

Continue Reading No Colorado River Abstention in Copyright Cases

Goss Int’l Ams., Inc. v. A-Am. Mach. & Assembly Co., No. 07 C 3248, 2007 WL 4294744 (N.D. Ill. Nov. 30, 2007) (Gettleman, J.).
Judge Gettleman denied defendant’s Fed. R. Civ. P. 12(b)(1) motion to dismiss plaintiff’s copyright for lack of subject matter jurisdiction. Plaintiff alleged that defendant violated plaintiff’s copyrights in its simplified machine drawings of its commercial printing machines by placing them on the internet without authorization. The Court held that plaintiff’s simplification of its drawings and addition of part numbers were sufficient to meet copyright’s originality requirement. The Court also looked to the Fifth and Eighth Circuits and held that the registration requirement was met when plaintiff filed its copyright registration, as opposed to when the Copyright Office acted on it. In this case, plaintiff filed its application in May 2007 and was waiting on registration as of the date of the opinion. The Court reasoned that because plaintiff would also have a cause of action if the registration was denied, there was no reason to make plaintiff wait until the Copyright Office acted.

Continue Reading Application for Copyright Registration Creates Subject Matter Jurisdiction