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Tobias Designs, Inc. v. Chromcraft Revington Douglas, Ind., Inc.

United States District Court, S.D. Florida

May 11, 2017

TOBIAS DESIGNS, INC., Plaintiff,
v.
CHROMCRAFT REVINGTON DOUGLAS IND., INC., Defendant.

          ORDER

          DARRIN P. GAYLES UNITED STATES DISTRICT JUDGE

         THIS CAUSE came before the Court upon Defendant's Motion to Dismiss Copyright Claims for Lack of Declaratory Judgment Jurisdiction [ECF No. 6]. The Court has reviewed the Motion and the record and is otherwise fully advised. For the reasons that follow, the Motion is granted.

         FACTUAL BACKGROUND

         Plaintiff Tobias Designs, Inc. (“Plaintiff”) and Defendant Chromcraft Revington Douglas Ind., Inc. (“Defendant”) are furniture companies, each producing swivel chairs. On September 7, 2016, Defendant sent a cease and desist letter to Plaintiff and one of Plaintiff's distributors alleging that Plaintiff had infringed on Defendant's designs and intellectual property and Defendant's original copyrighted work with respect to a particular chair. Defendant threatened suit for both trade dress and copyright infringement. Plaintiff responded on October 4, 2016, denying liability.

         After acquiring new counsel, Chromcraft sent a second cease and desist letter to Plaintiff, threatening legal action for only the trade dress claim and eliminating the reference to copyright infringement. In lieu of responding, Plaintiff filed this action seeking declaratory relief. In particular, Plaintiff seeks a declaration that (1) Defendants's alleged copyrights are invalid (Claim I); (2) Plaintiff has not infringed on any of Defendant's copyrights (Claim II); (3) Defendant's alleged trade dress is unenforceable (Claim III); and (4) Plaintiff has not infringed on Defendant's trade dress.

         On November 10, 2016, Defendant sent Plaintiff a draft covenant not to sue. The proposed covenant promised not to pursue legal action for copyright infringement against Plaintiff with respect to any products or furniture designs used, sold, or marketed by Plaintiff as of the effective date. The proposed covenant was not signed and appeared to require the signatures of both Defendant and Plaintiff to be effective Plaintiff rejected the proposed covenant.

         On November 15, 2016, Defendant moved to dismiss Claims I and II of the Complaint arguing that the Court has no jurisdiction over those claims because (1) there are no registered copyrights at issue and (2) the proposed covenant not to sue eliminates any case or controversy. Defendant also sought sanctions against Plaintiff.

         On December 9, 2016, Defendant filed an amended version of the proposed covenant adding that “Chromcraft [Defendant] agrees that this Agreement shall be binding upon it even absent signature of Tobias [Plaintiff] for the sake of resolving the pending motion.” [ECF No. 15-1].

         LEGAL STANDARD

         “Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “A district court must have jurisdiction under at least one of the three types of subject-matter jurisdiction: (1) jurisdiction pursuant to a specific statutory grant; (2) federal question jurisdiction pursuant to 28 U.S.C. § 1331; or (3) diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).” Butler v. Morgan, 562 F.App'x 832, 834 (11th Cir. 2014) (citation omitted). “It is to be presumed that a cause lies outside this limited jurisdiction . . . and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen, 511 U.S. at 377 (citations omitted).

         “[A] motion to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) can be based upon either a facial or factual challenge to the complaint.” McElmurray v. Consol. Gov't of Augustana-Richmond Cty., 501 F.3d 1244, 1251 (11th Cir. 2007) (citing Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981)). A facial challenge provides Plaintiff with similar safeguards to those of a Rule 12(b)(6) motion, and “the court must consider the allegations in the plaintiff's complaint as true.” Id. In considering a facial attack on the complaint, the court must look to whether the plaintiff has “sufficiently alleged a basis of subject matter jurisdiction.” Id. The court can consider the complaint as well as the attached exhibits. Id. “Factual attacks challenge subject matter jurisdiction in fact, irrespective of the pleadings. In resolving a factual attack, the district court may consider extrinsic evidence such as testimony and affidavits.” Morrison v. Amway Corp.¸ 323 F.3d 925 n.5 (11th Cir. 2003). However, where “the existence of subject matter jurisdiction is inextricably intertwined with material facts affecting the merits of the claim, a district court must be guided by the standard for summary judgment motions under Fed.R.Civ.P. 56.” Bennett v. United States, 102 F.3d 486, 488 (11th Cir. 1996).

         ANALYSIS

         A. Declaratory Judgment Act

         The Declaratory Judgment Act grants the federal district courts the power to “declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). “An essential element for a declaratory judgment action is the existence of an ‘actual controversy' between the parties, a term which holds the same meaning as the cases and controversies requirement of Article III to the United States Constitution.” Sprint Sols., Inc. v. 4 U Cell, LLC, No. 2:15-CV-605-FTM-38CM, 2016 WL 1244528, at *2 (M.D. Fla. Mar. 30, 2016). “A case or controversy must exist at the time the declaratory judgment action is filed.” GTE Directories Pub. Corp. v. Trimen Am., Inc., 67 F.3d 1563, 1568 (11th Cir. 1995). “The test for an ‘actual controversy' under the Declaratory Judgment Act does not require a present dispute, but only the ‘practical likelihood' that a dispute will arise.” Tudor Ins. Co. v. Zelwin, LLC, No. 8:16-CV-376-T-30JSS, 2016 WL 1383040, at *1 (M.D. Fla. Apr. 7, 2016). “[A]n ‘actual controversy' exists where ‘there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'” Blitz Telecom Consulting, LLC v. Peerless Network, Inc., 151 F.Supp.3d ...


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