217 F. Supp. 89 | D. Del. | 1963
This is a declaratory judgment proceeding wherein the plaintiff, Ultronic Systems, Inc., seeks a declaration of in
1. June 27, 1962 — Defendant accused plaintiff, by letter, of infringing defendant’s trade name and copyrights.
2. October 23, 1962 — Plaintiff was served with a complaint filed by defendant in the California State Court, alleging trade name and federally registered trade-mark infringement.
3. October 81, 1962 — Plaintiff filed the present declaratory judgment action in this Court.
4. November 9, 1962 — Plaintiff removed defendant’s California State Court action to the United States District Court for the Northern District of California, pursuant to 28 U.S.C. § 1441.
5. November 16, 1962 — Plaintiff answered the California complaint.
6. November 28, 1962 — Plaintiff moved in this Court to enjoin defendant from prosecuting the California infringement action in favor of the Delaware action.
7. December lk, 1962 — Defendant moved in this Court to dismiss or stay this declaratory judgment proceeding in favor of its California action.
As indicated above, cross motions are now before the Court to decide, in effect, in which forum the controversy is to be resolved.
Plaintiff’s argument that the California action should be enjoined is that the broader controversy, as it views the pleadings, is in the Delaware action. It thus invokes the principles of Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co.
An analysis of the nature of the two pending cases shows that the Delaware declaratory judgment action is not, in fact, a more comprehensive case. Plaintiff admits that the exact issues of validity and infringement are common to both actions, but maintains that the Delaware action is broader due to additional copyright issues and the fact that it seeks, in Delaware, the remedy of cancellation of defendant’s registered trade-marks.
Plaintiff purports to find a copyright question in its Delaware declaratory judgment case by virtue of the accusatory letter of June 27, 1962. However, it was developed at argument that the use of the word “copyright” in this letter was an inadvertence,
This prayer for cancellation is based solely on the allegation in plaintiff’s complaint that defendant’s registrations were secured by material misrepresentations to the United States Patent Office. But this very issue of misrepresentation is also before the California Court by plaintiff’s answer in California specifically denying that the registrations of defendant’s marks were duly and legally
Plaintiff’s intimation in its brief that the Federal Court in California would not have jurisdiction to order cancellation is without merit. Its argument is based on the theory that a federal court upon removal acquires no more jurisdiction than the state court had. ■Since the California State Court has no power to order cancellation, plaintiff ■argues that the Federal Court in California cannot grant the remedy, although it would have such powers in an •original suit.
Concedely, in Lambert Run Coal Co. v. Baltimore & Ohio Railroad Co., 258 U.S. 377, 42 S.Ct. 349, 66 L.Ed. 671 (1922), the Supreme Court did hold :
“The jurisdiction of the federal court on removal is, in a limited sense, a derivative jurisdiction. If the state court lacks jurisdiction of the subject-matter or of the parties, the federal court acquires none, although it might in a like suit originally brought there have had jurisdiction.”5
However, the Lambert Run rule was later explained and distinguished by the Supreme Court in Freeman v. Bee Machine Co., 319 U.S. 448, 63 S.Ct. 1146, 87 L.Ed. 1509 (1943). In Freeman, the plaintiff brought suit in the Massachusetts State Court for breach of contract. Defendant removed the case to the District Court in Massachusetts, there being diversity of citizenship and the requisite jurisdictional amount. The plaintiff moved to amend its complaint by adding a charge for treble damages under the Clayton Act. Since the State Court would have had no jurisdiction under the Clayton Act, the District Court, relying on Lambert, denied the motion to amend. The Supreme Court disagreed with the District Court, saying:
“The Lambert Co. case and those which preceded and followed it merely held that defects in the jurisdiction of the state court either as respects the subject matter or the parties were not cured by removal but could thereafter be challenged in the federal court. We see no reason in precedent or policy for extending that rule so as to bar amendments to the complaint, otherwise proper, merely because they could not have been made if the action had remained in the state court. If the federal court has jurisdiction of the removed cause and if the amendment to the complaint could have been made had the suit originated in the federal court, the fact that the federal court acquired jurisdiction by removal does not deprive it of power to allow the amendment.” (Emphasis added.)6
It is my opinion that the present case falls under the Freeman rule rather than the Lambert rule. Plaintiff never sought cancellation in the State Court, so an attempt to obtain that remedy in the Federal Court is not an attempt to cure defective state jurisdiction. A counterclaim in Federal Court, under the circumstances here presented, is hardly different from the amendment permitted in Freeman. And plaintiff’s counsel virtually conceded at argument that the right to amend to insert a counterclaim in the California action did exist.
Finally, plaintiff urges that the factor of convenience of witnesses, etc., requires the suit to be heard in Delaware. However, it is unnecessary to decide where the balance of convenience lies, because, in my view, all other factors being equal, it is for the Court having prior jurisdiction to determine this issue by way of a motion to transfer venue, 28 U.S.C. § 1404(a). Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 186, 72 S.Ct. 219, 96 L.Ed. 200 (1952); Tivoli Realty, Inc. v. Interstate Circuit, Inc., 167 F.2d 155 (5th Cir., 1948), cert. denied, 334 U.S. 837, 68 S.Ct. 1494, 92 L.Ed. 1762 (1948); Massachusetts Mutual Life Insurance Co. v. Stern, 124 F.Supp. 695 (E.D.N.Y.1954).
In situations where a direct and a declaratory action are pending on the same subject, courts are clothed with considerable discretion in untangling the proceedings. Seaboard Surety Co. v. Texas City Refining, Inc., 109 F.Supp. 468 (D.Del.1952). For the reasons given above, it is my conclusion that this controversy should be tried in California.
Plaintiff’s motion is denied and defendant’s motion to stay is granted.
. 189 F.2d 31 (3rd Cir., 1951), aff’d, 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200 (1952).
. Defendant warned in the letter that the name “Ultronix” was protected by “copyright” when it obviously meant to say it was protected by “trade-mark.”
. “Omitted Counterclaim. When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counterclaim by amendment.”
. 258 U.S. at 382, 42 S.Ct. at 351, 66 L.Ed. 671.
. 319 U.S. at 451, 63 S.Ct. at 1148, 87 L.Ed. 1509.
. Contra, Lorraine Motors, Inc. v. Aetna Casualty & Surety Co., 166 F.Supp. 319 (E.D.N.Y.1958).
. Unless returned to Delaware under Sec. 1404(a) by subsequent order of the California Court.