Opinion
NO. 3-02-CV-0705-BD (P)
October 22, 2003
MEMORANDUM OPINION AND ORDER
Defendant Stephen A. Gummow has filed a motion to dismiss Plaintiff's Second Amended Complaint for lack of subject matter jurisdiction. For the reasons stated herein, the motion is granted.
I.
This is a declaratory judgment action involving two patents for an indexable head ratchet wrench. At issue is whether Plaintiff James Ellis Cole is the sole and true inventor of U.S. Patent No. 5,419,221 (the "`221 Patent"), issued May 30, 1995, and U.S. Patent No. 5,775,184 (the "`184 Patent"), issued July 7, 1998.( See Plf. Sec. Am. Compl. at 1, ¶ 1 Plf. Resp. App. at 5-8, 9-15).
An indexable head ratchet wrench is a "wrench[ ] to which other tools, such as sockets, crowfoot-type wrenches, and the like, are connected for use in tightening and loosening nuts and bolts." (Plf. Resp. App. at 13).
On February 22, 2002, defendant sued plaintiff in Illinois federal district court claiming that he, not plaintiff, was the true inventor of the `221 Patent. (Plf. Sec. Am. Compl. at 2, ¶ 8). In that case, defendant, who holds patents on other types of ratchet wrenches, alleged that he conceived and designed an indexable improvement to his patented device which was disclosed in confidential communications to plaintiff and his brother, Charles Austin Cole, in the early 1990s. According to defendant, plaintiff used this confidential information to apply for and obtain the `221 Patent. The Illinois lawsuit was dismissed for lack of personal jurisdiction over plaintiff. See Gummow v. Cole, 2002 WL 959836 (N.D. Ill. May 9, 2002).
While the Illinois case was still pending, plaintiff filed a declaratory judgment action in this court seeking to clarify his inventorship status. Defendant answered and counterclaimed for a declaratory judgment that he is the true inventor of the subject claims of the `221 and `184 Patents. hi a separate pleading, defendant moves to dismiss this case for lack of subject matter jurisdiction. The motion has been fully briefed by the parties and is ripe for determination.
On May 20, 2003, four months after the pleading deadline expired, defendant filed an amended counterclaim asserting claims against plaintiff and four new parties for infringement, correction of inventorship, civil conspiracy, breach of contract, fraud, unjust enrichment, breach of fiduciary duty, and breach of the duty of good faith and fan-dealing. By order dated June 10, 2003, the court struck this amended counterclaim as untimely. Thereafter, defendant filed a separate lawsuit against plaintiff, Teresa M. Cole, Charles Austin Cole, James G. Jones, and Splined Tools Corporation. That case is currently pending before another judge in this district. Gummow v. Splined Tools Corp., et al., No. 3-03-CV-1428-L.
II.
A party seeking to invoke the jurisdiction of a federal court must prove that jurisdiction is proper. See Boudreau v. United States, 53 F.3d 81, 82 (5th Cir. 1995), cert. denied, 116 S.Ct. 771 (1996); Lowe v. Ingalls Shipbuilding, A Division of Litton Systems, Inc., 723 F.2d 1173, 1177 (5th Cir. 1984). In this case, the burden falls on plaintiff. The allegations of his complaint must be taken as true and all inferences drawn in his favor. Saraw Partnership v. United States, 67 F.3d 567, 569 (5th Cir. 1995); Garcia v. United States, 776 F.2d 116, 117 (5th Cir. 1985). Dismissal is warranted only if those allegations, together with any undisputed facts and the court's resolution of disputed facts, establish that the district court lacks subject matter jurisdiction. See Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001), cert. denied, 122 S.Ct. 1059 (2002); Santerre v. Agip Petroleum Co., 45 F. Supp.2d 558, 565 (S.D. Tex. 1999).
In his reply brief, defendant argues that the court cannot go beyond the pleadings in ruling on a motion to dismiss. ( See Def. Reply Br. at 4). Such is not the case. In examining the basis for its own jurisdiction, the court may consider: (1) the allegations of the complaint alone; (2) the allegations of the complaint supplemented by undisputed facts in the record; or (3) the allegations of the complaint supplemented by undisputed facts and the court's resolution of disputed facts. Den Norske, 241 F.3d at 424; Santerre, 45 F. Supp.2d at 565.
A.
The Declaratory Judgment Act authorizes federal district courts 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). However, an "actual controversy" between the parties is necessary to establish subject matter jurisdiction under the Act. Cardinal Chemical Co. v. Morton International, Inc., 508 U.S. 83, 95, 113 S.Ct. 1967, 1974, 124 L.Ed.2d 1 (1993); Spectronics Corp. v. KB. Fuller Co., 940 F.2d 631, 633-34 (Fed. Cir.), cert. denied, 112 S.Ct. 658 (1991). Hypothetical, conjectural, or conditional disputes based on factual situations that may never develop will not support a request for declaratory relief. Brown Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir. 1967). The question is "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 57-58, 96 S.Ct. 1917, 1933, 48 L.Ed.2d 450 (1976), quoting Golden v. Zwickler, 394 U.S. 103, 108, 89 S.Ct. 956, 959, 22 L.Ed.2 118 (1969).The Federal Circuit has established a two-part test to determine whether an "actual controversy" exists in an inventorship dispute. Chou v. University of Chicago, 254 F.3d 1347, 1358 (Fed. Cir. 2001), citing Fina Oil Chemical Co. v. Ewen, 123 F.3d 1466, 1471 (Fed. Cir. 1997). A party seeking declaratory relief must prove both: (1) that he holds a recognized interest in a patent that could be adversely affected by an action challenging inventorship; and (2) that another party with a right to bring such an action has created an objectively reasonable apprehension on the part of the plaintiff that it will do so. Ewen, 123 F.3d at 1471. The court must analyze the operative facts as they existed at the time the complaint was filed. Arrowhead Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988); see also Spectronics, 940 F.2d at 634-35 ("[A] party seeking a declaratory judgment must plead facts initially sufficient to establish the existence of an actual controversy . . . [L]ater events may not create jurisdiction where none existed at the time of filing.").
B.
While maintaining his right to contest inventorship of the `221 and `184 Patents, defendant argues that the court lacks subject matter jurisdiction over this declaratory judgment action because plaintiff no longer holds a recognized interest in the patents sufficient to create an actual case or controversy. Indeed, plaintiff admits that he assigned his entire interest in the `221 Patent to Splined Tools Corporation, a company formed by his sister-in-law, in 1995. (Plf. Resp. App. at 1, ¶ 3; at 2, ¶¶ 7-8; at 4, ¶ 12). Splined, in turn, licensed the patent to Superior Ratchet and Tool Company, a manufacturing company owned by plaintiff. ( Id. at 2, ¶ 8). From 1994 to 1995, Superior sold wrenches to various independent dealers, including Snap-On Tools Company.( Id. at 1, ¶¶ 4-5 2, ¶ 8). On May 7, 1997, Splined licensed the `221 Patent directly to Snap-On in exchange for royalties on the licensed products. ( Id. at 3, ¶ 11 32-50). A short time later, Superior ceased making wrenches. ( Id. at 3, ¶ 11). Plaintiff then entered into an oral consulting agreement with Splined. ( Id. at 4, ¶ 12). According to plaintiff:
Defendant has withdrawn his correction of inventorship claim against plaintiff. However, he continues to pursue such a claim against Splined Tools Corporation, the assignee of the `221 and `184 Patents. ( See Def. Reply Br. at 6-7).
I consulted with Splined over inventive and marketing activities and assigned to Splined the rights to [the `184 Patent] . . . on September 8, 1998. I was able to enter into and continue under the income producing consulting agreement with Splined based on large part on my status as the named and correct inventor of the `224 and `184 patents.
( Id.).To date, plaintiff has received more than $500,000 under his consulting agreement with Splined. ( Id. at 4, ¶ 12). However, due to the inventorship dispute with defendant, plaintiff states that Splined "is unable to pay me a consulting fee and is not paying me a consulting fee." ( Id.).
Although plaintiff no longer has any ownership rights in the `221 and `184 Patents, certain interests other than ownership may be sufficient to confer standing to sue for declaratory relief. See Chou, 254 F.3d at 1358 (suggesting that a party who has "a concrete financial interest in the patent, albeit an interest less than ownership," has standing in an inventorship dispute). Plaintiff argues that his oral consulting agreement with Splined gives him the necessary financial interest to maintain this action. However, the only evidence of this consulting arrangement is plaintiff's self-serving, conclusory statement that he is paid for giving advice regarding unspecified "inventive and marketing activities." ( Id. at 4, ¶ 12). There is no indication what, if any, relationship exists between those activities and the patents in-suit. For all the record shows, plaintiff could have been paid consulting fees for developing new products not related to the `221 and `184 Patents. Thus, plaintiff has failed to prove that he has a "concrete financial interest in the patent" necessary to confer standing. See Chou, 254 F.3d at 1359.
Indeed, at the time plaintiff assigned his rights in the `221 Patent, he "had additional ideas for tools" and anticipated entering into a consulting agreement whereby he would assign the right to "future inventions" to Splined. (Plf. Resp. App. at 3, ¶ 9).
C.
Plaintiff further argues that he has a "reputational interest" in his status as the inventor of the `221 and `184 Patents. ( See Plf. Resp. App. at 4, ¶ 14). Although the Federal Circuit has suggested in dicta that "[p]ecuniary consequences may well flow from being designated as an inventor[,]" no federal court has yet to determine whether the mere status of inventor is sufficient to confer standing. See Chou, 254 F.3d at 1359.
Whatever the contours of such an interest may be, plaintiff has offered neither evidence nor argument to assist the court in answering this jurisdictional question. Beyond his bald assertion that "I have a reputational interest as inventor of the `221 and `184 Patents," there is nothing in the record to support such a conclusion. Plaintiffs mere say-so is hardly sufficient to carry his burden of proof.
CONCLUSION
Plaintiff has failed to prove that he has a recognized interest in the patents in-suit sufficient to create an actual case or controversy. Accordingly, defendant's motion to dismiss for lack of subject matter jurisdiction is granted.
SO ORDERED.