Deats v. Joseph Swantak, Inc.

• Decision Date: 19 June 1985
• Docket Number: No. 85-CV-36.,85-CV-36.
• Citation: 619 F. Supp. 973
• Parties: Richard A. DEATS, Plaintiff, v. JOSEPH SWANTAK, INC. and Joseph Swantak, Individually, Defendants.
• Court: U.S. District Court — Northern District of New York

619 F. Supp. 973

Richard A. DEATS, Plaintiff, v. JOSEPH SWANTAK, INC. and Joseph Swantak, Individually, Defendants.

No. 85-CV-36.

United States District Court, N.D. New York.

June 19, 1985.

Ruthman, Feinberg & Dumas, Albany, N.Y., for plaintiff; Edward R. Feinberg, of counsel.

Heslin, Watts & Rothenberg, Latham, N.Y., for defendants; Robert E. Heslin, Jeffrey Rothenberg, of counsel.

MINER, District Judge.

MEMORANDUM-DECISION and ORDER

I

The instant action arises out of various commercial disputes surrounding a mobile hayfeeder patented by plaintiff Richard Deats in 1973 and sold under the federally registered trademark "Roll-A-Bout."¹ Originally commenced in New York State Supreme Court, Schoharie County, the action was removed here by defendants on January 10, 1985 pursuant to 28 U.S.C. §§ 1441(c), 1446.² Removal jurisdiction is asserted by defendants to be found in 28 U.S.C. § 1338(a)³ and 15 U.S.C. § 1125(a) ("Lanham Act").⁴ Suggesting that this lawsuit is not appropriate fodder for the federal courts, plaintiff moves to remand the action, 28 U.S.C. § 1447(c).⁵

II

The facts underlying this lawsuit, as set forth in plaintiff's complaint,⁶ are as follows: In early 1971, plaintiff was employed by RAD⁷ Equipment Co., Ltd., ("RAD"). In that capacity, plaintiff invented and manufactured the Roll-A-Bout hayfeeder at issue here. Plaintiff was issued a certificate of registration from the United States Patent Office in February of 1973 for the trademark "Roll-A-Bout." The patent was issued later that year. In early 1971, prior to registration of the trademark, RAD entered into an exclusive sales agreement with defendants. The terms of that agreement called for defendants' purchase of Roll-A-Bout hayfeeders in exchange for an exclusive right to sell them for a ten-year period. After experiencing financial difficulties, RAD was liquidated in May of 1972. Prior to liquidation, however, RAD assigned its right, title and interest in the Roll-A-Bout and the exclusive sales agreement to plaintiff. Plaintiff himself then began to manufacture the hayfeeders under the trade name of "Richard A. Deats." Defendants continued to sell under the terms of the exclusive contract.

In January of 1977, plaintiff offered defendants a license to manufacture his hayfeeders in exchange for the payment of certain royalties. The parties subsequently entered into a royalty agreement calling for payment by defendants to plaintiff of five dollars for each unit sold. The complaint alleges that defendants have never paid any royalties, although they have continued to manufacture the hayfeeder. On November 22, 1982, plaintiff terminated both the exclusive sales agreement and the royalty agreement. Certain provisions of the sales agreement required that, upon termination, defendants were to cease using plaintiff's trademark and trade name and that, for a period of three years, defendants were not to engage in any competitive hayfeeder venture. Notwithstanding these provisions, defendants have continued to distribute hayfeeders under plaintiff's trademark and trade name.

These allegations form the basis for several causes of action. First, plaintiff claims that defendants have breached paragraphs 4(e)⁸ and 13⁹ of the exclusive sales agreement. Next, plaintiff claims that defendants have infringed his trademark and trade name. Third, plaintiff alleges that defendants have breached the patent royalty agreement. Fourth, plaintiff contends that defendants have converted his property by failing to return to him, as required by paragraph 4(e) of the exclusive sales agreement,¹⁰ unused equipment, materials, parts, manuals, and other trade-related items. Finally, plaintiff asserts that "by its sic actions, the defendants have been unjustly enriched by the reasonable value of all money royalties from the sale of Roll-A-Bout hayfeeders which the defendants have manufactured ... without the consent or license of the plaintiff." Complaint, ¶ 51.

In their petition for removal, defendants set forth the following as bases upon which removal jurisdiction may be founded: (1) Paragraph 8 of the complaint asserts that plaintiff was issued a certificate of registration from the United States Patent Office registering the trademark "Roll-A-Bout"; (2) Paragraphs 25, 29 and 32 of the complaint allege or suggest that defendants are infringing upon plaintiff's trademark and trade name; and (3) Paragraph 34 of the complaint asserts that plaintiff was granted Letters Patent from the United States Patent Office on the Roll-A-Bout, and paragraph 52 alleges that "Plaintiff has been unjustly deprived of the reasonable value of all profits which the plaintiff could have made through the sale of hayfeeders had defendant not infringed on plaintiff's trademark, tradename, sic and patent."

III

According to plaintiff, this action was improvidently removed by defendants and should be remanded to state court because this Court lacks subject matter jurisdiction. The basis for plaintiff's argument is that his complaint presents only state law claims and that, since there is no diversity of citizenship between the parties, the federal courts are without jurisdiction.

Disposition of the instant motion must begin with the statutory language found in 28 U.S.C. § 1441(b), which provides, in relevant part: "Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties...." The central question, of course, is whether plaintiff's claims may be said to arise under the Constitution or laws of the United States so as to confer upon this Court proper removal jurisdiction. A reading of plaintiff's complaint discloses, among the five causes of action, claims of three distinct varieties. There unquestionably are present claims in the nature of breach of contract. As to these indisputably state-law grounded causes of action, this Court would have no original jurisdiction and therefore could not acquire removal jurisdiction.¹¹ There remain, however, two other varieties of claims which, depending upon their interpretation and characterization, would come within this Court's original jurisdiction and would therefore also be accommodated by the Court's removal jurisdiction. These are the claims revolving around trademark and patent infringement.

A. Trademark infringement

The federal courts' jurisdiction in matters of trademark is concurrent with that of the state courts. See 28 U.S.C. § 1338(a); see generally 1 J. Gilson, Trademark Protection and Practice § 8.02 (1984). Because plaintiff is master of his own complaint and entitled to decide what law he will rely upon, The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716 (1913), if he "decides not to invoke a federal right, his claim belongs in a state court." Pan American Petroleum Corp. v. Superior Court of Delaware, 366 U.S. 656, 663, 81 S.Ct. 1303, 1307, 6 L.Ed.2d 584 (1961); Alameda Room, Inc. v. Pitta, 538 F.Supp. 1072, 1075 (S.D.N.Y.1982). Of course, "it is an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint." Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 22, 103 S.Ct. 2841, 2853, 77 L.Ed.2d 420 (1983); see Avco Corp. v. Aero Lodge No. 735, International Association of Machinists, 376 F.2d 337, 339-40 (6th Cir. 1967), aff'd, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968); see generally 14A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3722, at 266-76 (1985).

In support of the propriety of removal here, defendants urge a number of points. First, defendants point to the fact that plaintiff has pleaded the federal registration of his Roll-A-Bout trademark. Second, defendants note that the substance of the complaint's allegations supports the conclusion that plaintiff is complaining of conduct adversely affecting his interstate business. Finally, defendants rely on the elementary principle that a plaintiff may not defeat federal jurisdiction by disguising a federal claim as a state claim. According to defendants, the combination of these and other factors points to no other conclusion but that plaintiff has pleaded a federal trademark action. This Court disagrees. Although the question is a close one,¹² the Court is persuaded that, in light of controlling case law and a fair reading of plaintiff's claims, at least with respect to causes of action predicated upon plaintiff's trademark, no federal claims are to be found.

Whether or not plaintiff has elected to pursue a federal or state claim is to be determined from the face of the complaint. Gully v. First National Bank in Meridian, 299 U.S. 109, 112, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936). To state a trademark infringement claim under either federal or New York law, the plaintiff must "show that the defendant's use of the trade-mark is likely to cause confusion, mistake or to deceive...." Allied Maintenance Corp. v. Allied Mechanical Trades, Inc., 42 N.Y.2d 538, 543, 399 N.Y.S.2d 628, 631, 369 N.E.2d 1162, 1165 (1977); Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 624 (2d Cir.1983). Paragraph 31 of plaintiff's complaint reads, in pertinent part: "By use of plaintiff's trademark ... defendants are misleading the public into believing that their product is manufactured by plaintiff...." That language certainly would satisfy the pleading requirements of either a state or federal claim. However, in order to make out a federal trademark infringement claim, plaintiff must also allege that the registered mark is or was being used "in commerce." 1 J. Gilson, Trademark Protection and Practice § 8.031a, at 8-11 to 8-12 (1984); Youngs Rubber Corp. v. C.I. Lee & Co., 45 F.2d 103, 106 (2d Cir.1930) (...