Logan v. Burgers Ozark Country Cured Hams Inc.

• Decision Date: 12 September 2001
• Docket Number: No. 00-30652,00-30652
• Citation: 263 F.3d 447
• Parties: (5th Cir. 2001) JAMES P. LOGAN, JR., Plaintiff, v. BURGERS OZARK COUNTRY CURED HAMS INC; ET AL, Defendants. JAMES P. LOGAN, JR., Plaintiff-Appellant-Cross-Appellee, v. ORIGINAL HONEY BAKED HAM COMPANY OF GEORGIA, ETC.; ET AL, Defendants, ORIGINAL HONEY BAKED HAM COMPANY OF GEORGIA, doing business as Honeybaked Ham Co.; Honeybaked Foods Inc., doing business as Honeybaked Ham Co., Defendants-Appellees-Cross-Appellants
• Court: U.S. Court of Appeals — Fifth Circuit

Page 447

263 F.3d 447 (5th Cir. 2001)

JAMES P. LOGAN, JR., Plaintiff, v. BURGERS OZARK COUNTRY CURED HAMS INC; ET AL, Defendants.

JAMES P. LOGAN, JR., Plaintiff-Appellant-Cross-Appellee, v. ORIGINAL HONEY BAKED HAM COMPANY OF GEORGIA, ETC.; ET AL, Defendants, ORIGINAL HONEY BAKED HAM COMPANY OF GEORGIA, doing business as Honeybaked Ham Co.; Honeybaked Foods Inc., doing business as Honeybaked Ham Co., Defendants-Appellees-Cross-Appellants.

No. 00-30652

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

September 12, 2001

Appeals from the United States District Court for the Western District of Louisiana

[Copyrighted Material Omitted] Before STEWART and PARKER, Circuit Judges, and GOLDBERG^*, Judge.

CARL E. STEWART, Circuit Judge:

James P. Logan ("Logan") appeals from the district court's judgment, partially granting the motion for judgment as a matter of law brought by The Original HoneyBaked Ham Company of Georgia, Inc., and HoneyBaked Foods, Inc., (collectively, "HoneyBaked") following a jury trial. Also, HoneyBaked appeals the district court's refusal to grant certain portions of its motion for judgment as a matter of law. For the following reasons, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Logan holds several patents on a method of spirally slicing boneless meat products and sells meat products that were cut using this method in several retail outlets. In July 1997, Logan filed a patent infringement suit against HoneyBaked, alleging violations of his patents for the spiral slicing method in cutting boneless turkey breasts.

As part of a resolution of the litigation, the parties entered into a license agreement whereby HoneyBaked would provide royalties to Logan for all boneless meat products it sold that were cut using the spiral slicing process. The contract did not specifically state that HoneyBaked was obligated to sell any of Logan's product.

Before it was to begin paying royalties, HoneyBaked ordered its sellers not to sell the meat products that were subject to the agreement. Only a small quantity of the meat was sold, and consequently, Logan received only a small payment from HoneyBaked. However, HoneyBaked continued to use pictures of the spiral sliced meat products in its advertising. A few stores owned by Logan continued to sell the spiral sliced meat products.

After the parties had reached their agreement and shortly before the deadline for entry of the order dismissing Logan's suspended patent infringement claim, Logan discovered that HoneyBaked had discontinued its sales of spiral sliced meat products. He also discovered that HoneyBaked owed him very little in royalties. Thus, he resumed litigating his patent infringement claim, adding claims for breach of contract, or in the alternative, rescission due to error or fraud, false advertising under the Lanham Act, 15 U.S.C. § 1125(a), and Louisiana unfair competition and deceptive trade practices law.

The district court bifurcated Logan's claims, ruling that Logan's nonpatent claims would be tried first. Following trial on the nonpatent claims, the jury found that HoneyBaked did not breach a valid agreement with Logan. However, the jury also found that the receipt of a stream of royalties was a principal cause of the contract and that HoneyBaked knew or should have known this fact. The jury concluded that Logan's consent to the license agreement had been obtained by fraud. The jury also determined that HoneyBaked had willfully violated the Lanham Act by falsely advertising spiral sliced meat products. However, it found that Logan had not established any actual losses with respect to the Lanham Act violation. The jury awarded Logan $8.8 million on the fraud claim and $480,000 on the Lanham Act claim.¹

After the jury returned its verdict, Logan moved to dismiss his pending patent infringement claims with prejudice on the condition that HoneyBaked dismiss its declaratory judgment patent claim. On August 9, 1999, the district court dismissed all of the patent claims. However, the court did not specify whether the dismissal was with or without prejudice. On May 17, 2000, upon motion by HoneyBaked and one day after Logan filed his notice of appeal to this Court, the district court entered an order attempting to correct its April 19, 2000, memorandum ruling, which indicated that Logan's patent infringement claims had been dismissed without prejudice and that he was free to pursue those claims. The court stated that the dismissal of the patent claims had been with prejudice.

On February 15, 2000, the district court entered final judgment. The court declined to award prejudgment interest to Logan with respect to the jury's verdict on his fraud claim. The court also denied Logan's request for attorney's fees with respect to his Lanham Act claim. However it granted Logan attorney's fees with respect to the fraud claim. Also, in its February 15th ruling, the district court noted its denial of Logan's request for a permanent injunction against future Lanham Act violations.

After the district court entered final judgment, HoneyBaked moved for judgment as a matter of law. On April 19, 2000, the district court granted HoneyBaked's motion regarding damages for Logan's fraud claim and profits for the Lanham Act violation. Thus, it vacated and set aside all monetary awards. However, the court denied HoneyBaked's motion with respect to the remaining aspects of the jury's verdict and entered final judgment. Logan now appeals the district court's grant of judgment as a matter of law on the issue of damages for fraud and profits for the Lanham Act violation. He also appeals the court's determination that he is not entitled to prejudgment interest on the fraud damages and its refusal to grant an injunction against further Lanham Act violations. In its cross-appeal, HoneyBaked argues that the district court erred in denying its motion for judgment as a matter of law on the claims that it committed fraud and willfully violated the Lanham Act.

DISCUSSION

I. Jurisdiction

We must, as an initial matter, address whether we have jurisdiction over this case or whether this case should be decided by the United States Court of Appeals for the Federal Circuit.

Uncertain as to whether this Court or the Federal Circuit has jurisdiction over the instant appeal, Logan filed a notice of appeal in both courts. Subsequently, believing that jurisdiction is proper in this circuit, Logan, with the approval of HoneyBaked, moved the Federal Circuit to grant a non-prejudicial dismissal or transfer of appeal to this Court. The Federal Circuit, in a single judge order, denied Logan's motion to dismiss or transfer, finding that it has appellate jurisdiction over the instant case. After oral argument before this Court, Logan, unopposed by HoneyBaked, moved the Federal Circuit to stay proceedings in the case until this Court issues a ruling. The Federal Circuit granted that motion.

28 U.S.C. § 1295(a)(1) grants exclusive jurisdiction to the Federal Circuit over "an appeal from a final decision of a district court of the United States . . . if the jurisdiction of that court was based, in whole or in part, on section 1338 of this title." 28 U.S.C. 1295(a)(1). Section 1338(a) grants to district courts "original jurisdiction of any civil action arising under any Act of Congress relating to patents." 28 U.S.C. § 1338(a). The Supreme Court has held that "§ 1338(a) jurisdiction . . . extend[s] only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988).

In Christianson, both the Seventh Circuit and the Federal Circuit found that they lacked the jurisdiction over a case, transferring it to each other. Christianson, 486 U.S. at 803. The plaintiff's well-pleaded complaint contained two claims under the Sherman Act. Id. at 810. The Court determined that a patent law issue was arguably necessary for at least one theory under each claim but was not necessary for the success of either claim. Id. Thus, the Court held that the Seventh Circuit had jurisdiction. Id.

Even though jurisdiction is determined at the outset of the suit, the Federal Circuit has held that where patent claims are dismissed without prejudice from complaints containing multiple counts, it has no jurisdiction over an appeal of the non-patent claims. See Nilssen v. Motorola, Inc. 203 F.3d 782 (Fed. Cir. 2000). In Nilssen, the court agreed with one party that bifurcating the case was an efficient way to manage the trial and dismissed the patent claims without prejudice under Fed. R. Civ. P. 41(b), which provides for involuntary dismissals of a plaintiff's claims. Id. at 783. The plaintiff re-filed the patent infringement claims in a separate action. Id. Resolving the jurisdiction issue, the Federal Circuit stated, "We agree . . . that we lack jurisdiction . . . . There is no dispute that Nilssen's complaint originally contained a well-pleaded claim for patent infringement . . . . Jurisdiction normally attaches at the time of filing based on pleadings. Had the patent claims remained in the case, we surely would have had jurisdiction." Id. at 784. The court found that, because the patent claims were dismissed without prejudice under Rule 41(b), the district court no longer had jurisdiction over the remaining state law claims based on 28 U.S.C. § 1338 but that its jurisdiction was instead based on 28 U.S.C. § 1367.² Id.

The Nilssen court rejected the plaintiff's argument that the jurisdictional issue must always be determined on the basis of the claims existing at the commencement of the suit because that contention is contrary to its holding in Gronholz v. Sears, Roebuck & Co., 836...