Pixton v. B & B Plastics, Inc.

• Decision Date: 29 May 2002
• Docket Number: No. 01-1012.,01-1012.
• Citation: 291 F.3d 1324
• Parties: Dennis N. PIXTON, Plaintiff-Appellant, v. B & B PLASTICS, INC. (doing business as Gambler), Michael Surman, and Russell Bringger, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

291 F.3d 1324

Dennis N. PIXTON, Plaintiff-Appellant, v. B & B PLASTICS, INC. (doing business as Gambler), Michael Surman, and Russell Bringger, Defendants-Appellees.

No. 01-1012.

United States Court of Appeals, Federal Circuit.

May 29, 2002.

Richard M. Saccocio, of Fort Lauderdale, FL, argued for plaintiff-appellant.

Richard C. Bagdasarian, of Boca Raton, FL, argued for defendants-appellees. With him on the brief was Amy D. Shield, of Boca Raton, FL.

Before MAYER, Chief Judge, RADER and DYK, Circuit Judges.

MAYER, Chief Judge.

Dennis N. Pixton appeals from the order of the United States District Court for the Southern District of Florida dismissing his cause of action for lack of subject matter jurisdiction. Pixton v. B & B Plastics, Inc., 99-6360-CIV (Dec. 20, 1999). Because the district court has subject matter jurisdiction over this case, we vacate the order of dismissal and remand for further proceedings.

Background

Pixton is the owner of U.S. Patent Nos. 5,025,586 and 5,129,175 directed to plastic fishing lures. In April of 1992, he granted B & B Plastics, doing business as Gambler, an exclusive license to these patents. The license agreement provided that B & B pay a minimum annual royalty to Pixton, and in the event that sales dropped to such a level that the minimum royalty would not be met, B & B could cover the shortfall. If B & B chose not to cover the shortfall, Pixton had the option to either make the agreement non-exclusive or terminate it outright. Pixton alleges that in September or October of 1998, B & B breached the license agreement. Therefore, on November 24, 1998, Pixton allegedly notified B & B of its breach, terminated the license agreement, and demanded that it cease and desist from all prohibited infringing activities. In January of 1999, Pixton allegedly sent another cease and desist letter to B & B, and, when no response was forthcoming, filed suit for patent infringement. In response to Pixton's complaint, B & B pled that the license agreement was still in force because it had been orally modified to remove the minimum royalty provisions. Before the matter could proceed to trial, the district court concluded that it lacked subject matter jurisdiction because the underlying action sounded entirely in contract and did not arise under the patent laws. We have jurisdiction pursuant to 28 U.S.C. § 1292(c)(2).

Discussion

Whether the trial court properly dismissed an action for lack of jurisdiction is a question of law that we review de novo. Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1371, 30 USPQ2d 1621, 1622 (Fed.Cir.1994). When a party has moved to dismiss for lack of subject matter jurisdiction, we view the alleged facts in the complaint as true, and if the facts reveal any reasonable basis upon which the non-movant may prevail, dismissal is inappropriate. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. atCt. 1683, 40 L.Ed.2d 90 (1974).

The district courts of the United States have original jurisdiction over any civil action arising under any Act of Congress related to patents and this jurisdiction is exclusive of the courts of the states. 28 U.S.C. § 1338 (2000). "To determine whether section 1338 jurisdiction attaches, the court must look to see whether the plaintiff has stated, in a well-pleaded complaint, a claim arising under the patent laws." Jim Arnold Corp. v. Hydrotech Sys., Inc., 109 F.3d 1567, 1576, 42 USPQ2d 1119, 1127 (Fed.Cir.1997) (citing Vink v. Schiff, 839 F.2d 676, 676-77, 5 USPQ2d 1728, 1730 (Fed.Cir.1988)). "The well pleaded complaint rule contemplates that the answer to whether an action arises under federal law `must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation or avoidance of defenses which it is thought the defendant may interpose.'" Id. (citing Vink, 839 F.2d at 676-77 (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983))).

Pixton argues that our holding in Air Products & Chemicals, Inc. v. Reichhold Chemicals, Inc., 755 F.2d 1559, 225 USPQ 121 (Fed.Cir.1985), is controlling. Air Products and Chemicals, Inc. owned U.S. Patent No. 3,708,388 and granted a non-exclusive license to E.I. duPont de Nemours and Company. DuPont then assigned its rights to Reichhold Chemicals. Reichhold licensed its rights under the patent to a third party. Air Products alleged that the latter license was not in conformance with the original license grant, terminated Reichhold's license, and filed suit for patent infringement. Concluding that the primary issue was a matter of contract interpretation, and not patent infringement, the district court dismissed the case for lack of subject matter jurisdiction. On appeal, we reviewed the Supreme Court's analysis of the issue in Luckett v. Delpark, Inc., 270 U.S. 496, 46 S.Ct. 397, 70 L.Ed. 703 (1926), to hold that Air Products' cause of action arises under the patent laws. "[A] federal district court has jurisdiction of a suit by a patentee for an injunction against infringement and for profits and damages, even though, in anticipation of a defense of license or authority to use the patent, the complainant includes in his bill averments intended to defeat such a defense." Id. at 1562, 755 F.2d 1559, 225 USPQ at 122-23 (citing Luckett v. Delpark, Inc., 270 U.S. 496, 46 S.Ct. 397, 70 L.Ed. 703). And "`the party who...