Plum Tree, Inc. v. Seligson

• Decision Date: 15 May 1972
• Docket Number: Civ. A. No. 71-1780.
• Citation: 342 F. Supp. 1084
• Parties: The PLUM TREE, INC. v. Jerome SELIGSON and Dorothy Seligson, husband and wife.
• Court: U.S. District Court — Eastern District of Pennsylvania

342 F. Supp. 1084

The PLUM TREE, INC. v. Jerome SELIGSON and Dorothy Seligson, husband and wife.

Civ. A. No. 71-1780.

United States District Court, E. D. Pennsylvania.

May 15, 1972.

Martin H. Katz, Michael J. Ambrose, Bridgeport, Pa., for plaintiff.

Perry S. Bechtle, Alan M. Lerner, Cohen, Shapiro, Polisher, Shiekman & Cohen, Philadelphia, Pa., for defendants.

OPINION AND ORDER

JOSEPH S. LORD, III, Chief Judge.

Defendants have moved to dismiss the complaint for lack of subject matter jurisdiction. Plaintiff, the registered owner of two related service marks¹ involving the use of the name "The Plum Tree," instituted this action to recover damages for defendants' alleged breaches of franchise and sublease agreements. There is no diversity of citizenship between the parties. Jurisdiction is asserted under paragraph 23 of the franchise agreement,² 28 U.S.C. §§ 1338, 2201, 2202 and 15 U.S.C. § 1121.

At the outset it is clear that we do not have jurisdiction under either the terms of the franchise agreement or the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202. The jurisdiction of the federal district courts is limited to that jurisdiction which Congress has conferred by statute. Jurisdiction cannot be conferred by consent of the parties, People's Bank of Belville v. Winslow, 102 U.S. 256, 26 L.Ed. 101 (1880), and therefore the terms of the franchise agreement cannot confer jurisdiction on this court. The fact that plaintiff seeks a declaratory judgment is equally irrelevant. The Declaratory Judgment Act does not create an independent jurisdictional basis but only provides a remedy for controversies properly brought within the court's jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-672, 70 S.Ct. 876, 94 L.Ed. 1194 (1950).

Plaintiff also claims that this court has jurisdiction under 15 U.S.C. § 1121 and 28 U.S.C. § 1338. Section 1121 grants the district courts original jurisdiction of all actions arising under chapter 22 of Title 15 which concerns registration of trademarks and remedies for trademark infringement. Section 1338 grants the district court original jurisdiction "of any civil action arising under any Act of Congress relating to patents, copyrights and trade-marks." We must therefore determine whether plaintiff's complaint states a cause of action which arises under the trademark laws.

The complaint alleges that on or about November 25, 1969, plaintiff as licensor and defendants as licensees entered into a written franchise agreement whereby plaintiff granted defendants the right to operate a Plum Tree shop in the York Mall Shopping Center, York, Pa. The terms of the agreement are set forth in the complaint. Plaintiff alleges that defendants have committed the following material breaches of their agreement:

"* * * (a) Since the week ending April 24, 1971, the Defendants have failed to mail to the Plaintiff on Tuesday of each week an accurate statement showing the gross receipts received by them during the preceding calendar week.

(b) The Defendants have failed to pay their franchise fees as provided for in their Agreement.

(c) The Defendants have failed to devote their full time, energies and efforts to the conduct of their shop and to give their personal loyalties to the goals and purposes of the Plum Tree organization.

(d) The Defendants have failed to pay rent and other charges for their shop pursuant to a Sublease executed by the Defendants with the Plaintiff on February 7, 1970. * * *

(e) The Defendants have failed to pay for merchandise ordered and received by them.

(f) The Defendants have failed to follow the merchandising and marketing policies as propounded by the Plaintiff." Paragraph 13, Plaintiff's Complaint.

Plaintiff further alleges that "the Defendants' conduct and actions in not submitting their weekly business reports have deprived and will deprive the Plaintiff of its ability to supervise, inspect and police the business establishment of the Defendants," paragraph 15, Plaintiff's Complaint, and that plaintiff has suffered loss of income and has incurred and will incur expenses as a result of defendants' actions.

Defendants contend that the complaint states a cause of action for breach of contract and therefore does not "arise under" any Act of Congress relating to trademarks. We agree.

"* * * It has been long the law that actions brought to enforce contracts of which a patent is the subject matter must, in the absence of diversity of citizenship, be brought in the state court. This is the interpretation placed upon 28 U.S.C.A. § 1338 and its predecessors when applied to patents. The same rule applies to the construction of this section when trade-marks are involved, since this section deals equally with patents and trademarks."

Everest & Jennings, Inc. v. E&J Manufacturing Co., 263 F.2d 254, 262 (C.A. 9, 1958). See also Wade v. Lawder, 165 U.S. 624, 627, 17 S.Ct. 425, 41 L.Ed. 851 (1897); Vanderveer v. Erie Malleable Iron Co., 238 F.2d 510, 513 (C.A. 3, 1956).

Plaintiff has not alleged that any action of defendants affected the good will of its business or infringed its service mark. Plaintiff cites provisions of the trademark laws which establish that an owner of a mark "has an affirmative duty * * * to take reasonable measures to detect and prevent misleading use of his mark by his licensees or suffer cancellation of his federal registration." Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358, 366 (C.A. 2, 1959). See 15 U.S.C. §§ 1055, 1064, 1127. Therefore, plaintiff argues that in seeking to terminate its license...