Schachel v. Closet Concepts, Inc., 80-1989
| Decision Date | 03 November 1981 |
| Docket Number | No. 80-1989,80-1989 |
| Citation | 405 So.2d 487 |
| Parties | Michael SCHACHEL and I. C. O. Corporation, Appellants, v. CLOSET CONCEPTS, INC., Appellee. |
| Court | Florida District Court of Appeals |
Before NESBITT and DANIEL S. PEARSON and FERGUSON, JJ.
In 1979, Schachel, the owner of a United States design patent on a modular closet-organizing system, and his exclusive licensee in the State of Florida, I. C. O. Corporation Inc., sued Closet Concepts, Inc. in the United States District Court for the Southern District of Florida, alleging that Closet Concepts, Inc. was an infringer of the patent. The parties settled that litigation by entering into an agreement under which, in pertinent part, Closet Concepts (a) would refrain from directly or indirectly infringing on the mentioned patent; (b) would refrain from the manufacturer, sale, and offering or advertising for sale the modular closet-organizing system depicted in the patent; and (c) would be permitted to manufacture, sell, and offer or advertise for sale a differently described closet system. Pursuant to that agreement, the suit was dismissed.
In 1980, Schachel and I. C. O. sued Closet Concepts in the Circuit Court in and for Dade County, Florida. This time they alleged that Closet Concepts had breached the settlement agreement by engaging in precisely the conduct it had agreed to refrain from in respect to Schachel's patent. Upon Closet Concepts' motion, the trial court dismissed the cause on the ground that the court lacked subject matter jurisdiction over the controversy. Schachel and I. C. O. appeal. We affirm.
Title 28, United States Code, Section 1338(a), provides that the Federal Courts shall have exclusive jurisdiction over actions arising under Acts of Congress relating to patents. Schachel and I. C. O. contend that Section 1338(a) does not apply, since their action against Closet Concepts is an action for breach of the settlement agreement, not an action for patent infringement. Which of these it is does not depend on the label given the suit, or the fact that the parties have reduced rights and obligations arising under patent laws to an agreement. Instead, the test is: if the suit is founded on a breach of a right created by the patent laws, even if that right is confirmed by separate agreement, the case arises under the patent laws, and a state court is without subject matter jurisdiction. On the other hand, if the suit is founded on some right falling outside the ambit of the patent laws, then the state court has jurisdiction, even if during the course of the suit the court is called upon to determine questions involving the patent laws. Bert Lane Company v. International Industries, 84 So.2d 5 (Fla.1955); Key Pharmaceuticals, Inc. v. Robinson, 334 So.2d 137 (Fla. 3d DCA 1976).
In the present case, the only possible way for Closet Concepts to breach the agreement would be to infringe the patent. 1 The settlement agreement neither modifies nor adds to any right which did not already exist in the patent holder or licensee by virtue of the patent laws. The complaint in turn alleges nothing other than a breach of the agreement. In substance, then, the complaint alleges nothing other than an action against Closet Concepts for infringement of patent rights. Unlike Bert Lane Company v. International Industries, supra, in which the gist of the complaint was that the defendants, former employees of the plaintiff, breached a confidential relationship and appropriated to their own use a patented device, and Key Pharmaceuticals, Inc. v. Robinson, supra, in which the gist of the complaint was the plaintiff's effort to recover past due royalties under a patent, the present case poses the patent's validity and infringement as the central and sole issue. That being so, the exclusive jurisdiction of this suit was in the Federal Court, and the trial court correctly dismissed the complaint. 2
Affirmed.
Though I agree with the majority result, I would rephrase the majority's test for determining whether there is exclusive federal jurisdiction in cases involving patents. In this case, the plaintiff sued for breach of the settlement agreement stating as the sole cause of action, breach of contract. Only by looking to the settlement...
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