Starter Corp. v. Converse, Inc., No. 1318

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: PER CURIAM
• Citation: 84 F.3d 592,38 U.S.P.Q.2d. 1947
• Docket Number: D,No. 1318
• Decision Date: 23 May 1996
• Parties: STARTER CORPORATION, Plaintiff-Appellant, v. CONVERSE, INC., Defendant-Appellee. ocket 95-9150.

Page 592

84 F.3d 592 38 U.S.P.Q.2d 1947 STARTER CORPORATION, Plaintiff-Appellant,
v.
CONVERSE, INC., Defendant-Appellee. No. 1318, Docket 95-9150. United States Court of Appeals,
Second Circuit. Argued Feb. 6, 1996.
Decided May 23, 1996.

Page 593

J. Joseph Bainton, Ross & Hardies, New YorkCity, for Appellant, Starter Corporation.

Harley I. Lewin, Lewin & Laytin, New York City, for Appellee, Converse, Inc.

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Before: OAKES and McLAUGHLIN, Circuit Judges, and OWEN, District Judge. ^*

PER CURIAM:

The Starter Corporation appeals from the district court's dismissal of its declaratory judgment complaint against appellee Converse, Inc. on the ground that the court lacked subject matter jurisdiction, and its pronouncement that it would decline to exercise declaratory judgment jurisdiction even if an "actual case or controversy" did exist.

Starter is a manufacturer of athletic apparel and Converse is a manufacturer of athletic footwear and licensor of sports apparel. Both parties possess trademark rights in versions of a five-pointed star. This dispute arises out of Starter's planned use of its registered trademarks, a five-pointed star in various designs, called Starter Marks or House Marks, on athletic footwear. In anticipation of this use, Starter filed for registration of its Starter Marks on athletic footwear with the Patent and Trademark Office. Converse opposed the registration of these applications before the Trademark Trial and Appeal Board on the ground that if used on footwear, the Starter Marks would create a likelihood of confusion with Converse's star mark, and thereafter advised Starter that if Starter brought any footwear to the marketplace bearing the Starter Marks, Converse would sue Starter for trademark infringement.

Starter, however, commenced this action on May 19, 1995, prior to bringing any Starter footwear to the marketplace, seeking declaratory relief concerning its right to use its House Marks on athletic footwear. On July 19, 1995, Converse moved to dismiss the complaint for lack of subject matter jurisdiction, and on November 13, 1995, the district court granted the motion dismissing Starter's complaint on the ground that the complaint failed to allege an actual "case or controversy" as required for subject matter jurisdiction under both Article III of the United States Constitution and the Declaratory Judgment Act, 28 U.S.C. 2201(a). The district court further noted that even if an actual case or controversy had existed, it would have exercised its discretion and declined to rule in the absence of any actual rendering of Starter's footwear in the marketplace. This appeal followed.

Starter's first contention before us is that the district court was in error in holding that it lacked subject matter jurisdiction over Starter's declaratory judgment action. On appeal from such determination, we review the district court's factual findings for clear error and legal conclusions de novo. In re Vogel Van & Storage Inc., 59 F.3d 9, 11 (2d Cir.1995).

The Declaratory Judgment Act, 28 U.S.C. 2201(a), provides that

in a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and legal relations of any party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

In addition, in order for a federal court to have jurisdiction over an "actual controversy," a federal question "arising under the Constitution, laws or treaties of the United States" must be involved, 28 U.S.C. § 1331, since it is well-settled that the Declaratory Judgment Act does not expand the jurisdiction of the federal courts. Albradco Inc., v. Bevona, 982 F.2d 82, 85 (2d Cir.1992) (citations omitted). Accordingly, we must first determine whether a federal question exists, and if it does--thereby providing the court with original jurisdiction--we must then determine whether the dispute presents a substantial controversy or merely an abstract question. There is no bright line here. As the Supreme Court explained in Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941),

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[t]he difference between an abstract question and a "controversy" contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

If both a federal question and an actual controversy exist, then declaratory judgment jurisdiction may appropriately be exercised. If no such controversy exists, however, the courts are prohibited from rendering an advisory opinion which would be beyond our constitutional power. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 464, 81 L.Ed. 617 (1937).

Starter's complaint asserts that jurisdiction is predicated on 28 U.S.C. § 1338, which confers original jurisdiction upon the district court in ...