Unique Concepts, Inc. v. Manuel
| Decision Date | 23 May 1991 |
| Docket Number | No. 90-1674,90-1674 |
| Parties | , 18 U.S.P.Q.2d 1654 UNIQUE CONCEPTS, INCORPORATED, and Floyd M. Baslow, Plaintiffs-Appellants, v. Ted MANUEL and Upholstered Wall Works, Incorporated, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Francis D. Morrissey, William Lynch Schaller, J. Kent Mathewson, Lisa Sopata, Baker & McKenzie, Chicago, Ill., Victoria A. Cundiff, Samuel D. Rosen, Thomajan Milgrim, Jacobs & Lee, New York City, Jean Marie R. Pechette, Stuart D. Smith, Gordon & Glickson, Chicago, Ill., for plaintiffs-appellants.
Donald C. Shine, Nisen & Elliott, James T. Fitzgibbon, Angelo J. Bufalino, C. Michael Kendall, Lockwood, Alex, Fitzgibbon & Cummings, Chicago, Ill., for defendants-appellees.
Before EASTERBROOK, RIPPLE, and KANNE, Circuit Judges.
Ted Manuel quit his employment at Unique Concepts, Inc., and started his own firm, Upholstered Wall Works. Unique Concepts believed that Manuel's new business was producing products for which it held a patent, and it filed suit under the patent laws. Manuel and Upholstered Wall Works (collectively Manuel) responded with a counterclaim based on the state law of defamation and a state consumer protection law. These counterclaims are permissive rather than compulsory, because they arise out of different transactions, Fed.R.Civ.P. 13(a), (b)--to be precise, out of a letter Unique Concepts sent to many of Manuel's customers. The letter said that Manuel's products are unsafe and mentioned the pending patent litigation. Diversity of citizenship supplies an independent jurisdictional basis of the counterclaims, which we call "the letter claims".
The district court bifurcated the case and tried the letter claims first. The jury returned a verdict of $200,000 in Manuel's favor. Unique Concepts then asked for leave to dismiss its claims without prejudice, a maneuver designed to avoid the possibility of preclusion in a contributory infringement suit Unique Concepts has pending in New York against Manuel's supplier. The district court granted this motion, conditioned on the execution of a covenant not to refile the patent suit against Manuel. The district judge entered a final judgment, covering all claims and counterclaims, on March 12, 1990.
The two sides then appealed, to different courts. Unique Concepts appealed to this court, Manuel to the Federal Circuit. Complicating matters, the clerk of the district court transmitted Unique Concepts' notice of appeal to both courts. Fed.R.App.P. 3(d) directs the clerk to send the notice of appeal "to the clerk of the court of appeals named in the notice", and Unique Concepts named this court. Apparently Manuel's counsel called the clerk's office and volunteered that Unique Concepts' lawyer had made a "mistake" in naming the Seventh Circuit. The clerk's office then took it upon itself to rectify this "mistake" by sending the notice to the Federal Circuit, where it has been docketed. The transmission to the Federal Circuit is unauthorized and ineffectual. The appeal was taken to this court; it has been docketed here, and it is ours to decide. Of course, the first question is whether we have jurisdiction. We called for briefs, and the subject is ready for decision.
The Federal Circuit has exclusive jurisdiction of "an appeal from a final decision of a district court ... if the jurisdiction of that court was based, in whole or in part, on section 1338 of this title, except that a case involving [copyright and trademark matters] and no other claims under section 1338(a) shall be governed by sections 1291, 1292, and 1294 of this title." 28 U.S.C. Sec. 1295(a)(1). Section 1338 creates subject-matter jurisdiction in patent, copyright, and trademark cases. The upshot is that if the jurisdiction of the district court is based "in part" on a patent claim, the appeal lies to the Federal Circuit. Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988), holds that to determine whether the district court's jurisdiction is based on Sec. 1338 the court of appeals should apply the well-pleaded complaint rule: if the plaintiff must succeed on a question of patent law in order to prevail, then jurisdiction is founded on Sec. 1338, and if not, not. This means that some patent issues (those offered as defenses) come to the regional courts of appeals. We took the next step in Kennedy v. Wright, 851 F.2d 963 (7th Cir.1988), holding that when the district court's jurisdiction depends in part on Sec. 1338, the appeal lies to the Federal Circuit even if the relief depends entirely on state law. (In Kennedy the district court decided that the defendant owned all rights in question and so avoided questions about validity and infringement.)
In this case, as in Kennedy, the complaint included a well-pleaded patent claim, and the relief depends on state law. Unique Concepts says that Kennedy does not control, however, because Manuel's relief was based on a permissive counterclaim. A federal court has supplemental jurisdiction over compulsory counterclaims. ("Ancillary jurisdiction" became "supplemental jurisdiction" on December 1, 1990, see Sec. 310(a) of the Judicial Improvements Act of 1990, 104 Stat. 5089, 28 U.S.C. Sec. 1367.) Permissive counterclaims, however, require their own jurisdictional basis. Harbor Insurance Co. v. Continental Bank Corp., 922 F.2d 357, 360 (7th Cir.1990); Tenneco Inc. v. Saxony Bar & Tube, Inc., 776 F.2d 1375, 1379 (7th Cir.1985); Clark v. Universal Builders, Inc., 501 F.2d 324, 341 (7th Cir.1974). See also Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, 6 Federal Practice & Procedure Sec. 1422 (2d ed. 1990) (collecting cases). Manuel's counterclaim has nothing to do with patent law; jurisdiction was founded on diversity of citizenship. 28 U.S.C. Sec. 1332(a). The award of $200,000 does not depend on the patent laws, even "in part". (To say it is based "in part" on Sec. 1338 would be to say that no independent jurisdictional basis was necessary.) It follows, Unique Concepts believes, that the appeal lies to the regional court of appeals. It invokes Aerojet-General Corp. v. Machine Tool Works, Oerlikon-Buehrle, Ltd., 895 F.2d 736 (Fed.Cir.1990) (in banc), which holds that a compulsory patent counterclaim may supply "part" of a district court's jurisdiction and so direct an appeal to the Federal Circuit. This works both ways, according to Unique Concepts.
If Sec. 1295(a)(1) allocated jurisdiction according to the basis of relief, this would be a strong argument....
To continue reading
Request your trial
-
Scholes v. Lehmann
...28 U.S.C. Sec. 1367; David D. Siegel, "Practice Commentary," 28 U.S.C.A. Sec. 1367, pp. 829, 830-31 (1993); Unique Concepts, Inc. v. Manuel, 930 F.2d 573, 574 (7th Cir.1991), which furnishes the jurisdictional basis for one of the three suits because it was filed after December 1, 1990, the......
-
Mille Lacs Band of Indians v. State of Minn.
...over compulsory counterclaims, but permissive counterclaims require an independent jurisdictional basis. Unique Concepts, Inc. v. Manuel, 930 F.2d 573, 574 (7th Cir.1991). Rule 13(a) A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has......
-
Walker v. New Mexico at Hobbs Ctr.
...jurisdiction and does not require an independent basis of subject matter jurisdiction. See 28 U.S.C. § 1367(a); Unique Concepts, Inc. v. Manuel, 930 F.2d 573, 574 (7th Cir.1991) (“A federal court has supplemental jurisdiction over compulsory counterclaims.”); Naranjo v. County of Rio Arriba......
-
Walker v. THI of New Mexico at Hobbs Ctr., CIV 09-0060 JB/KBM
...and does not require an independent basis of subject matter jurisdiction. See 28 U.S.C. § 1367(a); Unique Concepts, Inc. v. Manuel, 930 F.2d 573, 547 (7th Cir. 1991)("A federal court has supplemental jurisdiction over compulsory counterclaims."); Naranjo v. County of Rio Arriba, 862 F. Supp......