Vantage Trailers, Inc. v. Beall Corp.

• Decision Date: 08 May 2009
• Docket Number: No. 08-20139.,08-20139.
• Citation: 567 F.3d 745
• Parties: VANTAGE TRAILERS, INC., Plaintiff-Appellant, v. BEALL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

567 F.3d 745

VANTAGE TRAILERS, INC., Plaintiff-Appellant, v. BEALL CORPORATION, Defendant-Appellee.

No. 08-20139.

United States Court of Appeals, Fifth Circuit.

May 8, 2009.

Carroll Vernon Lawson, Matthews, Lawson & Bowick, PLLC, Houston, TX, Phillip A. Wittmann (argued), Barry Weldon Ashe, Stone, Pigman, Walther & Wittmann, New Orleans, LA, for Plaintiff-Appellant.

Earl Russell Tarleton (argued), Donna Marie Chamberlin, Seed Intellectual Prop. Law Group, PLLC, Seattle, WA, Charles J. Rogers, Conley Rose, Houston, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before JONES, Chief Judge, JOLLY, Circuit Judge, and MONTALVO,^* District Judge.

EDITH H. JONES, Chief Judge:

Vantage Trailers, Inc. ("Vantage") filed suit seeking a declaratory judgment that its design for a new aluminum bottom dump trailer would not infringe any valid trademark rights held by Beall Corporation ("Beall"). In a thorough and well-reasoned opinion, which develops the facts more thoroughly than we need do here, the district court dismissed the case for lack of subject matter jurisdiction because Vantage did not have a substantially fixed and definite trailer design when it filed the action. We affirm.

I. BACKGROUND

Beall manufactures and sells an aluminum bottom dump trailer, the "Beall Bullet," which is protected by U.S. Trademark Registration No. 1,622,364. The mark covers "the design of a truck trailer of the bottom dumping type" and has been registered since 1990. In early 2006, Vantage, a competitor, began design of its own bottom dump trailer. On July 17, 2006, David Shannon, Beall's Vice President, sent a letter to Vantage stating:

It has come to my attention that your company has built or is in the process of building an aluminum bottom dump trailer with the distinctive shape of the "Beall Bullet" trailer that is manufactured by Beall Corporation's subsidiaries Beall Trailers of Montana and Beall Trailers Sunnyside.

...

It is my duty to advise you that if your company places any trailers into service that violate any of the Beall trademarks we will pursue legal action to stop the infringement.

In response, Vantage filed this suit on September 25, 2006, seeking a declaratory judgment that Beall's trademark is invalid and that "the design, manufacture, sale and use of [Vantage's] aluminum bottom dump trailer does not infringe any valid intellectual property right" of Beall's. In addition, Vantage asserted claims for unfair competition based on Beall's assertion of its intellectual property rights.

In early November 2006, Beall filed a motion to dismiss based on the lack of personal jurisdiction and lack of standing. After Vantage responded, Beall withdrew its motion, but following discovery, Beall filed a second motion to dismiss the trademark declaratory judgment claim for lack of subject matter jurisdiction. The district court granted the motion to dismiss and sua sponte dismissed the unfair competition claim, finding that it merely duplicated the trademark claim. Vantage appeals both dismissals. We address each in turn.

II. STANDARD OF REVIEW

The district court dismissed the suit for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). The plaintiff has the burden of proving subject matter jurisdiction by a preponderance of the evidence. New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 327 (5th Cir.2008). In evaluating jurisdiction, the district court must resolve disputed facts without giving a presumption of truthfulness to the plaintiff's allegations. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.1981). This court reviews the district court's legal conclusions de novo and factual determinations for clear error. Id.

III. DISCUSSION

A. Declaratory Judgment

The Declaratory Judgment Act, 28 U.S.C. § 2201(a), requires an "actual controversy" between the parties to the declaratory judgment action. The declaratory judgment plaintiff must establish that this requirement was satisfied at the time the complaint was filed—post-filing conduct is not relevant. Sierra Applied Sciences, Inc. v. Advanced Energy Industries, Inc., 363 F.3d 1361, 1373 (Fed.Cir.2004). The Supreme Court directs that the dispute must be definite and concrete, real and substantial, and admit of specific relief through a decree of a conclusive character. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). Declaratory judgments cannot be used to seek an opinion advising what the law would be on a hypothetical set of facts. MedImmune, 549 U.S. at 127, 127 S.Ct. 764. At the same time, however, declaratory judgment plaintiffs need not actually expose themselves to liability before bringing suit. Id. at 129-30, 127 S.Ct. 764.

A common framework for analysis applies to all patent, copyright, and trademark declaratory judgment suits. Texas v. West Pub. Co., 882 F.2d 171, 175 (5th Cir.1989). To assess standing in declaratory judgment suits, federal courts have traditionally applied a two-part test that required the declaratory plaintiff to show:

(1) an explicit threat or other action by the [holder of a patent or trademark], which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity.

Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1343-44 (Fed.Cir.2007) (internal quotation marks omitted). Following MedImmune, the "reasonable apprehension of suit" requirement no longer applies. Id. at 1344. Instead, the Court clarified that "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." MedImmune, 549 U.S. at 127, 127 S.Ct. 764 (quoting Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941)). In evaluating the justiciability of a declaratory judgment suit, courts must require a definite and concrete dispute, remembering the prohibition against "an opinion advising what the law would be upon a hypothetical set of facts." MedImmune, 549 U.S. at 127, 127 S.Ct. 764 (quoting Aetna, 300 U.S. at 240-41, 57 S.Ct. 461).

Vantage argues that a variety of its activities, centered around its design and attempted sale of an aluminum bottom dump trailer, demonstrate the immediacy and reality of the controversy between itself and Beall. Vantage worked with an engineer on product development, began construction of a new manufacturing facility, purchased specialized equipment, built a sub-frame, and offered to sell its new model trailers. It is undisputed that Vantage had begun to manufacture some type of trailer—the question is whether the design was sufficiently fixed to allow evaluation of trademark infringement.¹

The district court appropriately looked to Sierra Applied Sciences, Inc. v. Advanced Energy Industries, Inc., 363 F.3d 1361 (Fed.Cir.2004), in resolving this issue. In Sierra Applied Sciences, the declaratory plaintiff had begun development of a potentially infringing power supply at the time of suit. Id. at 1380. The Federal Circuit concluded that no immediate and real controversy existed: "Because the design was fluid on the date the complaint was filed, it was impossible to determine— on that date—whether any eventual design ... would infringe [the] patents." Id.

The Seventh Circuit also discussed the need for a fixed design in evaluating intellectual property declaratory judgment actions:

Our concern is not that the [product at issue] will never be produced, but rather that because of the relatively early stage of its development, the design which is before us now may not be the design which is ultimately produced and marketed. For a decision in a case such as this to be anything other than an advisory opinion, the plaintiff must establish that the product presented to the court is the same product which will be produced if a declaration of noninfringement is obtained.

Int'l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1216 (7th Cir.1980). Although it has not required a completely fixed design—the eventually manufactured product need not be identical—the Federal Circuit has emphasized that the design must be fixed "particularly with respect to its potentially-infringing characteristics." Sierra Applied Sciences, 363 F.3d at 1379 (citing Telectronics Pacing Systems, Inc. v. Ventritex, Inc., 982 F.2d 1520, 1527 (Fed.Cir.1992)).

Based on its analysis of Sierra Applied Sciences, the district court concluded that Vantage did not have a substantially fixed and definite trailer design when it filed the declaratory judgment action. We agree. We need not address whether this is a factual conclusion reviewed for clear error or a legal conclusion reviewed de novo because the result is the same under either standard.

Vantage distinguishes this case from Sierra Applied Sciences because a trademark, not a patent, is at issue. While patents protect the substance of a product, the structure of a device or the method to accomplish a task, trademarks protect the configuration or appearance. But this distinction between patents and trademarks weakens, rather than strengthens, Vantage's argument for justiciability. Typically, the functional elements of design will long precede the cosmetic. The compromises and alterations necessary to accomplish a product's purpose often dictate its appearance. See Talking Rain Beverage Co. Inc. v. South Beach Beverage Co., 349 F.3d 601, 604 (9th Cir.2003) ("[M]anufacturing considerations explain why [the trademarked] bottle looks the way it does .... ...