Opinion
Case No. 6:03-cv-404-Orl-22DAB
September 11, 2003
Brent C. Bell, Esq., Shutts Bowen LLP, Orlando, FL
Jonathan Cohen, Esq., Shutts Bowen, LLP, Miami, FL
Brian R. Gilchrist, Esq., Alien, Dyer, Doppelt, Milbrath Gilchrist, P.A., Orlando, FL
REPORT AND RECOMMENDATION TO THE UNITED STATES DISTRICT COURT
This cause came on for consideration without oral argument following the District Judge's reference of the remaining question as to whether Count I should be dismissed with prejudice and the reminder of this case be remanded to state court (Doc. No. 22). Having considered the briefs of the parties (Doc. Nos. 20 and 21) and the applicable law, it is respectfully recommended that Count I of the Complaint be dismissed, with prejudice; Count I of the Counterclaim be dismissed, and the remainder of the case, including the Counterclaims, be remanded to state court.
As stated in the prior Report and Recommendation, Plaintiff filed a multi-count Complaint in state court, alleging a variety of claims against an ex-employee and his new employer, including: (1) a Florida common law claim of unfair competition; (2) violation of Florida's Uniform Trade Secret Act; (3) multiple counts of tortious interference; and (4) civil conspiracy. Defendant removed on the ground that the first of these, the common law claim of unfair competition, as it was pled here, is preempted by the federal Copyright Act. Plaintiff moved to remand, which the Court subsequently denied (Doc. Nos. 16 and 19).
Having found that removal was not inappropriate, the Court noted that Plaintiff appeared to have conceded that it does not have an enforceable copyright in the software, and the Court ordered the parties to show cause why Count I ought not to be dismissed with prejudice and the remaining state law claims remanded to state court for resolution. Id. Plaintiff filed a response which indicated that the Court should dismiss Count I without prejudice, and remand the remainder of the case. Defendant contends that the Court should dismiss Count I with prejudice, but should not remand the remaining claims, including its Declaratory Judgment action counterclaim, to state court. The Court finds neither suggestion persuasive.
Plaintiff acknowledges that "it has not yet registered its copyright with the United States Copyright Office, a precondition for bringing a federal copyright claim in federal court" (emphasis original), but that it "nevertheless has a valid federal copyright for its software based upon publication." As such, Plaintiff argues that it should not be foreclosed from bringing a federal copyright claim in the future, should it choose to register its copyright, nor should it be prohibited from bringing a future state law unfair competition claim "based upon additional facts and circumstances unrelated to a copyright claim." In essence, Plaintiff contends that a dismissal with prejudice would bar Plaintiff from bringing an action based on different facts in the future. Although the Court disagrees that a dismissal would necessarily preclude Plaintiff from bringing a Copyright Act claim on a registered copyright which is presently not in existence, it sees no harm in dismissing Count I, with prejudice to bringing an identical claim, based on circumstances as they exist today. The Court respectfully recommends such a dismissal.
The remaining claims in the Complaint are state law claims, and the Court's jurisdiction over these claims is supplementary. Defendant has filed a Counterclaim, which includes additional state law claims, and a purported federal claim, under the Declaratory Judgment Act. According to the Counterclaim, "Count One of this action seeks a declaration under 28 U.S.C. § 2201 that Counterclaimant has not infringed any valid copyright rights of Counter-Defendant." (Doc. No. 3, at 6). Thus, argues Defendant SimplexGrinnell, L. P., this Court has federal question jurisdiction over the Counterclaim and should therefore retain the entire action, as the state law claims are inter-related. This Court is not persuaded.
THE DECLARATORY JUDGMENT ACT
It is fundamental that the Declaratory Judgment Act is not, in and of itself, a grant of jurisdiction to the federal courts; "a suit brought under the Act must state some independent source of jurisdiction, such as the existence of diversity or the presentation of a federal question." Borden v. Katzman, 881 F.2d 1035, 1036 (11th Cir. 1989), citing Skelly Oil Co. v. Phillips Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed.2d 1194 (1950). Diversity is not apparent here and no federal question jurisdiction is explicitly pled in that the Counterclaim does not cite to the Copyright Act, nor does it appear to seek relief pursuant to the Copyright Act. Indeed, the action appears to state the very opposite of a copyright claim — it alleges that Plaintiff does not own the asserted work and has no valid or enforceable copyright.
Although the Counterclaim alleges that Plaintiff "has initiated litigation against [Defendant], alleging that [Defendant] has engaged in acts of copyright infringement," no such claim appears in this case. Indeed, the basis for this Court's recommendation that Count I of the Complaint be dismissed was precisely because it was not a copyright claim (though its subject matter was preempted by copyright law) and, as conceded by Plaintiff, a copyright claim can not now be brought, as Plaintiff has yet to register the work.
Even construing Count 1 of the Counterclaim as being based upon federal question jurisdiction under the Copyright Act, case law does not support the existence or exercise of jurisdiction under the circumstances of this case.
In Borden, supra, an author paid a professor to translate an old and rare book the author had acquired. Following the completion of the translation, the professor sought to publish his translation, and the author objected. The professor brought a declaratory judgment action against the author, seeking entry of a judgment declaring that the author "is without right to threaten suit against him or his publisher for alleged infringement or theft of copyright." 881 F.2d at 1037. Approximately one month after filing the action, the professor obtained a United States Certificate of Registration from the Copyright Office for his translation of the book. The District Court found that the issue "arose" under the Copyright Act, as it involved publication rights, and found in the professor's favor. Id. The Eleventh Circuit reversed, finding that the district court had no subject matter jurisdiction to determine the dispute. Id. at 1039. The Eleventh Circuit held that the dispute did not arise under the Copyright Act but was a dispute over the ability of the professor to exercise and enjoy the rights granted to him as the owner of a copyright. Id. at 1038. Thus, the Eleventh Circuit found no jurisdiction present to determine this dispute between a copyright holder and a party threatening suit against him for alleged infringement or theft of copyright. By contrast, here we have allegations that a party is threatening suit for alleged infringement but no assertion that either party holds the copyright. The allegations of this case are farther removed from the Copyright Act than those in Borden.
Defendant does not cite to or distinguish Borden, but instead relies upon Goodman v. Lee, 815 F, 2d 1030 (5th Cir. 1987) and Topolos v. Caldewey, 698 F.2d 991 (9th Cir. 1983), for the proposition that "[s]eeking declaratory judgment with respect to rights, duties and obligations under the Copyright Act clearly vest the Court with subject matter jurisdiction." Goodman, however, was a declaratory judgment action to establish joint authorship of a copyrighted work. Topolos involved an alleged claim of infringement, brought by an alleged beneficial owner of a copyright. In both cases, a copyrighted work existed. Neither case addressed the issue presented here-whether the Court has jurisdiction to declare that a party did not infringe alleged nonexistent copyright rights. In such a case, where, as here, the Counter-defendant has not made any application for registration, Counter-claimant's declaratory judgment action for copyright non-infringement is barred. Prospect Planet, LLC v. Paychecks for Life.Com, 2003 WL 751023, *2 (D. N.D. January 16, 2003); Burns v. Rockwood Distrib. Co., 481 F. Supp. 841, 845 (N.D. Ill. 1979).
Even if the Defendant were to establish that this action arose under the Copyright Act, the declaratory judgment count should be dismissed for absence of a justiciable controversy. As noted in Phillips Plastics Corp. v. Kato Hatsujuo Kabushiki Kaisha, 57 F.3d 1051 (Fed. Cir. 1995) (cited by Defendant), the declaratory judgment act authorizes a court to declare the rights of an interested party in a case of "actual controversy." In an intellectual property case, "actual controversy" exists when both prongs of a two-pronged test are satisfied: (1) when the declaratory plaintiff has a real and reasonable apprehension of litigation and (2) when the declaratory plaintiff has engaged in a course of conduct that brings it into adversarial conflict with the declaratory defendant. Texas v. West Pub. Co., 882 F.2d 171, 175 (5th Cir. 1989). Here, there is no real and reasonable apprehension of infringement litigation, as Plaintiff has conceded the absence of a valid copyright registration, which is a prerequisite to such a suit. Moreover, the Court has recommended dismissal of Count I of Plaintiffs suit, which constituted Plaintiffs attempt at asserting, in essence, a common law copyright claim. As such, there is no actual present copyright controversy left for the Court to adjudicate. Not only is Defendant's declaratory judgment count insufficient to confer independent federal question jurisdiction upon this Court, it is insufficient to survive a motion to dismiss.
Of course, should Plaintiff successfully register a copyright, this conclusion may change. From that perspective, the absence of justiciability arises from lack of ripeness.
With respect to the other counts of the Complaint and Counterclaim, the Court must determine whether to exercise its pendent or ancillary jurisdiction, now codified in Title 28, United States Code, Section 1367. Section 1367(c) lists specific circumstances in which a district court may decline to exercise supplemental jurisdiction over a state law claim joined with a claim over which the court has original jurisdiction. The Court may refuse to exercise such jurisdiction if, for example, the state claim raises a "novel or complex issue of State law" or "substantially predominates over" the claim over which the Court has original jurisdiction. 28 U.S.C. § 1367(c)(1) (2). Additionally, jurisdiction may be declined if "the district court has dismissed all claims over which it has original jurisdiction" or "in exceptional circumstances, there are other compelling reasons" for doing so. 28 U.S.C. § 1367(c)(3) (4). If, after examining the statutory factors, the Court determines that it has the discretion to decline jurisdiction, "it should consider the traditional rationales for pendent jurisdiction, including judicial economy and convenience, in deciding whether or not to exercise that jurisdiction." Palmer v. Hospital Authority of Randolph County, 22 F.3d 1559, 1569 (11th Cir. 1994).
Reviewing the allegations in the Complaint and Counterclaim, the Court notes that the state law claims "substantially predominate" over the purported federal claims. Should the district court adopt the undersigned's recommendation to dismiss Count I of the Complaint and agree that Count 1 of the Counterclaim fails to state a cognizable cause of action within the Court's original jurisdiction, no federal claims remain and remand to state court is appropriate.
The Court therefore respectfully recommends that:
• Count I of the Complaint be dismissed, with prejudice to bringing an identical claim, based on the present facts;
• Count I of the Counterclaim be dismissed for failure to state a cause of action, as a matter of law; and
• The Court decline to exercise supplemental jurisdiction over the remaining claims and that the case be remanded to state court.
Failure to file written objections to the proposed findings and recommendations contained in this report within ten (10) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.