Opinion
CIVIL ACTION NO. 3:99CV00083
September 15, 2000
David Zev Izakowitz, Woods, Rogers Hazlegrove, P.L.C., Charlottesville, Va, for Intel Corp., plaintiff.
Robert Richardson Vieth, Cooley Godward, LLP, Reston, Va, for Intel Corp., plaintiff.
Stacy C. Taylor, Eric H. Feiler, Edward Joseph Fuhr, Hunton Williams, Richmond, Va, for Cfw Wireless, Inc., defendant.
Eric H. Feiler, Hunton Williams, Richmond, Va, for CFW Wireless, Inc., counter-claimant.
David Zev Izakowitz, Woods, Rogers Hazlegrove, P.L.C., Charlottesville, Va, for Intel Corp., counter-defendant.
Robert Richardson Vieth, Craig A. Guthery, Cooley Godward, LLP, Reston, Va, for Intel Corp., counter-defendant.
ORDER
Before the court is the plaintiff's motion to dismiss the defendant's second counterclaim and the parties' memoranda in support and opposition thereto. Upon careful consideration of the arguments presented and for the reasons stated in the accompanying opinion, it is accordingly this day
ADJUDGED, ORDERED, AND DECREED
that the plaintiff's motion to dismiss the defendant's second counterclaim shall be, and hereby is, DENIED.
The Clerk of Court hereby is directed to send a certified copy of this Order and the accompanying Memorandum Opinion to all counsel of record.
MEMORANDUM OPINION
Before the court is the plaintiff's motion to dismiss the defendant's second counterclaim on the grounds that the court lacks of subject matter jurisdiction over said counterclaim. See Fed.R.Civ.P. 12(b)(1). The defendant's second counterclaim seeks a declaratory judgment from this court approving the defendant's use of the mark "InTelos" in the event that the plaintiff prevails on its infringement claim against the defendant for the use of the defendant's current mark, "Intelos."
Any claim for declaratory judgment must present a justiciable case or controversy within the meaning of Article III of the Constitution. See 28 U.S.C.A. § 2201(a). The Declaratory Judgment Act does not expand the jurisdiction of federal courts, and advisory opinions remain outside the purview of the federal courts. See Aetna Life Ins. v. Haworth, 300 U.S. 227, 240-41 (1937). The two pronged test for determining whether a case or controversy exists in a declaratory judgment action involving trademarks requires a showing that (1) the declaratory claimant has a real and reasonable apprehension of litigation, and (2) the claimant has engaged in a course of conduct which brought it into adversarial conflict with the declaratory defendant. See Windsurfing Internat'l Inc. v. AMF Inc., 828 F.2d 755, 757 (Fed Cir. 1987) (citations omitted), cited in Starter Corp. v. Converse, Inc., 84 F.3d 592, 595 (2d Cir. 1996); State of Tex. v. West Pub. Co., 882 F.2d 171, 175 (5th Cir. 1989); Virgin Enterprises Ltd. v. Virgin Cuts Inc., 53 U.S.P.Q.2d 1026, 1030 (E.D.Va. Nov 24, 1999).
With respect to the first prong, the parties dispute whether CFW has a real and reasonable fear of litigation in the event that it implements its proposal to use the "InTelos" mark. Apparently, Intel has vigorously protected its "INTEL" marks, as Intel is well within its rights to do. Based on the information presently before the court, and the fact that the parties are currently embroiled in a trademark infringement action, the court finds that the plaintiff could reasonably fear litigation from Intel upon CFW's implementation of the "InTelos" mark. See, e.g., Goodyear Tire Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 955 (Fed Cir. 1987) (holding that ongoing litigation between parties demonstrated their clear history of adverse legal interests).
The second prong presents a more difficult question, requiring the court to determine whether CFW's conduct has brought it into "actual controversy" with Intel. It is clear that federal courts cannot issue advisory opinions, but the nature of declaratory judgments create an inherent tension with this rule. As the Supreme Court stated,
The 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. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-242Maryland Cas. Co. v. Pacific Coal Oil Co., 312 U.S. 270, 273 (1941), cited in White v. National Union Fire Ins. Co. of Pittsburgh, Pa., 913 F.2d 165, 167-68 (4th Cir. 1990).
It is clear that CFW and Intel have adverse legal interests, so the question is whether there is sufficient immediacy in CFW's intention to use the "InTelos" mark to maintain a declaratory judgment action.
Intel interprets Windsurfing as requiring CFW to actually use the "InTelos" mark and get sued for that use, in order for the declaratory judgment claim to be ripe. The court agrees with more recent Second Circuit case law, which holds that actual use is not required to maintain a declaratory judgment action. See Starter, 84 F.3d at 595 (exercising subject matter jurisdiction over declaratory judgment action where plaintiff sought to implement trademark that defendant alleged would create likelihood of confusion). In Starter, the intent to use was imminent, but not yet implemented. This is distinguishable form the present case, where the implementation of the "InTelos" mark is linked to the outcome of the underlying infringement claim. Nonetheless, the facts of the present matter satisfy the "imminent intention and ability" test used in Starter for determining live controversies. Under the imminent intention and ability test, "an actual case or controversy exists where a party has engaged in a course of conduct evidencing a `definite intent and apparent ability to commence use' of the marks on the product." SuperGuide Corp. v. Kegan, 987 F. Supp. 481, 484 (W.D.N.C. 1997) (citing and quoting Starter, 84 F.3d at 595-96 (citations omitted)). CFW has taken concrete steps toward producing the trademark in controversy, as opposed to expressing a vague or general desire to use the "InTelos" mark. See Starter, 84 F.3d at 585; Windsurfing, 828 F.2d at 758. This is required for establishing an "actual controversy." Goodyear, 824 F.2d at 955, cited in Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888 (Fed. Cir. 1992); see also Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054,1058 (Fed. Cir. 1995) (holding that second prong for declaration of rights in patent case requires concrete steps taken with intent to conduct such activity which could constitute infringement).
Recently, in R.M.S. Titanic, Inc. v. Haver, the Fourth Circuit reviewed the threshold question of whether a live case or controversy existed within the meaning of Article III of the Constitution. 171 F.3d 943, 955 (4th Cir. 1999). In Titanic, the Fourth Circuit held that the test for whether a controversy exists is whether a decision by the court will make a meaningful difference to the parties by affording meaningful relief. See id. (citing Church of Scientology of California v. United States, 506 U.S. 9, 12 (1992) ("It has long been settled that a federal court has no authority `to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue before it' " (quoting Mills v. Green, 159 U.S. 651, 653, 16 S.Ct. 132, 40 L.Ed. 293 (1895))). A decision on the merits of CFW's second counterclaim, if it comes to pass, would afford meaningful relief to the parties. In the event that Intel prevails in the underlying infringement claim, the second counterclaim will be starkly presented and the immediacy and meaningful relief requirements of the Fourth Circuit and Supreme Court will be readily apparent. See id. At that juncture in the litigation, it will be clear whether this court is in a position to give an opinion on the matter or whether it would simply be declaring abstract principles that could not have a real and immediate affect on the parties. At the present stage of the litigation, however, no opinion on the merits of the second counterclaim is proper.
The court takes no position in this opinion as to the merits of the "Intelos" infringement claim, but only explores the results of the possible outcomes.
Although Intel argues that linking the second counterclaim to the merits of the primary infringement claim is too contingent to establish jurisdiction, the court disagrees. In finding that there was no jurisdiction in Windsurfing, the Federal Circuit held that "[t]here must. . .be something beyond the mere competitor status of the parties to serve as a basis for the court's jurisdiction. Such basis may, for example be a suit for trademark infringement. . ."
Windsurfing, 828 F.2d at 758 (citing MWS Wire Indus., Inc. v. California Fine Wire Co., 797 F.2d 799 (9th Cir. 1986) (counterclaim of genericness entertained in suit for trademark infringement)). That is precisely the case here: jurisdiction of the court rests on the primary suit for trademark infringement, allowing more leeway for interpretation of "actual controversy" for the second declaratory judgment counterclaim. It is evident from the pending litigation that the behavior of CFW has brought it into "actual controversy" with Intel. CFW's intent to use "InTelos" is not based on vague notions of what it may or may not choose to do in the future. Rather, CFW has repeatedly represented to the court that, if Intel prevails on the primary infringement claim, CFW immediately will implement use of the "InTelos" mark. Unlike the plaintiff in Windsurfing, CFW's declaratory judgment counterclaim arises out of a live litigation, in which the parties are highly contesting Intel's infringement claim. The projected use of the "InTelos" mark is not mere conjecture and speculation, it is based on the real possibility that CFW may not prevail in its defense against Intel's infringement claim. Furthermore, the court agrees with the Second Circuit that a liberal view of "actual conflict" is required for declaratory judgment actions brought under the Lanham Act. The purpose of the Declaratory Judgment Act is to provide an allegedly infringing party "relief from uncertainty and delay regarding its legal rights." Goodyear, 824 F.2d at 956. A more restrictive view would potentially turn one lawsuit into two, thereby being a very inefficient use of the time and resources of all parties involved, including the court.
See supra note 1.
The court in no way believes that a liberal construction means that there should be a low barrier to the entry of litigation in federal courts. On the contrary, it is required by, and in the best interest of the court to fiercely exercise jurisdiction only over justiciable cases or controversies. As explained above, CFW's second counterclaim falls under this rubric.
Accordingly, for the reasons stated in the foregoing opinion, Intel's motion to dismiss CFW's second counterclaim for declaratory judgment shall be denied. The merits of the declaratory judgment counterclaim shall be addressed at the appropriate time in this litigation: after the primary infringement claim has been decided on the merits.
An appropriate order shall this day enter.