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McCabe v. Rose

United States District Court, Ninth Circuit

July 1, 2013



DAVID O. CARTER, District Judge.


Before the Court are two items: (1) a Motion to Dismiss (Dkt. 15) filed by Defendants Floyd Rose ("Rose"), Floyd Rose Marketing, Inc. ("FRM"), and AP Global Enterprises, Inc. ("APG") (together, "Defendants"); and (2) a Motion for an Evidentiary Hearing (Dkt. 27) filed by Plaintiffs Geoffrey McCabe ("McCabe") and Kahler International, Inc. ("KI") (together, "Plaintiffs"). After reviewing all filings, the Court hereby GRANTS Defendants' motion and DISMISSES Plaintiffs' claims against Defendants. The Court DENIES Plaintiffs' Motion for an Evidentiary Hearing.[1]

I. Background

The facts alleged by Plaintiffs are as follows:

McCabe is an inventor and patent-holder of fulcrum tremolos[2] and global tuners on fulcrum tremolos. Compl. (Dkt. 1) ¶ 3. KI manufactures tremolos. Id. ¶ 5. Defendants commercialize competing tremolo devices. Id. ¶ 6. Since the early 1980s, Defendants have garnered significant royalties under several U.S. patents on their "Original Floyd Rose Tremolo" and other tremolos. Id. These patents have since expired, id., but Defendants maintain that Rose owns trade dress rights to the appearance of the "whale tail" shape of certain tremolo bridges. Id. ¶ 7. Competitors cannot manufacture tremolos with the "whale tail" shape without paying royalties. Id. Plaintiffs believe that Rose licenses the trade dress rights to APG and FRM. Id. Plaintiffs believe that Defendants have never sought federal registration of these trade dress rights. Id. ¶ 22.

In 1986, Kramer Music Products, Inc. ("Kramer"), Rose's exclusive licensee at the time, brought patent infringement claims against American Precision Metal Works, Inc. ("APMW"), predecessor of KI and owned by Gary Kahler ("Kahler"). Id. ¶ 23. The case settled in 1987, creating a business relationship between Rose and APMW in which APMW manufactured tremolos for Rose, Kramer, and their customers. Id. The settlement also granted AMPW a license to certain Rose patents. Id. In 1989, Kramer declared bankruptcy. Id. ¶ 28. Kramer defaulted on its purchase obligations to APMW, resulting in APMW's failure to satisfy licensing payments to Rose. Id. Rose sued APMW in 1992, resulting in APMW's exit from the tremolo market. Id. Kahler re-entered the tremolo market in 2005 as KI. Id. ¶ 29. During the annual National Association of Music Merchants ("NAMM") tradeshow in 2004, Andrew Papiccio ("Papiccio") - owner and president of APG, executive at FRM, and business partner of Rose - told Kahler that he was not permitted to manufacture a fulcrum tremolo with a "whale tail" shape without paying royalties to Rose. Id. ¶ 7.

Plaintiffs wish to expand their product line to include fulcrum tremolos. Id. ¶¶ 29-30. Plaintiffs' "Springblade" line of fulcrum tremolos and KI-branded "Steeler" and "Spyder" tremolos include a "whale tail" shape. Id. ¶¶ 8, 30-33. Plaintiffs fear enforcement of Rose's trade dress rights. Id. ¶ 8. Plaintiffs seek declaratory relief concerning their right to develop and sell such products. Id.

II. Legal Standard

A federal court only has jurisdiction to award declaratory relief where there exists an actual controversy. Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994) (citing Wickland Oil Terminals v. ASARCO, Inc., 792 F.2d 887, 893 (9th Cir. 1986)). The Ninth Circuit has established that this requirement mirrors Article III's constitutional case or controversy requirement. Societe de Conditionnement en Aluminum v. Hunter's Eng'g Co., 655 F.2d 938, 942 (9th Cir. 1981). While the Supreme Court has never fashioned a concrete test for determining whether a suit for a declaratory judgment raises an actual controversy, it has explained that there must exist "a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510 (1941). Ultimately, "[t]he difference between definite, concrete and substantial controversies which are justiciable, and hypothetical, abstract, or academic ones which are not justiciable, is one of degree, to be determined on a case by case basis." Muller v. Olin Mathieson Chem. Corp., 404 F.2d 501, 504 (2d Cir. 1968); see also Maryland Cas., 312 U.S. at 273 (question "is necessarily one of degree").

Under Federal Rule of Civil Procedure 12(b)(1), a complaint must be dismissed if the court lacks subject matter jurisdiction to adjudicate the claims. Once subject matter jurisdiction is challenged, the burden of proof is placed on the party asserting that jurisdiction exists. Scott v. Breeland , 792 F.2d 925, 927 (9th Cir. 1986) (holding that "the party seeking to invoke the court's jurisdiction bears the burden of establishing that jurisdiction exists"). Accordingly, the court will presume lack of subject matter jurisdiction until the plaintiff proves otherwise in response to the motion to dismiss. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

In evaluating a Rule 12(b)(1) motion, the question of whether the court must accept the complaint's allegations as true turns on whether the challenge is facial or factual. A facial attack is one in which subject matter jurisdiction is challenged solely on the allegations in the complaint, attached documents, and judicially noticed facts. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial attack, the moving party asserts that the lack of federal subject matter jurisdiction appears on the "face of the pleadings." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). In the case of a facial attack, the court is required to accept as true all factual allegations set forth in the complaint. Whisnant v. United States, 400 F.3d 1177, 1179 (9th Cir. 2005).

In contrast, a factual attack (or a "speaking motion") is one in which subject matter jurisdiction is challenged as a matter of fact, and the challenger "disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air , 373 F.3d at 1039. In assessing the validity of a factual attack, the court is not required to presume the truth of the plaintiff's factual ...

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