Hoyt Electrical v . ISSPRO CV-02-582-M 05/30/03 P
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Hoyt Electrical Instrument
Works, Inc.,
Plaintiff
v. Civil N o . 02-582-M
Opinion N o . 2003 DNH 095P
Isspro, Inc.,
Defendant
O R D E R
For over forty years, Hoyt Electrical Instrument Works, Inc.
manufactured pyrometers for Isspro, Inc.1 In the summer of 2002,
that relationship ended after Isspro began manufacturing its own
pyrometers. In November of that year, Isspro’s president
contacted Hoyt and asserted that Isspro retained a property
interest in “a substantial amount of tooling” related to its
“proprietary line of pyrometer products.” Complaint, Exhibit A .
That tooling was in Hoyt’s possession and Isspro demanded its
return. Hoyt asked Isspro to provide it with copies of any
1
A pyrometer is an instrument designed to measure high
temperatures. It appears that the pyrometers at issue in this
case were produced for Isspro for subsequent sale to truck
manufacturers such as Kenworth, Freightliner, and Volvo and were
designed to measure the temperature of exhaust gases.
documentation that supported its claim, and, saying that it
(Hoyt) was aware of no such documentation, denied that any of its
tooling or other manufacturing equipment belonged to Isspro.
About a month later, Isspro (acting through legal counsel
this time) wrote to Hoyt and again asserted that, based upon
“customary industry practice,” i t , rather than Hoyt, owned “the
tooling used to produce the Isspro-designed pyrometers.”
Complaint, Exhibit B. 2 Isspro also charged that Hoyt was
manufacturing and selling Pyrometers to third parties in
violation of Isspro’s “proprietary trade dress rights.” Id.
This action ensued, in which Hoyt seeks a declaratory judgment
that Isspro has no trade dress or other trademark rights in any
2
According to Hoyt’s president and general manager, Tim
Hoyt, “All meters that Hoyt manufactures are produced using tools
mounted in diesets. Each step in the process requires a
different tool . . . . With five exceptions, the one hundred and
ninety-nine odd tools that Hoyt used in manufacturing Isspro’s
pyrometers were the same tools it used to make ammeters,
voltmeters, and other products for other customers.” Affidavit
of Tim Hoyt in opposition to defendant’s motion to dismiss
(attached to document n o . 9 ) at para. 7 . Taken literally, then,
Isspro’s claim to “the tooling used to produce the Isspro-designed pyrometers” amounted to an assertion that it owned
virtually every one of Hoyt’s manufacturing tools and diesets.
Accordingly, Isspro’s “insistence that [it] owned these tools, if
substantiated, would require Hoyt to cease production of a large
percentage of its product line to retool.” Id. at para. 8 .
2
of the pyrometers manufactured by Hoyt (count one) and that
Isspro has no ownership or other rights in Hoyt’s designs, tools,
dies, or other components used to manufacture pyrometers (count
two). See 28 U.S.C. § 2201.
Isspro moves to dismiss both counts of Hoyt’s complaint,
saying the court lacks subject matter jurisdiction. See Fed. R.
Civ. P. 12(b)(1). Hoyt objects.
Standard of Review
“When faced with a motion to dismiss for lack of subject
matter jurisdiction, Rule 12(b)(1), Fed. R. Civ. P., the party
asserting jurisdiction has the burden to establish by competent
proof that jurisdiction exists.” Stone v . Dartmouth College, 682
F. Supp. 106, 107 (D.N.H. 1988) (citing O’Toole v . Arlington
Trust Co.,
681 F.2d 9 4 , 98 (1st Cir. 1982)). See also Hampshire
Paper Corp. v . Highland Supply Corp.,
2002 DNH 135,
2002 WL
1676285 (D.N.H. July 1 8 , 2002) (noting that while the standard of
review for a motion challenging subject matter jurisdiction with
respect to patent claims is provided by the Federal Circuit, the
standard for determining subject matter jurisdiction as to
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trademark claims is provided by the First Circuit). See
generally C . Wright & A . Miller, 5 Federal Practice and Procedure
§ 1350, at 555 (1969 & Supp. 1987)).
And, in determining whether the party asserting jurisdiction
has met its burden, the court “may consider whatever evidence has
been submitted, such as the depositions and exhibits submitted in
[the] case.” Aversa v . United States, 99 F.3d 1200, 1210 (1st
Cir. 1996). See also Lex Computer & Management Corp. v . Eslinger
& Pelton, P.C.,
676 F. Supp. 399, 402 (D.N.H. 1987) (the court
“may consider pleadings, affidavits, and other evidentiary
materials without converting the [Rule 12(b)(1)] motion to
dismiss to a motion for summary judgment.”).
Discussion
In support of its motion to dismiss, Isspro says that there
is no actual case or controversy between the parties and,
therefore, the court may not properly exercise subject matter
jurisdiction under the federal Declaratory Judgment Act. That
statute provides, in pertinent part, that:
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In a case of actual controversy within its
jurisdiction, . . . any court of the United States,
upon the filing of an appropriate pleading, may declare
the rights and other legal relations of any interested
party seeking such declaration, whether or not further
relief is or could be sought.
28 U.S.C. § 2201(a) (emphasis supplied). Isspro claims that
because “[n]either of Isspro’s two letters to Hoyt contains any
explicit threat of litigation,” Hoyt could not have had “an
objectively reasonable apprehension that Isspro was going to
initiate a lawsuit.” Defendant’s memorandum at 1 0 . And, says
Isspro, absent a reasonable apprehension of impending litigation,
Hoyt’s declaratory judgment action is premature.
Isspro i s , at least in part, correct - there must be an
actual case or controversy between the parties in order for one
of them to properly invoke the Declaratory Judgment Act. As the
court of appeals for this circuit has observed, “[a] federal
court will not start up the machinery of adjudication to repel an
entirely speculative threat.” PHC, Inc. v . Pioneer Healthcare,
Inc., 75 F.3d 7 5 , 79 (1st Cir. 1996). Consequently, the question
presented by Isspro’s motion to dismiss is whether its letters to
Hoyt, when viewed in the context of its other conduct toward
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Hoyt, may properly be viewed as threatening litigation, or
whether Hoyt’s asserted perception of such a threat was “entirely
speculative.” See generally Arrowhead Industrial Water, Inc. v .
Ecolochem, Inc., 846 F.2d 7 3 1 , 736 (1st Cir. 1988).
As noted above, Isspro focuses on the fact that neither of
its letters explicitly threatened litigation if Hoyt failed to
meet its demands. That focus i s , however, too narrow.
[T]he question under the case law on declaratory
judgments is not whether the [defendant] made a
specific threat to bring [litigation] or even had such
a claim in mind. The federal declaratory judgment
statute aims at resolving potential disputes, often
commercial in character, that can reasonably be feared
by a potential target in light of the other side’s
conduct.
Pioneer Healthcare, 75 F.3d at 79 (citation omitted). As one
legal commentator has observed, for there to be an “actual
controversy” between the parties:
[a] threat of litigation does not have to be said in so
many words. It can be expressed in the attitude of
defendant as expressed in “circumspect language” in a
letter. Even in the absence of direct charges of
infringement against plaintiff by defendant, an “actual
controversy” can be found if the commercial realities
of the situation put plaintiff in a position where it
must run a real risk of potential liability if it goes
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ahead to exercise what it believes are its legal rights
in the commercial market.
5 J. McCarthy, McCarthy on Trademarks and Unfair Competition,
§ 32.51 at 32-101 (4th ed. 2002) (footnotes omitted).
In this case, Isspro’s first letter explicitly asserted that
it held title to “a substantial amount of tooling related to
[its] proprietary line of pyrometer products,” which it said
“remains in [Hoyt’s] possession.” Complaint, Exhibit A . It then
demanded that the disputed tooling be returned within six weeks.
Id. In its second letter, which was drafted by counsel
specializing in “patents, trademark, copyrights & litigation,”
Isspro reiterated its view that it held valid title to the
disputed tooling. Complaint, Exhibit B . That letter went on to
assert that Hoyt had already infringed upon Isspro’s “proprietary
trade dress” and warned against any similar conduct in the
future.
Isspro has and continues to maintain proprietary rights
in the distinctive look and style of its products, and
particularly its line of pyrometers. Customers
immediately recognize and associate the overall look of
Isspro’s pyrometers with Isspro. This signature
appearance distinguishes Isspro’s line of pyrometers
from those of its competitors. Isspro’s proprietary
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trade dress rights have been earned through many years
of selling, marketing and promoting its line of
pyrometers.
Be advised that if Hoyt Electrical sells any pyrometers
having an appearance that is confusingly similar to
Isspro’s pyrometers, such sales are acts of
infringement in violation of Isspro’s rights under
Federal Trademark and Unfair Competition Laws. We
understand that Hoyt Electrical sold some pyrometer
models with the Stewart Warner name that are
confusingly similar to Isspro’s pyrometer models, and
Isspro advised Hoyt Electrical of its objection.
Isspro did not take any legal action at that time
because it understood the transaction to be an isolated
instance that did not warrant the expense of
litigation. Isspro now is concerned that Hoyt
Electrical intends to use the same tooling used to
manufacture the Isspro pyrometers to manufacture
pyrometer designs having a confusingly similar
appearance for one or more of Isspro’s competitors.
Isspro still prefers to resolve this matter amicably.
To that end, Isspro requests that Hoyt Electrical
provide its assurance that it will not manufacture or
sell any pyrometers having a confusingly similar
appearance to any of Isspro’s pyrometer models.
Complaint, Exhibit B (emphasis supplied). While that letter does
not explicitly threaten litigation, it undeniably suggests that,
should Hoyt fail to accede to Isspro’s demands, Isspro would
abandon its preference to “resolve this matter amicably,” and
resort to litigation.
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Taken as a whole, the two letters sent by Isspro leave the
unmistakable impression that Hoyt faced a choice: turn over the
disputed tooling (and thereby stop manufacturing any pyrometers
with it) or face a federal trademark and unfair competition suit.
Notwithstanding Isspro’s claims to the contrary, that implied
threat is sufficiently clear and unambiguous to warrant the
conclusion that an actual case or controversy exists between the
parties. In short, as in Pioneer Healthcare, “[n]o competent
lawyer advising [plaintiff] could fail to tell it that, based on
the threatening letters and the surrounding circumstances, a
[federal] suit was a likely outcome.” Pioneer Healthcare, 75
F.3d at 7 9 . See also EMC Corp. v . Norand Corp.,
89 F.3d 8 0 7 , 812
(Fed. Cir. 1996) (“An objective reader of [defendant’s] letter
could only conclude that [defendant] had already decided
[plaintiff] was infringing its patents and that [defendant]
intended to file suit unless it could obtain satisfaction without
having to sue.”).
Conclusion
Hoyt has carried its burden of establishing that the court
has subject matter jurisdiction over its petition for declaratory
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judgment (i.e., federal question jurisdiction over the trademark
and trade dress claims and supplemental and/or diversity
jurisdiction over the property claims) and that the court should
exercise its discretion to permit Hoyt to pursue its claims under
the Declaratory Judgment Act. Simply stated, the issue before
the court is whether Isspro’s conduct toward Hoyt was
sufficiently threatening to warrant the conclusion that an actual
case or controversy exists between the parties. It was.
Consequently, Isspro’s motion to dismiss (document n o . 8 ) is
denied.
SO ORDERED.
Steven J. McAuliffe
United States District Judge
May 3 0 , 2003
cc: Jeffrey C . Spear, Esq.
Christopher Cole, Esq.
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