Beane v. Beane, et al.

Beane v . Beane, et a l .             06-CV-446-SM     01/15/08
                   UNITED STATES DISTRICT COURT

                     DISTRICT OF NEW HAMPSHIRE


Alan F. Beane and
Mii Technologies, LLC,
     Plaintiff and
     Nominal Plaintiff


     v.                                   Civil N o . 06-cv-446-SM
                                          Opinion N o . 

Glenn L . Beane and
Glenn Beane, LLC,
     Defendants and
     Third-Party Plaintiffs

     v.

Alan F. Beane; Mii
Technologies, LLC;
and Sara E . Beane,
     Counterdefendants and
     Third-Party Defendants


                              O R D E R

     Several motions to dismiss are currently pending in this

case.   However, examination of plaintiffs’ amended verified

complaint (document n o . 14) reveals significant jurisdictional

issues that ought to be addressed before turning to the merits.

See Espinal-Dominguez v . Commw. of P.R., 

 9 0 , 495 (1st

Cir. 2003) (“Because federal courts are powerless to act in the

absence of subject matter jurisdiction, [they] have an unflagging

obligation to notice jurisdictional defects and to pursue them on

[their] own initiative.”) (citations omitted).
     In paragraph 62 of their complaint, plaintiffs state that

jurisdiction is proper under 28 U.S.C. 1332 because “Plaintiff

Alan Beane is a resident of a different state than the other

Parties to this Action.”   But, in paragraph 6 3 , plaintiffs state

that “[t]he Defendants and Plaintiff Mii are residents of the

State of New Hampshire.”   The co-residence of one plaintiff and

all defendants in the same state defeats diversity jurisdiction

under 

. “The diversity requirement of § 1332

must be complete. In cases involving multiple plaintiffs or

defendants, the presence of but one nondiverse party divests the

district court of original jurisdiction over the entire action.”

In re Olympic Mills Corp., 

 , 6 (1st Cir. 2007) (citing

Strawbridge v . Curtiss, 

 6 7 , 267 (1806)).



     Without complete diversity, this court has subject matter

jurisdiction only if plaintiff has raised a federal question.

See 

. The only potential federal question

appears in Count IX of plaintiffs’ amended complaint, captioned

“Lanham Act § 43(a) Unfair Competition/False Designation of

Origin.”



     In Count I X , plaintiffs assert that “Glenn Beane

misrepresented that he is the source of the press technology and

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that he owns the intellectual property relating thereto.”      (Am.

Compl. ¶ 112.)   That assertion appears to be based upon the

following factual allegation: “During the course of negotiations

[between Mii and Lovejoy], Lovejoy confirmed that it had entered

into an agreement with Glenn Beane and that Glenn Beane had

represented that he owned all the intellectual property used in

the press systems and held clear title thereto.”1     (Id. ¶ 55.)

According to plaintiffs, “Glenn Beane’s misrepresentation that he

is the source of the press technology and that he owns the

intellectual property relating thereto constitutes a false

designation of origin that is an unfair and deceptive trade

practice in violation of 

(a).”     (Id. ¶ 113.)



     Plaintiffs’ theory of Lanham Act liability is untenable.       In

Digigan, Inc. v . iValidate, Inc., N o . 02 Civ. 420(RCC), 

 (S.D.N.Y. Feb. 3 , 2004), the district court explained:


          The Amended Complaint alleges that Defendants
     violated section 43(a) of the Lanham Act by making
     false and misleading representations concerning


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       Regarding the actual ownership of the intellectual
property, plaintiffs allege: “Glenn Beane was named as an
inventor on all patents and patent applications related to the
press technology developed by Mii and, prior to 2004, executed
formal assignments of his rights in all such inventions to
Materials [Innovation, I n c . ] , who has exclusively licensed those
patents to Mii.” (Am. Compl. ¶ 12.)

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Defendants’ rights in one of the patents. (Compl. ¶
36.) These misrepresentations allegedly were made in
the course of Defendants’ website advertising of
products protected by the patent. (Id.) The gravamen
of Plaintiff’s claim is that Defendants, in marketing
their products, falsely stated that they owned the
patent that Plaintiff received from iValidate under the
security agreement. Thus, the alleged
misrepresentations concerned the patent, not any
products or services. A patent is not a “good or
service” as those terms are used in the Lanham Act.
See Hans-Jurgen Laube & Oxidwerk HJL AG v . KM Europa
Metal AG, N o . 96 Civ. 8147(PKL), 

, at *2
(S.D.N.Y. Mar. 2 7 , 1998) (citing Pro-Mold & Tool C o . v .
Great Lakes Plastics, Inc., 

 (Fed.
Cir. 1996)).

     In Hans-Jurgen, the plaintiffs alleged that the
defendant violated section 43(a) when it falsely
claimed ownership of a patent. 

 Judge Leisure
concluded that the cause of action arose out of
misrepresentations regarding ownership of the patent,
and noted that the Federal Circuit has held that a
patent is not a “good or service” under section 43(a)
of the Lanham Act. See 

     Plaintiff responds that its Lanham Act claim is
valid because Defendants advertised “products embodying
technology protected by the Patent.” (Compl. ¶ 36.)
However, drawing all reasonable inferences in
Plaintiff’s favor, the Amended Complaint does not
allege any “false or misleading representation of fact”
“in connection with any goods or services.” See 

. The patent, and not any product or
service, is at the center of the controversy between
the parties.

     First, the only misrepresentations alleged
occurred when Defendants claimed to own the patent or
to be licensees of the patent. (See Compl. ¶ 35.)
Second, the reason that Plaintiff claims the statements
were false was that i t , and not Defendants, actually
own the patent. (See id. ¶ 37.) Finally, Plaintiff’s
vague reference to Defendants’ “products embodying
technology” does not allege the necessary connection


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     between the misrepresentations of fact and goods or
     services. Even paragraph 36 of the Amended Complaint,
     in which Plaintiff mentions Defendants’ products, only
     alleges misrepresentations in connection with
     Defendants’ rights to the patent, not with the products
     themselves. Thus, the Court concludes that Plaintiff
     has alleged misrepresentations of fact in connection
     with a patent, not goods or services. Therefore, the
     Lanham Act claim is dismissed.


Id. at * 5 .



                             Conclusion

     The persuasive reasoning of Digigan, applied to the facts of

this case, would require dismissal of plaintiffs’ Lanham Act

claim, which is the sole federal question presented in the

amended complaint. Since the parties have not identified the

issue and have not had an opportunity to address i t , plaintiffs

may either seek voluntary dismissal of their complaint, or show

cause on or before February 1 0 , 2008, why their Lanham Act claim

should not be dismissed, and why, if it i s , this court should

exercise supplemental jurisdiction over their state law claims.

(The prevailing rule is that “[w]hen federal claims are dismissed

before trial, state claims are normally dismissed as well.”

McInnis-Misenor v . M e . Med. Ctr., 

 3 , 74 (1st Cir. 2003)

(citing Camelio v . Am. Fed’n, 

 (1st Cir.

1998))).   In the meantime, the pending motions to dismiss for


                                  5
lack of standing, etc. (document nos. 1 5 , 1 6 , 1 7 , 4 4 , and 46) are

denied, without prejudice.



      SO ORDERED.



                                             ____________
                                 Steven J. McAuliffe
                                 Chief Judge

January 1 5 , 2008

cc:   William S . Gannon, Esq.
      W.E. Whittington, Esq.
      Michael J. Persson, Esq.




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