IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 8, 2009
No. 08-20139 Charles R. Fulbruge III
Clerk
VANTAGE TRAILERS INC.
Plaintiff-Appellant
v.
BEALL CORPORATION
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Texas
Before JONES, Chief Judge, JOLLY, Circuit Judge, and MONTALVO,* District
Judge.
EDITH H. JONES, Chief Judge:
Vantage Trailers, Inc. (“Vantage”) filed suit seeking a declaratory
judgment that its design for a new aluminum bottom dump trailer would not
infringe any valid trademark rights held by Beall Corporation (“Beall”). In a
thorough and well-reasoned opinion, which develops the facts more thoroughly
than we need do here, the district court dismissed the case for lack of subject
matter jurisdiction because Vantage did not have a substantially fixed and
definite trailer design when it filed the action. We affirm.
*
District Judge of the Western District of Texas, sitting by designation.
No. 08-20139
I. BACKGROUND
Beall manufactures and sells an aluminum bottom dump trailer, the
“Beall Bullet,” which is protected by U.S. Trademark Registration No. 1,622,364.
The mark covers “the design of a truck trailer of the bottom dumping type” and
has been registered since 1990. In early 2006, Vantage, a competitor, began
design of its own bottom dump trailer. On July 17, 2006, David Shannon, Beall’s
Vice President, sent a letter to Vantage stating:
It has come to my attention that your company has built or is
in the process of building an aluminum bottom dump trailer with
the distinctive shape of the “Beall Bullet®” trailer that is
manufactured by Beall Corporation’s subsidiaries Beall Trailers of
Montana and Beall Trailers Sunnyside.
...
It is my duty to advise you that if your company places any
trailers into service that violate any of the Beall trademarks we will
pursue legal action to stop the infringement.
In response, Vantage filed this suit on September 25, 2006, seeking a declaratory
judgment that Beall’s trademark is invalid and that “the design, manufacture,
sale and use of [Vantage’s] aluminum bottom dump trailer does not infringe any
valid intellectual property right” of Beall’s. In addition, Vantage asserted claims
for unfair competition based on Beall’s assertion of its intellectual property
rights.
In early November 2006, Beall filed a motion to dismiss based on the lack
of personal jurisdiction and lack of standing. After Vantage responded, Beall
withdrew its motion, but following discovery, Beall filed a second motion to
dismiss the trademark declaratory judgment claim for lack of subject matter
jurisdiction. The district court granted the motion to dismiss and sua sponte
dismissed the unfair competition claim, finding that it merely duplicated the
trademark claim. Vantage appeals both dismissals. We address each in turn.
2
No. 08-20139
II. STANDARD OF REVIEW
The district court dismissed the suit for lack of subject matter jurisdiction
under Federal Rule of Civil Procedure 12(b)(1). The plaintiff has the burden of
proving subject matter jurisdiction by a preponderance of the evidence. New
Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 327 (5th Cir. 2008). In
evaluating jurisdiction, the district court must resolve disputed facts without
giving a presumption of truthfulness to the plaintiff’s allegations. Williamson
v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981). This court reviews the district
court’s legal conclusions de novo and factual determinations for clear error. Id.
III. DISCUSSION
A. Declaratory Judgment
The Declaratory Judgment Act, 28 U.S.C. § 2201(a), requires an “actual
controversy” between the parties to the declaratory judgment action. The
declaratory judgment plaintiff must establish that this requirement was
satisfied at the time the complaint was filed—post-filing conduct is not relevant.
Sierra Applied Sciences, Inc. v. Advanced Energy Industries, Inc., 363 F.3d 1361,
1373 (Fed. Cir. 2004). The Supreme Court directs that the dispute must be
definite and concrete, real and substantial, and admit of specific relief through
a decree of a conclusive character. MedImmune, Inc. v. Genentech, Inc., 549 U.S.
118, 127, 127 S. Ct. 764 (2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S.
227, 240–41, 57 S. Ct. 461 (1937)). Declaratory judgments cannot be used to
seek an opinion advising what the law would be on a hypothetical set of facts.
MedImmune, 549 U.S. at 127. At the same time, however, declaratory judgment
plaintiffs need not actually expose themselves to liability before bringing suit.
Id. at 129–30.
A common framework for analysis applies to all patent, copyright, and
trademark declaratory judgment suits. Texas v. West Pub. Co., 882 F.2d 171,
175 (5th Cir. 1989). To assess standing in declaratory judgment suits, federal
3
No. 08-20139
courts have traditionally applied a two-part test that required the declaratory
plaintiff to show:
(1) an explicit threat or other action by the [holder of a patent or
trademark], which creates a reasonable apprehension on the part of
the declaratory plaintiff that it will face an infringement suit, and
(2) present activity which could constitute infringement or concrete
steps taken with the intent to conduct such activity.
Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1343–44 (Fed. Cir.
2007) (internal quotation marks omitted). Following MedImmune, the
“reasonable apprehension of suit” requirement no longer applies. Id. at 1344.
Instead, the Court clarified that “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.”
MedImmune, 549 U.S. at 127 (quoting Maryland Casualty Co. v. Pacific Coal &
Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510 (1941)). In evaluating the justiciability
of a declaratory judgment suit, courts must require a definite and concrete
dispute, remembering the prohibition against “an opinion advising what the law
would be upon a hypothetical set of facts.” MedImmune, 549 U.S. at 127
(quoting Aetna, 300 U.S. at 240–41).
Vantage argues that a variety of its activities, centered around its design
and attempted sale of an aluminum bottom dump trailer, demonstrate the
immediacy and reality of the controversy between itself and Beall. Vantage
worked with an engineer on product development, began construction of a new
manufacturing facility, purchased specialized equipment, built a sub-frame, and
offered to sell its new model trailers. It is undisputed that Vantage had begun
4
No. 08-20139
to manufacture some type of trailer—the question is whether the design was
sufficiently fixed to allow evaluation of trademark infringement.1
The district court appropriately looked to Sierra Applied Sciences, Inc. v.
Advanced Energy Industries, Inc., 363 F.3d 1361 (Fed. Cir. 2004), in resolving
this issue. In Sierra Applied Sciences, the declaratory plaintiff had begun
development of a potentially infringing power supply at the time of suit. Id. at
1380. The Federal Circuit concluded that no immediate and real controversy
existed: “Because the design was fluid on the date the complaint was filed, it
was impossible to determine—on that date—whether any eventual design . . .
would infringe [the] patents.” Id.
The Seventh Circuit also discussed the need for a fixed design in
evaluating intellectual property declaratory judgment actions:
Our concern is not that the [product at issue] will never be
produced, but rather that because of the relatively early stage of its
development, the design which is before us now may not be the
design which is ultimately produced and marketed. For a decision
in a case such as this to be anything other than an advisory opinion,
the plaintiff must establish that the product presented to the court
is the same product which will be produced if a declaration of
noninfringement is obtained.
Int’l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1216 (7th Cir. 1980). Although
it has not required a completely fixed design—the eventually manufactured
product need not be identical—the Federal Circuit has emphasized that the
design must be fixed “particularly with respect to its potentially-infringing
characteristics.” Sierra Applied Sciences, 363 F.3d at 1379 (citing Telectronics
Pacing Systems, Inc. v. Ventritex, Inc., 982 F.2d 1520, 1527 (Fed. Cir. 1992)).
1
At points in its brief, Vantage appears to shift from arguing that its activities
constituted sufficient preparation for manufacturing of infringing trailers to arguing that its
mere showing a customer a drawing of a trailer similar to Beall’s constituted trademark
infringement. Because Vantage did not raise the latter argument below, we do not consider
it now. Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1307 (5th Cir. 1988).
5
No. 08-20139
Based on its analysis of Sierra Applied Sciences, the district court
concluded that Vantage did not have a substantially fixed and definite trailer
design when it filed the declaratory judgment action. We agree. We need not
address whether this is a factual conclusion reviewed for clear error or a legal
conclusion reviewed de novo because the result is the same under either
standard.
Vantage distinguishes this case from Sierra Applied Sciences because a
trademark, not a patent, is at issue. While patents protect the substance of a
product, the structure of a device or the method to accomplish a task,
trademarks protect the configuration or appearance. But this distinction
between patents and trademarks weakens, rather than strengthens, Vantage’s
argument for justiciability. Typically, the functional elements of design will long
precede the cosmetic. The compromises and alterations necessary to accomplish
a product’s purpose often dictate its appearance. See Talking Rain Beverage Co.
Inc. v. South Beach Beverage Co., 349 F.3d 601, 604 (9th Cir. 2003)
(“[M]anufacturing considerations explain why [the trademarked] bottle looks the
way it does. . . . [B]y adding a recessed/ grip area, [the producer] could
manufacture a plastic bottle with curved sides that would not collapse.”).
Because aesthetic changes can ordinarily be made far later in the design process
and with less expense than functional changes, trademark declaratory
judgments raise a greater risk than patent declaratory judgments that the
design presented may have little relation to the design ultimately produced and
marketed.
Indeed, Vantage’s brief acknowledges that during the litigation it “made
certain modifications in the external configuration or appearance of the trailers
it was working to build.” Although Vantage has submitted an undated drawing
of a bottom dump trailer allegedly made before the suit, the district court noted
that one of Vantage’s customers “testified that [Vantage] periodically sent to him
6
No. 08-20139
different depictions of trailers during the later part of 2006 and early 2007.”
While these ongoing modifications could be irrelevant to a patent-infringement
analysis, appearance is the heart of the trademark inquiry.
The Second Circuit’s decision in Starter Corp. v. Converse, 84 F.3d 592 (2d
Cir. 1996) (per curiam), although predating MedImmune, illustrates a
trademark dispute suitable for declaratory judgment. Starter, an athletic
apparel manufacturer, and Converse, an athletic footwear manufacturer, both
used designs incorporating five-pointed stars as trademarks. Id. at 594. Starter
planned to enter the athletic footwear market and attempted to register its mark
for footwear with the Patent and Trademark Office. Id. Converse opposed the
registration and informed Starter that if Starter brought any shoes to market
bearing a five-pointed star mark, Converse would sue for trademark
infringement. Id. In response, Starter filed a declaratory judgment action. Id.
The district court granted Converse’s motion to dismiss for lack of subject matter
jurisdiction, and Starter appealed. Id. In reversing the district court, the
Second Circuit explained, “[Starter] would have been immediately prepared, at
the time the complaint was filed, to begin manufacture and sale of shoes bearing
the Starter Marks.” Id. at 596. Declaratory judgment was appropriate because
there was “no uncertainty” as to how Starter’s marks would be used on the
footwear. Id. at 597.
The present case differs from Starter Corp. in two crucial respects. First,
Vantage was not “immediately prepared” to manufacture and sell the trailers at
the time it filed suit. But more importantly, in Starter Corp., the potentially-
infringing characteristics were fixed at the time Starter filed suit. Converse and
Starter both used actual marks, stamped or sewn into products. Although
Starter provided an actual prototype shoe to the district court, the critical
comparison was not between the designs of the shoes but between Converse’s
and Starter’s five-pointed star emblems. Here, Beall describes its mark as
7
No. 08-20139
protecting “the distinctive shape” of the Bullet. Even though Vantage was
preparing to enter the bottom-dump trailer market, its design had not become
sufficiently fixed at the time of suit to compare its shape against that of Beall’s
trailers.
Among all the relevant circumstances of the controversy, Beall’s letter
threatening legal action weighs decidedly in Vantage’s favor. Courts have long
looked for an “indirect or implicit or covert charge or threat” against the
infringer when evaluating reasonable apprehension of suit under the pre-
MedImmune test. E.g., Goodrich-Gulf Chemicals, Inc. v. Phillips Petroleum Co.,
376 F.2d 1015, 1019 (6th Cir. 1967) (analyzing whether the patent holder had
charged infringement). An unfulfilled threat of action by the patent holder is
precisely the type of bullying—warning of legal action but never bringing
suit—that the Declaratory Judgment Act sought to prevent. But threats of legal
action, alone, cannot create an actual controversy under the Declaratory
Judgment Act. Scholle Corp. v. Blackhawk Molding Co., Inc., 133 F.3d 1469,
1472 n.1 (Fed. Cir. 1998). Vantage must still demonstrate that the controversy
was sufficiently immediate and real.
Trademarks protect only decorative, nonfunctional elements intended to
reveal the origin of the product. Wilhelm Pudenz, GmbH v. Littlefuse, Inc.,
177 F.3d 1204, 1207 (11th Cir. 1999) (“[N]o trademark rights may be claimed in
a product’s functional shapes or features.”). To the extent that Beall’s trailer
appearance is functional, perhaps cheaper to manufacture or more aerodynamic
in operation, then it will likely receive no trademark protection. See
Eppendorf-Netheler-Hinz GMBH v. Ritter GMBH, 289 F.3d 351, 356 (5th Cir.
2002) (“[T]he primary test for determining whether a product feature is
functional is whether the feature is essential to the use or purpose of the product
or whether it affects the cost or quality of the product.”). Whether Beall’s rather
8
No. 08-20139
generic depiction of its trailer design fulfills the criteria for trademark protection
is not obvious.
For these reasons, Vantage has failed to meet its burden to show that its
design was substantially fixed as to the potentially infringing elements, i.e., the
appearance of the trailers, at the time of suit, or that its suit embraced a real
and immediate controversy with Beall. The district court correctly held that it
lacked subject matter jurisdiction over Vantage’s declaratory judgment claim.
B. Unfair Competition
In addition to seeking a declaratory judgment regarding the trademark,
Vantage sought injunctive relief in a claim for unfair competition: “Defendant’s
assertion of a right to prohibit Plaintiff from making, using or selling a bottom
dump trailer having features depicted in Defendant’s alleged Mark is an act of
unfair competition.” 2 The dismissal of the trademark declaratory judgment
claim requires dismissal of this claim as well. Vantage “cannot bootstrap itself
into a decision on the validity claim by asserting secondary claims that
necessarily depend on the resolution of the primary claim.” West Publishing Co.,
882 F.2d at 177.
IV. CONCLUSION
The judgment of the district is AFFIRMED.
2
Oddly, Vantage argues that this claim encompassed Beall’s assertion of a patent right
in the Bullet. The district court accurately characterized Vantage’s complaint as directed at
Beall’s assertion of trademark rights.
9