Industrial Models v. SNF is a nonprecedential case decided on November 7, 2017 on appeal from the Northern District of Texas. This suit relates to Industrial Models’ decision to enter the market for fiberglass utility bodies for use in trucks. In February 2013, plaintiff SNF sent defendant Industrial Models a cease-and-desist letter indicating that Industrial Models’ molds for its utility bodies infringed SNF’s trade dress, copyrights, and patents. In March 2013, SNF sued Industrial Models in state court, alleging trade dress infringement and common law unfair competition. While the state court case was on appeal, SNF sold the assets relating to its utility body product line to BFX Holdings, a third party. As part of the transfer, SNF assigned all of its IP associated with the product line to BFX. SNF eventually voluntarily dismissed the state law claims on remand. A year later, Industrial Models sued SNF for a declaratory judgment of noninfringement. The district court denied SNF’s motion to dismiss for lack of subject matter jurisdiction, dismissed Industrial Models’ antitrust and tortious interference claims, granted summary judgment of noninfringement, and awarded attorney fees to Industrial Models. Both parties appealed.
The Federal Circuit affirmed the denial of the motion to dismiss for lack of subject matter jurisdiction, affirmed the grant of the motion to dismiss the antitrust and tortious interference claims, affirmed the grant of the summary judgment of noninfringement of trade dress, vacated grant of attorney fees to the extent they were awarded under any provision other than the Lanham Act, and remanded.
The district court had subject matter jurisdiction under the Declaratory Judgment Act. To determine whether a case or controversy existed sufficient to confer jurisdiction, the courts “consider, inter alia: whether a party has proved a reasonable apprehension of suit; whether there has been meaningful preparation to conduct potentially infringing activity; whether a party demonstrates refusal to grant a covenant not to sue; and the nature and extent of any communications between the declaratory plaintiff and the patentee related to infringement.)”
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Sufficient evidence existed to suggest an actual case or controversy between the parties. Industrial Models had devoted substantial resources to its new model utility mold business. SNF sent cease-and-desist letters threatening imminent suit for alleged infringement of patent, copyright, and trade dress protections; and filed a suit alleging trade dress infringement. And SNF refused to sign covenants not to sue, and maintained its litigation positions in this suit for nearly a year before filing a motion to dismiss. This was enough to satisfy the case or controversy requirement. Despite that SNF assigned its IP rights to BFX before the declaratory judgment suit was filed, a case or controversy still existed between Industrial Models and SNF. This is because SNF refused to sign any covenant not to sue, and participated in the trial court proceedings represented by the same counsel as BFX. SNF and BFX “retain[ed] common ownership interests.”
The Federal Circuit held that an award of attorney fees was appropriate only with respect to the Lanham Act, but not with respect to the Copyright or Patent Acts. SNF’s “conduct with respect to the asserted declaratory judgment claims of noninfringement for patent and copyright was not unreasonable, and, if it awarded fees under either of those statutory authorities, the District Court abused its discretion.” SNF simply defended itself against declaratory judgment claims. Its submissions to the court evinced no undue delay, and it made nonfrivolous submissions with respect to copyright and patent claims.