Atari, Inc. v. Js & a Group, Inc.

747 F.2d 1422, 223 U.S.P.Q. (BNA) 1074, 1984 U.S. App. LEXIS 15217
Court of Appeals for the Federal Circuit·Decided November 8, 1984·No. Appeal 84-742·Published·Cited by 134 cases

Opinions

ORDER

MARKEY, Chief Judge.

Atari, Inc. (Atari) moved to transfer this appeal to the United States Court of Appeals for the Seventh Circuit, asserting lack of jurisdiction in this court. The motion will be denied.

Background

On November 18, 1983, Atari, Inc. (Atari) filed a complaint in the United States District Court for the Northern District of Illinois against JS & A Group, Inc. (JS & A), alleging contributory copyright infringement (Count I), patent infringement (Count II), and five non-patent claims. The latter included one federal claim, for unfair competition (unfair use of Atari’s trademarks in advertising) under 15 U.S.C. § 1125(a) (Count III), and four claims under Illinois law for deceptive trade practices (Count IV), fraud (Count V), state unfair competition (Count VI), and misappropriation (Count VII).

Atari thus filed a single case involving one patent and six non-patent counts, all based on the same limited bundle of integrated facts and arising out of the same transaction, i.e., JS & A’s advertising and sale of its Prom Blaster product and blank cartridges.

The district court’s jurisdiction of all federal claims (Counts I, II, III) was based on § 1338. Its jurisdiction of counts IV — VII was pendent. The case was and is designated “Civil Action No. 83 C 8333” in the district court. The complaint stated that it “joins claims for unfair competition with substantial and related claims under the patent and trademark laws.” Atari incorporated by reference the allegations of Count I in Count II.

On December 8, 1983, the district court preliminarily enjoined JS & A against contributory copyright infringement. The injunction restrained JS & A from selling its blank 8K cartridge, the sole subject of the patent infringement count, for use with the Prom Blaster. Thus Atari effectively obtained an injunction against at least some acts of patent infringement. The record does not reveal whether there is any potential for sale of 8K cartridges that would not contribute to copyright infringement.

The foregoing facts illustrate the obvious one-ness of the case, but do not control our conclusion respecting the jurisdiction granted in § 1295(a)(1), Federal Courts Improvement Act of 1982, P.L. 97-164, 96 Stat. 25 (1982) (hereinafter “FCIA”).

On December 19, 1983, after obtaining the injunction, Atari moved under Fed.R. Civ.P. 13(i) and 42(b) for an order separating patent count II “for trial and judgment” (though Atari speaks of Count I as “separated”, that Count was neither separated nor mentioned by the district court). [1425]*1425The sole basis and purpose stated for Atari’s motion was its counsel’s desire that an anticipated appeal by JS & A from the injunction order be directed to the Seventh Circuit.

Atari’s motion to separate was filed, heard, and decided while JS & A’s counsel was out of the country. A Mr. Von Mandel, who “stood in” for JS & A, told the court he knew nothing of the case (which may account for the court’s volunteered grant of time for a motion to vacate). At the short hearing devoted to the motion (3 transcript pages), Mr. Von Mandel said nothing on its merits. Atari’s counsel stated, though disingenuously, the purpose of Atari’s motion in this colloquy:

MR. SPRINGER: The reason for the motion, your Honor, is there have been some changes in appellate jurisdiction regarding patent cases over the last couple of years.
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The legislative history of the Act setting up the Federal Circuit says basically Federal District Judges should use their authority under the Federal Rules to separate out the patent claims from the non-patent claims to make sure that the patent claims go to the Court of Appeals for the Federal Circuit and the other claims go to the Court of Appeals on a regional basis.
We have some reason to believe that defendant has in mind appealing this court’s preliminary injunction order to the Court of Appeals for the Federal Circuit.
One of the purposes — or the basic purpose of our motion is to make certain that there is no question but that your Honor’s order granting the preliminary injunction related only to the copyright issues.
THE COURT: There is no question about that, none whatever.
MR. VON MANDEL: Your Honor, if I may, Mr. Gilhooly of Mr. Gerstman’s office called Mr. Springer, I’m told, and they agreed to put it over until next Wednesday when Mr. Gerstman will be back in town and handle this.
MR. SPRINGER: Here is what happened on that score. He did call me and I said, “I don’t have any problem putting it over, but I want to get a letter from you saying you’re not going to file any Notice of Appeal while my motion is pending because it’s important that this motion be presented to the Court and ruled on before the defendants attempt to take an appeal.”
What we’re saying today in this motion will be a part of the record if they do attempt to take an appeal to the Federal Circuit.
THE COURT: I’m going to grant the motion with leave to vacate it in ten days so that you can come in and convince me it’s wrong. But there is no question — I mean, when you were discussing this matter, I thought that ought to be academic because I made that ruling , that referred [sic] to any patent claims. It was copyright exclusively.
So I’ll — what you want to do is separate the — tell me precisely what you want done.
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MR. SPRINGER: What we’re asking is that the patent claim, relating to these 8-K cartridges be separated out for a separate trial, if necessary, and for a separate judgment so an appeal from whatever judgment is entered there would lie properly with the Court of Appeals for. the Federal Circuit rather than to the Court of Appeals for the Seventh Circuit. [Emphasis added].
THE COURT: Well, just to preserve the status quo is what it amounts to.
I’ll grant that motion today, but you can come in and ask me to change my mind on Wednesday or any other time you want to.

The record contains no findings (on relationship of counts or otherwise) and no reference to a statute or Rule. Nor does the record reveal whether the district court thought it had no choice in light of moving counsel’s statements, or whether it realized [1426]*1426it was being asked to assure the inevitable. Atari cites no basis for telling the district court that separation was required to guarantee what the law indisputably mandates, i.e., that an appeal from a judgment on the patent count would lie to this court.

Though the separation order is not before us, we note in this background statement that at no time did Atari mention the criteria for application of Rule 13(i) or Rule 42(b). No reference is made to the “judgment on a counterclaim or cross-claim” to which Rule 13(1) is directed, or to the

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Atari, Inc. v. Js & a Group, Inc., 747 F.2d 1422, 223 U.S.P.Q. (BNA) 1074, 1984 U.S. App. LEXIS 15217 (Fed. Cir. 1984).

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