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Pixton v. B & B Plastic, Inc.

Dismissal of cause of action for lack of subject matter jurisdiction vacated; in action for patent infringement in which defendant asserted defense of license, jurisdiction in federal court was not lost simply because court would need to address defendant's contract issue before determining patent issue.

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Dennis N. Pixton appeals from the order of the United States District Court for the Southern District of Florida dismissing his cause of action for lack of subject matter jurisdiction. Pixton v. B&B Plastics, Inc., 99-6360-CIV (Dec. 20, 1999). Because the district court has subject matter jurisdiction over this case, we vacate the order of dismissal and remand for further proceedings.

Background

Pixton is the owner of U.S. Patent Nos. 5,025,586 and 5,129,175 directed to plastic fishing lures. In April of 1992, he granted B&B Plastics, doing business as Gambler, an exclusive license to these patents. The license agreement provided that B&B pay a minimum annual royalty to Pixton, and in the event that sales dropped to such a level that the minimum royalty would not be met, B&B could cover the shortfall. If B&B chose not to cover the shortfall, Pixton had the option to either make the agreement non-exclusive or terminate it outright. Pixton alleges that in September or October of 1998, B&B breached the license agreement. Therefore, on November 24, 1998, Pixton allegedly notified B&B of its breach, terminated the license agreement, and demanded that it cease and desist from all prohibited infringing activities. In January of 1999, Pixton allegedly sent another cease and desist letter to B&B, and, when no response was forthcoming, filed suit for patent infringement. In response to Pixton’s complaint, B&B pled that the license agreement was still in force because it had been orally modified to remove the minimum royalty provisions. Before the matter could proceed to trial, the district court concluded that it lacked subject matter jurisdiction because the underlying action sounded entirely in contract and did not arise under the patent laws. We have jurisdiction pursuant to 28 U.S.C. � 1292(c)(2).

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