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EPLING v. GOLDEN EAGLE/SATELLITE ARCHERY

September 25, 1998

MARVIN E. EPLING and SENECA OUTDOOR, INC., Plaintiffs,
v.
GOLDEN EAGLE/SATELLITE ARCHERY, INC., Defendant.



The opinion of the court was delivered by: LARIMER

DECISION AND ORDER

 Plaintiffs, Marvin E. Epling ("Epling") and Seneca Outdoor, Inc. ("Seneca Outdoor") (collectively "plaintiffs"), commenced this action, pursuant to 28 U.S.C. § 2201, to obtain a declaratory judgement that the archery bow products manufactured and sold by Seneca Outdoor do not infringe a patent owned by defendant Golden Eagle/Satellite Archery, Inc. ("Golden Eagle" or "defendant"). Pending before the Court is defendant's motion to dismiss or stay this action. For the reasons set forth below, this motion is denied.

 FACTUAL BACKGROUND

 Golden Eagle manufactures and sells archery equipment, including bows. Epling was employed by Golden Eagle from 1988 through 1994 and also held the position of President and Chief Executive Officer. *fn1" While working for Golden Eagle, Epling developed an injection molding process for manufacturing compound archery bows. This process was used, and continues to be used, by Golden Eagle in making the "Brave" bow.

 In April 1994, Epling left Golden Eagle and started Seneca Outdoor, which also manufactures and sells archery equipment, including bows. In March 1995, Epling filed a patent application for the injection molding process he developed at Golden Eagle and listed himself as the sole inventor.

 Shortly thereafter, Golden Eagle commenced an action in New York State Supreme Court, Ontario County, for breach of fiduciary duty, breach of contract, and theft of trade secrets, arising out of Epling's failure to assign the pending patent application to Golden Eagle and Seneca Outdoor's continued use of the injection molding process. Byway of relief, Golden Eagle requested, inter alia, a declaration that Golden Eagle was the sole owner of the pending patent application, an order restraining Seneca Outdoor from manufacturing or selling any products made from the process, and an award of damages resulting from Epling's misappropriation of the process.

 While the state court action was pending, a patent was issued to Epling. The parties then cross-moved for partial summary judgment on the issue of whether Epling had a fiduciary duty to assign the patent to Golden Eagle. Although the trial court denied the motions, the Appellate Division, Fourth Department reversed, finding that the patent belonged to Golden Eagle, not only because Epling developed it while serving as President and CEO of Golden Eagle, but also because he developed it with the assistance of the company's employees and computers. Pursuant to the Fourth Department's decision, Epling has now assigned the patent to Golden Eagle. The action has been remanded to state court for further proceedings, including a determination of damages.

 Within days of the Fourth Department's decision, plaintiffs commenced the instant action, seeking a declaratory judgment from this Court that the compound bow products currently made by Epling and Seneca Outdoor do not utilize the patented process and, therefore, do not infringe Golden Eagle's patent.

 Golden Eagle moves to dismiss this action, pursuant to Fed. R. Civ. P. 12(b)(1), for lack of subject matter jurisdiction. Golden Eagle maintains that there is no actual controversy between the parties, and, therefore, plaintiffs fail to satisfy the jurisdictional prerequisite for bringing a declaratory judgment action. Alternatively, Golden Eagle asks this Court to exercise its discretion to dismiss or stay this federal declaratory judgment action in deference to the pending state court proceedings.

 DISCUSSION

 A. Subject Matter Jurisdiction

 A district court's jurisdiction under the Declaratory Judgment Act extends only to those cases in which there is an "actual controversy" between the parties. 28 U.S.C. § 2201(a). In an action brought to establish the absence of patent infringement, the "actual controversy" requirement is satisfied if: (1) plaintiff has produced or is prepared to produce the allegedly infringing product; and (2) defendant's conduct created an objectively reasonable apprehension on the part of plaintiff that it will face a lawsuit if the allegedly infringing activity continues. FINA Research, S.A. v. Baroid Ltd., 141 F.3d 1479, 1481 (Fed. Cir. 1998); GAF Bldg. Materials Corp. v. Elk Corp., 90 F.3d 479, 481 (Fed. Cir. 1996).

 In this case, there is no dispute that Seneca Outdoor is manufacturing, marketing, and selling the allegedly infringing products. Further, plaintiffs have alleged sufficient facts in their complaint and have submitted sufficient proof on this motion to demonstrate both defendant's express charges of infringement and its continued threats of an infringement action. In his affidavit, Epling states:

 
Over the past three years, the defendant, Golden Eagle/Satellite Archery, Inc., has repeatedly demanded, in correspondence and conversations with my attorneys and in pleadings in state court litigation, that Seneca Outdoor, Inc. cease and desist from manufacturing its modest line of archery bow products. Golden Eagle has claimed it owns a certain ...

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