In the

United States Court of Appeals

For the Seventh Circuit

No. 99-4118

ITOFCA, Inc.,

Plaintiff-Appellant,

v.

MegaTrans Logistics, Inc.,

Defendant-Appellee.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 99 C 2087--Ruben Castillo, Judge.

Argued November 3, 2000--Decided December 19, 2000

 Before Flaum, Chief Judge, and Easterbrook and

Williams, Circuit Judges.

 Flaum, Chief Judge. ITOFCA, Inc. ("ITOFCA")

brought suit against MegaTrans Logistics, Inc.

("MegaTrans") alleging that MegaTrans’ continual

licensing of a computer software program

constitutes an infringement on a copyright

belonging to ITOFCA. MegaTrans counterclaimed,

seeking termination of ITOFCA’s copyright in the

program along with a declaratory judgment that

MegaTrans holds a non-exclusive copyright in the

software. Additionally, MegaTrans asserted in its

counterclaim that ITOFCA has violated the Lanham

Act, 15 U.S.C. sec. 1125, by representing to

MegaTrans customers that ITOFCA is the software

copyright owner. The district court granted

MegaTrans summary judgment after determining

ITOFCA’s copyright infringement claim to be

barred by res judicata. In the same order, the

court dismissed all of MegaTrans’ counterclaims

without prejudice. ITOFCA now appeals the grant

of summary judgment. For the reasons stated

herein, we find appellate jurisdiction wanting

and therefore dismiss.

I. BACKGROUND

 ITOFCA is a not-for-profit association that was

created to assist its members in the procurement

of transportation, shipping, and freight

forwarding services. By 1986, ITOFCA had
developed a comprehensive intermodal software

computer program that assisted its members in

tracking and scheduling their freight shipments.

That same year, as part of an asset transfer

agreement, ITOFCA transferred ownership of two

copies of the software to ITOFCA Consolidators,

Inc. ("ICI"), a wholly owned, for-profit

corporate subsidiary of ITOFCA. According to

ITOFCA, the transfer of software ownership did

not include any transfer of the intellectual

property rights in the software. From 1987

through 1991, ICI used and modified the software

program.

 In January of 1991, ICI was forced into

bankruptcy. Since the bankruptcy proceedings

required that ICI receive court approval for any

asset transfer, the company filed a motion with

the court requesting authorization to sell one of

its copies of the software to a company named

Amerifreight. Initially, ITOFCA objected to the

sale, but after a hearing clarifying the scope of

the sale, the company withdrew its challenge.

Amerifreight and ICI subsequently executed an

assignment of ICI’s rights in the software, and

ICI delivered to Amerifreight one of its copies

of the software’s source code on magnetic tape.

In return, ICI received $25,000. 

 Shortly thereafter, Amerifreight transferred its

rights received under the ICI assignment to

MegaTrans, the defendant in this matter.

MegaTrans slightly altered the software and began

to market it under the name MegaLink. Between

1991 and 1998 MegaTrans licensed the MegaLink

software to three customers, raising

approximately $225,000 in revenue. ITOFCA, which

had gone dormant for almost five years,

reemerged, contacted MegaTrans, and asserted that

it, ITOFCA, owned the copyright in the software

program. The parties were unable to come to any

agreement regarding the ownership of the

intellectual property rights. Thereafter, in

March of 1999, ITOFCA applied for and obtained a

copyright registration for the comprehensive

intermodal software program.

 ITOFCA subsequently filed suit in the District

Court for the Northern District of Illinois

alleging copyright infringement on the part of

MegaTrans. In addition to damages, ITOFCA sought

to enjoin MegaTrans from further alleged acts of

infringement and to have all copies of the

software produced in violation of ITOFCA’s rights

impounded. MegaTrans counterclaimed. In direct

opposition to ITOFCA’s prayer for relief,

MegaTrans sought a declaratory judgment that

ITOFCA has no copyright in the software at issue,

and that MegaTrans has been assigned on a nonexclusive basis all intellectual property rights
in the software. Furthermore, MegaTrans sought to

have ITOFCA’s 1999 copyright registration voided.

Finally, MegaTrans alleged that ITOFCA, by

contacting certain actual and potential customers

of MegaTrans and representing to them that ITOFCA

holds the copyright to the software, has made

misleading descriptions of facts likely to cause

confusion, all in violation of 15 U.S.C. sec.

1125, the Lanham Act.

 On November 19, 1999, the district court

granted summary judgment to MegaTrans. The court

found that ITOFCA had been a party to the

bankruptcy sale, which it determined to be a

judicially authorized final adjudication of the

ownership rights. According to the district

court, during those proceedings "the Bankruptcy

Court, correctly or incorrectly, purported to

sell a non-exclusive right to the computer

program ’free and clear of all liens, claims and

encumbrances.’" ITOFCA, Inc. v. MegaTrans

Logistics, Inc., No. 99 C 2087, 1999 WL 1068479,

at *3 (N.D. Ill. Nov. 19, 1999). Therefore, the

court held that by withdrawing its objection,

ITOFCA acquiesced in the sale such that res

judicata barred ITOFCA’s present attempt to

litigate copyright ownership. In entering

judgment against ITOFCA, the court noted that it

was "mindful that this order may not result in

the end of litigation because of MegaTrans’

counterclaims." Id. at *4 n.3. However, because

it felt that "some of these claims may now be

moot," the court "decided to dismiss the

counterclaims without prejudice to their refiling

in an appropriate amended fashion." Id. In doing

so, the court urged the parties to consider

settlement of any issues that remained.

 ITOFCA appealed to this Court. Recognizing that

the district court’s decision may not have

constituted a final appealable judgement within

28 U.S.C. sec. 1291, on December 10, 1999, we

ordered ITOFCA to file a memorandum stating why

this appeal should not be dismissed for lack of

jurisdiction. On January 24, 2000, we ordered

that the appeal should proceed to briefing, and

that the issue of appellate jurisdiction be

considered along with the merits.

II. DISCUSSION

 Both parties to this litigation maintain that

28 U.S.C. sec. 1291 confers jurisdiction upon

this Court to hear the present appeal. That

Section provides that "courts of appeal . . .

shall have jurisdiction of appeals from all final

decisions of the district courts of the United

States." 28 U.S.C. sec. 1291. However, simply

because the litigants agree that a judicial

determination is a final decision (and thus
appealable under Section 1291), does not make it

so. See Union Oil Co. of Cal. v. John Brown E &

C, 121 F.3d 305, 309 (7th Cir. 1997). "It is our

threshold and independent obligation to make that

determination even though both parties agreeably

considered the order final and appealable."

Horwitz v. Alloy Automotive Co., 957 F.2d 1431,

1435 (7th Cir. 1992). 

 Whether a decision is final for purposes of

sec. 1291 generally depends on whether the

decision by the district court "ends the

litigation on the merits and leaves nothing for

the court to do but execute the judgment."

Coopers & Lybrand v. Livesay, 437 U.S. 463, 467

(1978) (internal quotation omitted). ITOFCA

argues that the district court’s decision, by

granting summary judgment to MegaTrans and

dismissing all of MegaTrans’ counterclaims, has

in effect ended the litigation on the merits,

thus allowing appellate review of the summary

judgment decision. Had MegaTrans never filed

counterclaims, such that this suit only involved

ITOFCA’s claim which the district court decided

in summary judgment, our jurisdiction under sec.

1291 would be undeniable. However, the filing of

counterclaims against ITOFCA by MegaTrans calls

into question whether there has been a final

judgment for sec. 1291 purposes. This is because

"[a]n order dismissing a complaint, but not

ending the case, is not a final decision and

therefore may not be appealed." Albiero v. City

of Kankakee, 122 F.3d 417, 418 (7th Cir. 1997).

 ITOFCA suggests that the district court’s

decision dismissing MegaTrans’ counterclaims

makes this case procedurally indistinguishable

from the hypothetical situation in which no

counterclaims are ever filed. We disagree. Were

MegaTrans’ counterclaims dismissed with

prejudice, such that there was no possibility of

their reemergence, ITOFCA would be correct, and

we would proceed to the merits. However, the

district court unequivocally stated that it "has

decided to dismiss the counterclaims without

prejudice to their refiling in an appropriate

amended fashion." ITOFCA, No. 99 C 2087, 1999 WL

1068479, at *4. Though earlier cases from this

Circuit may not have uniformly held so, we do

find that this "form of dismissal does not

terminate the litigation in the district court in

any realistic sense and so is not a final

decision within the meaning of 28 U.S.C. sec.

1291, which authorizes the appeal of such

decisions." JTC Petroleum Co. v. Piasa Motor

Fuels, Inc., 190 F.3d 775, 776 (7th Cir. 1999);

see also Union Oil, 121 F.3d at 309-11; Horwitz,

957 F.2d at 1435-36. To understand why, we need

not look beyond the rationale behind the district

court’s decision and the ramifications of that
decision.

 In order to create a final judgment under sec.

1291 and make the order granting summary judgment

appealable, the district court had to dispose of

all the issues it did not decide in its order.

Yet, it would be disingenuous to suggest that by

dismissing the claims without prejudice, the

district court did dispose of all those issues.

Given the district court’s order, MegaTrans was

free to refile its counterclaims at any point

from the moment they were dismissed.

Theoretically, the company could have refiled the

claims on November 20, the day after the order

came down, and had those claims back in the

federal court system less than twenty-four hours

after they had been dismissed. If the effect of

the district court’s order was only to separate

those claims for a fleeting moment, we do not

believe they have been disposed of in a manner

that gives rise to sec. 1291 review. The finality

requirement of sec. 1291 should be applied

practically rather than technically. See Cohen v.

Beneficial Indus. Loan Corp., 337 U.S. 541, 546

(1949). Practically speaking, it is entirely

conceivable that while we decide the issue in the

Court of Appeals, MegaTrans could refile its

counterclaims thereby further developing the same

issue and having it adjudicated (at the same

time) at the district court level. "We, however,

sit to settle only controversies fully developed

below." Union Oil, 121 F.3d at 310 (quoting Way

v. Reliance Ins. Co., 815 F.2d 1033, 1034 (5th

Cir. 1987)). As the Supreme Court has noted, the

finality requirement in sec. 1291 evinces a

legislative judgment that "[r]estricting

appellate review to ’final decisions’ prevents

the debilitating effect on judicial

administration caused by piecemeal appeal

disposition of what is, in practical consequence,

but a single controversy." Livesay, 437 U.S. at

471./1 Thus for our purposes, we must view the

counterclaims dismissed without prejudice as if

they are still before the district court, which

they could be at any moment. Since we would not

have appellate jurisdiction under sec. 1291 if

the court had not dismissed the counterclaims, we

have no appellate jurisdiction under the

circumstances as they now exist.

 Our explanation above does not suggest that

every instance in which a district court makes a

decision on one claim and dismisses the others

without prejudice, the decided issue is not

immediately appealable. For example, Rule 54(b)

authorizes the district court to make immediately

appealable a judgment that disposes, with

finality, of one or more (but not all) claims,

even though other claims remain pending in the

district court so that the suit as a whole has
not been finally disposed of by that court. See

Olympia Hotels Corp. v. Johnson Wax Dev. Corp.,

908 F.2d 1363, 1366 (7th Cir. 1990). Given our

view that the dismissal of MegaTrans’

counterclaims without prejudice has not created

a final decision that allows for Section 1291

review, Rule 54(b) would seem to be an adequate

alternative means of gaining appellate

jurisdiction. However, that mechanism cannot be

employed here. It is implicit in Rule 54(b) that

the retained and appealed claims be factually

distinct, for otherwise the court of appeals may

be forced to analyze the same facts in successive

appeals, a form of piecemeal appealing not

authorized by the rule. Id.; see also Horn v.

Transcon Lines, Inc., 898 F.2d 589, 592 (7th Cir.

1990). Two claims cannot be considered separate

merely because one is contained in the complaint,

and one is the countercomplaint. See Automatic

Liquid Packaging v. Dominik, 852 F.2d 1036, 1037

(7th Cir. 1988). In this instance, if none of the

claims in ITOFCA’s complaint were duplicated in

MegaTrans’ counterclaims, the order dismissing

the complaint would be appealable. Id. But if the

complaint and the counterclaim contain the same

claim, there has been no final judgment on the

issue. Id. Here, ITOFCA’s complaint calls upon

the court to decide ITOFCA’s and MegaTrans’

respective intellectual property rights in the

comprehensive intermodal software computer

program. MegaTrans’ counterclaims, though couched

in somewhat different legal terms, call upon this

court to make the identical determination. As we

have noted, "[I]f the same set of facts is

alleged as a breach of contract and as a breach

of a statutory duty, or as a violation of federal

and of state securities laws, or as a fraud and

as a mutual mistake, then as a practical matter

there is only one claim, and a Rule 54(b)

judgment cannot be entered." Olympia Hotels, 908

F.2d at 1367. Thus here, the counterclaims cannot

be considered distinct from the claim in the

complaint, and Rule 54(b) cannot create an

appealable final decision./2 

 Even assuming arguendo that the claims were

sufficiently distinct for Rule 54(b) purposes,

the dismissal without prejudice would be

insufficient to create a final judgment. Even if

it would have been proper for ITOFCA to ask the

district court to enter judgment under Rule 54(b)

as to its claim, it did not do so. In West v.

Macht, 197 F.3d 1185, 1190 (7th Cir. 1999), and

Horwitz, 957 F.2d at 1434, this court faced the

same situation and refused to aid the parties by

attempting to conform the judgment to Rule 54(b).

This refusal is in accord with our practice

regarding attempts to appeal from partial

judgments not in compliance with Rule 54(b). See

West, 197 F.3d at 1190; see also United States v.
Ettrick Wood Products, Inc., 916 F.2d 1211, 1217

(7th Cir. 1990) ("Absent proper entry of judgment

under Rule 54(b), an order that determines one

claim in a multi-claim case, or disposes of all

claims against one or more parties in a multiparty case, is not final and appealable."). And

as we have noted in the past, "bending the rules

to provide jurisdiction is not a move to be

undertaken lightly." West, 197 F.3d at 1189. 

 At oral argument, when we raised the

possibility that the dismissal without prejudice

might mean that there has been no final decision

for sec. 1291 purposes, we asked MegaTrans’

attorney whether the company would represent to

the Court that it would not refile its

counterclaims. Had MegaTrans done so, we could

have treated the district court’s dismissal of

the counterclaims as having been with prejudice,

thus winding up the litigation and eliminating

the bar to our jurisdiction. See JTC Petroleum,

190 F.3d at 776-77 (7th Cir. 1999). However,

MegaTrans was unwilling to make any such

representation and thus we cannot proceed to the

merits of ITOFCA’s appeal./3

III. CONCLUSION

 Even assuming as we do that MegaTrans has no

immediate plans to refile its counterclaims, the

present resolution is at best a contingent one.

If we were to affirm the district court’s grant

of summary judgment to MegaTrans, that would in

all likelihood put an end to this litigation, as

MegaTrans would have no incentive to pursue its

counterclaims. During oral arguments, MegaTrans

conceded as much. "[B]ut if we reverse the

parties will continue to litigate their dispute."

Union Oil, 121 F.3d at 309. Assuming we decided

to remand this case to the district court, there

would be no reason why MegaTrans would not wish

to reinstate its counterclaims and present them

before the trier of fact. Certainly, the district

court, in dismissing those counterclaims without

prejudice, envisioned such a possibility. As we

have stated, "the fact that the court of appeals

could end the litigation does not make a decision

on a single issue final." Massey Ferguson Div. of

Varity Corp. v. Gurley, 51 F.3d 102, 105 (7th

Cir. 1995); see also Horwitz, 957 F.2d at 1436

("What this court might do or not do with an

appeal cannot make final an order that was

not."). "This court can do nothing unless it has

jurisdiction when the case arrives." Horwitz, 957

F.2d at 1436.

 For the foregoing reasons, we Dismiss this appeal

for lack of jurisdiction.
/1 The final judgment rule promotes judicial

efficiency, as some issues a party seeks to

appeal before a final decision may be mooted when

the case is finally determined on the merits.

Furthermore, the rule helps to avoid piecemeal

appeals that may threaten the independence of

trial judges and prevents the potential

harassment and cost that a series of separate

appeals from various individual rulings could

create. See Rebecca A. Cochran, "Gaining

Appellate Review by ’Manufacturing’ a Final

Judgment Through Voluntary Dismissal of

Peripheral Claims," 48 Mercer L.Rev. 979 (1997). 

/2 In addition to Rule 54(b) there exist other

mechanisms by which to appeal a decision on one

claim while the remaining claims either have been

dismissed without prejudice or are still

remaining at the district court level. For

example, when the issue certified for appeal

involves a controlling question of law which the

parties have substantial differences of opinion

as to the application of, and when the resolution

of the question may materially advance the

ultimate termination of the litigation, the law

allows for an interlocutory appeal. 28 U.S.C.

sec. 1292(b). We note in passing that this case

does not fit within any of the pigeonholes that

would allow such an appeal.

/3 We recognize that this case is procedurally

different from others in which we have ruled that

a dismissal without prejudice is of no assistance

in creating the finality necessary for sec. 1291.

Here, it is MegaTrans’ counterclaims which are

acting to bar a final judgment and thus appellate

jurisdiction. While those counterclaims sit in

hibernation, ITOFCA is left without an avenue to

appeal the district court’s decision against it.

In fact, the current status of this case provides

MegaTrans with no incentive to refile its

counterclaims. MegaTrans has won in the court

below, and that decision cannot be appealed so

long as the statute of limitations on its

counterclaims has not expired or those claims

have not been adjudicated. Yet, these peculiar

circumstances do not factor into our decision

that we have no appellate jurisdiction. If ITOFCA

wishes this Court to review the merits of the

district court’s decision it must either wait

until the claims are time barred, or return to

the district court to have it create a proper

final order.