In the

United States Court of Appeals

For the Seventh Circuit

No. 01-1493

International Armor

& Limousine Company,

Plaintiff-Appellant,

v.

Moloney Coachbuilders, Inc.,

Defendant, Third-Party

Plaintiff-Appellee.

v.

Earle F. Moloney, et al.,

Third-Party Defendants-Appellants.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 98 C 5898--John A. Nordberg, Judge.

Argued October 24, 2001--Decided November 26, 2001

 Before Harlington Wood, Jr., Coffey, and

Easterbrook, Circuit Judges.

 Easterbrook, Circuit Judge. Earle F.

Moloney owes his fame and fortune to

success in the limousine, armored car,

and custom auto rebuilding business. In

1986 he sold his limousine assets,

together with the name "Moloney Coach

Builders", to Jacques Moore, who

incorporated Moloney Coachbuilders, Inc.,

to carry on the business. Earle agreed

not to compete for five years in the

stretch limousine business but reserved

the right to make armored limousines and

custom vehicles extended by less than 20

inches. Disputes ensued. Earle Moloney

contended that Moloney Coachbuilders had

acquired the right to use "Moloney Coach

Builders" as a corporate name but not as

a trademark for its products; Earle also

contended that he, rather than Moloney

Coachbuilders, retained the business’s

corporate history (such as the right to

say "in business since 1969" and to brag

about limousines made for heads of

state). Litigation ensued, a judge

resolved several issues on the pleadings,
see Moloney v. Centner, 727 F. Supp. 1232

(N.D. Ill. 1989), and the rest were

settled in 1990, with Moloney

Coachbuilders prevailing on all central

issues.

 More disputes erupted after the nocompetition clause expired and Earle

reentered the armored stretch limousine

business. Advertisements for Earle’s new

firm, International Armor & Limousine

Company, carried phrases such as "The

world’s standard in extended limousines

was created by E.F. Moloney, the pioneer

in the stretch limousine industry" and "A

Moloney Owned Entity". After Moloney

Coachbuilders protested the use of the

Moloney name in connection with Earle’s

limousine business, International Armor

filed this suit, seeking a declaratory

judgment that use of these and similar

phrases does not violate sec.43 of the

Lanham Act, 15 U.S.C. sec.1125, by making

a confusingly false claim of origin.

Moloney Coachbuilders responded with a

counterclaim (plus a third-party claim

against Earle and two of his other firms)

contending that Earle’s use of his name

and corporate history in connection with

stretch limousines (armored or not)

violates the 1986 contract of sale, the

1990 settlement, and the Lanham Act. The

district court concluded that Earle

Moloney’s use of his name in connection

with any stretch limousine business

violates the 1990 settlement agreement.

Earle and his firms have appealed.

 Our first question is whether they have

anything to appeal from. The judgment

entered by the district court provides:

IT IS HEREBY ORDERED AND ADJUDGED that

Enter memorandum Opinion and Order. For

the foregoing reasons, this court grants

the amended motion for attorneys [sic]

fees and orders Earle F. Moloney to pay

Moloney Coachbuilders, Inc. $70,521.84 in

fees and costs. The original motion is

denied as moot. This court also grants

the motion for a permanent injunction for

the reasons stated herein [sic: "and"

missing?] enjoins Eale [sic] F. Moloney,

International Armor & Limousine,

Limousine Werks, and Chicago Armor &

Limousine, their officers, agents,

servants, employees, attorneys and all

other persons in action [sic: active?]

concert or participation with them.
In addition to the multiple references to

other documents, which should not appear

in a judgment, see Reytblatt v. Denton,

812 F.2d 1042 (7th Cir. 1987), this

judgment dangles. Earle Moloney and firms

are enjoined, but from doing what? The

judgment does not say. This is the second

time the district court violated Fed. R.

Civ. P. 65(d) in the case; an earlier

"standstill order" never was reduced to

writing, a problem that the judge

acknowledged, 2000 WL 640883 (N.D. Ill.

Mar. 21, 2000). Complete failure to

specify the terms of a decision makes

appeal impossible; there is no order

adverse to the appellant, no possibility

of penalties for noncompliance, and thus

nothing to review. See Hispanics United

of DuPage County v. Addison, 248 F.3d 617

(7th Cir. 2001); Bates v. Johnson, 901

F.2d 1424 (7th Cir. 1990); Bethune Plaza,

Inc. v. Lumpkin, 863 F.2d 525 (7th Cir.

1988). But when the terms may be gleaned

from other sources, there is only a

violation of Rule 65, which is

correctable on appeal. See Chathas v.

Local 134 IBEW, 233 F.3d 508, 512-13 (7th

Cir. 2000); Metzl v. Leininger, 57 F.3d

618 (7th Cir. 1995). The district judge’s

memorandum order of February 20, 2001,

contains terms that the judge evidently

meant to be used as an injunction;

unfortunately the court as an institution

did not ensure that these were reflected

in a formal judgment. The result is

appealable--but it will not be necessary

to remand for compliance with Rule 65(d),

because now that our jurisdiction is

secure we hold that the district court

lacked subject-matter jurisdiction.

 The problem is simple: This is a

contract dispute, and although the stakes

may exceed $75,000 all litigants

arecitizens of Illinois. The contracts of

1986 and 1990 are about trademarks, so a

claim under the Lanham Act may be

derivative of the rights conferred.

Whichever side owns the marks may use

them, and whichever side does not own

them is at risk under the Lanham Act as

well as the law of contract. Many federal

statutes create property rights that may

become the subject of ownership disputes:

copyright law, patent law, trademark law,

and a score of licensing systems. Any

fight about ownership could be

recharacterized as a claim for redress

under federal law. For example, if A

sells a patent to B, and A then practices
the invention without B’s consent, a suit

alleging patent infringement may conceal

a dispositive contract issue (A may

defend the infringement action by saying

that the contract is invalid). If the

outcome of a suit nominally under federal

law depends entirely on the state law of

contracts, does the dispute come within

the federal-question jurisdiction of 28

U.S.C. sec.1331, which applies to "all

civil actions arising under the

Constitution, laws, or treaties of the

United States" (emphasis added)?

 Osborn v. Bank of the United States, 22

U.S. (9 Wheat.) 738, 822-28 (1824), gives

"arising under" in Article III of the

Constitution the broadest possible

meaning, extending the grant to every

case in which federal law furnishes a

necessary ingredient of the claim even if

this role is distantly related to the

parties’ dispute. Our case arises under

the trademark laws in Osborn’s sense. But

the Supreme Court has long given a

narrower meaning to "arising under" in

statutes defining the jurisdiction of the

district courts. See, e.g., Merrell Dow

Pharmaceuticals, Inc. v. Thompson, 478

U.S. 804 (1986); Franchise Tax Board v.

Construction Laborers Vacation Trust, 463

U.S. 1 (1983); Shulthis v. McDougal, 225

U.S. 561, 569 (1912). In Merrell Dow, for

example, the plaintiff’s success depended

on a favorable interpretation of federal

drug-safety laws; but the Court observed

that state law supplied the right to

recover damages for torts and held that

the presence of a federal issue in a

claim that depended on state law did not

make the claim one "arising under"

federal law.

 Professor Mishkin’s appraisal remains

apt: A suit comes within federal

jurisdiction under sec.1331 when a

substan-tial claim is founded directly on

federal law. See Paul J. Mishkin, The

Federal "Question" in the District

Courts, 53 Colum. L. Rev. 157, 160-65

(1953). That leaves much play in the

joints: What is "substantial," and how

"direct" is direct enough? But it is a

more comprehensive and nuanced approach

than Justice Holmes’s statement that a

"suit arises under the law that creates

the cause of action." American Well Works

Co. v. Layne & Bowler Co., 241 U.S. 257,

260 (1916). Many other opinions discuss

the limitations of that approach, and we
add that under the Federal Rules of Civil

Procedure the concept of "cause of

action" as Holmes used it--a reference to

a code-pleading regime in which law was

essential to the plaintiff’s complaint--

has vanished from federal law and been

replaced by notice pleading, which need

not specify a source of law. See

Bartholet v. Reishauer A.G. (Zurich), 953

F.2d 1073 (7th Cir. 1992); Bennett v.

Schmidt, 153 F.3d 516 (7th Cir. 1998).

Under the Federal Rules, courts rather

than parties decide which rules of law

govern the disputes. This changes the

focus of the "arising under" jurisdiction

from the contents of the complaint to the

attributes of a successful claim. This is

why decisions such as Merrell Dow hold

that complaints forcefully stating

federal ingredients do not necessarily

arise under federal law, and why

Franchise Tax Board observes that "artful

pleading" in an effort to create a

federal issue that is not really there,

or avoid one that is essential, no longer

succeeds. Although the well-pleadedcomplaint doctrine of Gully v. First

National Bank, 299 U.S. 109 (1936),

establishes that the federal element must

be part of the plaintiff’s claim (as

opposed to a defense), it does not mean

that the plaintiff may maneuver a case

into or out of federal court at will by

including or omitting federal aspects. In

our notice-pleading regime (adopted two

years after Gully) the district court

looks past the surface allegations to

make its own assessment of what law the

claim arises under.

 Long before the Supreme Court adopted

the artful-pleading doctrine and

permitted district courts to look behind

the surface of a complaint, Judge

Friendly concluded in T.B. Harms Co. v.

Eliscu, 339 F.2d 823 (2d Cir. 1964), that

a dispute about the ownership of a

copyright does not arise under federal

law, even though the dispute could not

exist but for the property right created

by copyright, a federal ingredient that

would have been enough under Osborn’s

expansive understanding. That conclusion

holds sway among the federal appellate

courts, and we have not only adopted it

for copyright disputes, see Spearman v.

Exxon Coal USA, Inc., 16 F.3d 722 (7th

Cir. 1994) (dictum); Saturday Evening

Post Co. v. Rumbleseat Press, Inc., 816

F.2d 1191, 1194-95 (7th Cir. 1987)
(dictum), but also extended it to

disputes about ownership of patents. See

Kennedy v. Wright, 851 F.2d 963 (7th Cir.

1988). We have intimated that it is

equally applicable to disputes about the

ownership of trademarks. Country Mutual

Insurance Co. v. American Farm Bureau

Federation, 876 F.2d 599, 601 (7th Cir.

1989). Two other circuits have square

holdings on that point. Each adopted

Eliscu’s approach for trademark ownership

disputes. See Gibraltar, P.R., Inc. v.

Otoki Group, Inc., 104 F.3d 616 (4th Cir.

1997); Postal Instant Press v. Clark, 741

F.2d 256 (9th Cir. 1984). Because in this

case the only serious dispute is how the

contracts of 1986 and 1990 allocate

ownership rights in the Moloney name and

business history (as applied to stretch

limousines), the same principle leads to

the conclusion that there is no federal

jurisdiction. The dispute arises under

the law of contracts; any trademark

claims are entirely derivative of the

contract issues. The decision of the

district court, and the parties’ briefs

in this court, are all about contract;

trademark receives scarcely a sidelong

glance, and the Lanham Act played no role

in the disposition.

 In a supplemental brief filed after oral

argument, Moloney Coachbuilders attempted

to distinguish Eliscu as a case dealing

with a "pure" ownership dispute; the com

plaint did not charge the defendant with

infringement. The dispute concerned the

allocation of royalties, not the

lawfulness of any given copy or

performance. One could say the same of

Gibraltar, which concerned arbitration of

an ownership dispute--though not of

Postal Instant Press, which began with a

charge of trademark infringement by a

franchisee that stayed in business after

the contract ended. Here the case began

with a request for a declaratory judgment

of non-infringement and continued with a

counterclaim seeking damages for

trademark infringement. Both the

complaint and the counterclaim satisfy

the approach of American Well--still used

as an inclusive, though not an exclusive,

definition--that the "suit arises under

the law that creates the cause of

action." Contract issues are defenses and

cannot undermine jurisdiction established

by the complaint, the argument concludes.

If this is so then Postal Instant Press

is wrongly decided and we must create a
conflict among the circuits. But that

decision is not a blunder; Postal Instant

Press applies the artful-pleading

doctrine (though without naming it), and

sensibly so.

 Suppose that the claim in Eliscu had

been cast slightly differently: Instead

of demanding royalties according to (his

interpretation of) the contract, the

author of the lyrics could have argued

that, because he was not being paid, the

sale of the sheet music infringed his

copyright. Turning the telescope around

in this way should not be a means to

create federal jurisdiction, when the

real dispute is unaffected. Yet this is

all that our parties have done. Instead

of relying on the contract claims

directly, they have tried to frame

trademark issues that immediately vanish,

a coat of water-soluble paint that washes

away to reveal the contract dispute

underneath. That disappearing-ink trick

does not create federal jurisdiction; it

simply defines artful pleading.

International Armor might as well have

requested a declaratory judgment that its

advertising does not violate the

antitrust laws or erisa.

 A claim might arise under federal law

even though all dispositive issues depend

on state law if the remedies differ.

Suppose that Illinois would give Moloney

Coachbuilders actual damages, plus an

injunction, if Earle Moloney broke his

promises, but that federal law would

provide treble damages if the broken

promise amounted to misappropriation of

Moloney Coachbuilders’ trademark. Then

breach of contract under state law would

set up a genuine, distinctive federal

claim. But the parties’ supplemental

briefs do not contend that the Lanham Act

affords any remedy that is unavailable

under the state law of contract, or makes

that remedy easier to obtain, or in this

case serves any role other than as a

veneer laid over the state-law core.

International Armor’s complaint alerts

the district court to the contractual

foundation, and the counterclaim rubs it

in; it describes the 1990 agreement in

para.3, even before it identifies the

parties to the case! We therefore treat

this ownership dispute as what it is, a

claim arising under the state law of

contracts.
 Seeking a way to keep this case in

federal court, the parties have

identified a second potential source of

jurisdiction: If sec.1331 is unavailable,

they contend, the court still had

supplemental jurisdiction to enforce the

1990 agreement. Kokkonen v. Guardian Life

Insurance Co., 511 U.S. 375 (1994), holds

that a settlement of a suit arising under

federal law normally is a contract that

can be enforced in federal court only if

there is an independent source of

jurisdiction, such as diversity of

citizenship. But Kokkonen adds that, if a

court retains jurisdiction to enforce the

terms of a settlement, then ancillary

jurisdiction may be available. 511 U.S.

at 380-81. The terminating order in the

earlier suit (No. 88 C 6564) provides,

among other things: "The Court shall

maintain jurisdiction of this matter for

the purpose of enforcing the Mutual

Settlement and General Release

Agreement."

 One problem with this line of argument

is that neither International Armor’s

complaint nor Moloney Coachbuilders’

counterclaim invoked the jurisdiction

retained in 88 C 6564. International

Armor filed a brand new suit, and Moloney

Coachbuilders filed a counterclaim in

that suit rather than seeking relief from

the original judge. The 1988 suit was

assigned to Judge Aspen, this 1998 suit

to Judge Nordberg. Moloney Coachbuilders

asked Judge Nordberg to transfer the new

proceedings to Judge Aspen so that they

could be resolved as ancillary to the

1988 suit. That motion was denied.

Although it is the court rather than the

judge that retains jurisdiction, the

court as an institution did not do what

was necessary to show that the

jurisdiction retained in 1990 was being

exercised.

 A second, and deeper, problem is that

even a request filed directly under the

1988 case would not have been sufficient-

-for that case, too, was outside federal

jurisdiction, and for the same reason the

current suit does not arise under federal

law. The 1988 suit was a poorly disguised

request for interpretation of the 1986

contract, plus a defamation claim

explicitly under state law. The district

court’s published opinion in that case

steps through one state-law theory after

another: defamation, tortious
interference with contract, and unfair

competition. The court observed that

Earle Moloney had alleged trademark

infringement but also made it clear that

the only dispute was whether the 1986

agreement had transferred to Moloney

Coachbuilders, the new corporation, the

Moloney Coach Builders trademark (with its

distinctive script) that Earle Moloney

had registered years earlier. 727 F.

Supp. at 1238-40. Just as in the current

suit, then, the trademark claim was a

veneer for a contract dispute, and for

the reasons we have already given did not

arise under federal law. The district

court in 1990 could "retain" no more

jurisdiction than it had--which is to

say, none.

 Neither the court nor the parties can be

happy when lengthy litigation comes to

naught, but enforcing the limits of

federal jurisdiction is essential lest

clever lawyers be able to transfer suits

at will to federal court. These litigious

parties may be unwilling to give up; the

long-running nature of this dispute does

not augur well for peaceful resolution.

But Earle Moloney should consider, before

he renews hostilities in state court, the

possibility that the district judge’s

thoughtful and well-reasoned opinions in

this case will be persuasive with the

state judges.

 The judgment of the district court is

vacated, and the case is remanded with

instructions to dismiss for lack of

subject-matter jurisdiction.