UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

 

 :

PENNONI ASSOCIATES, INC., :

: Civ. A. No. 11-939 (NLH)(KMW)

Plaintiff, :

:

v. :

: OPINION

MEDFORD VILLAGE EAST :

ASSOCIATES, LLC, :

:

Defendant. :

 

APPEARANCES:

Stephen McNally, Esq.

Chiumento McNally LLC

Cherry Tree Corporate Center 

535 Route 38 East 

Suite 360 

Cherry Hill, NJ 08002 

Attorneys for Plaintiff, Pennoni Associates, Inc.

Peter Jay Boyer, Esq.

Hyland Levin, LLP 

6000 Sagemore Drive 

Suite 6301 

Marlton, NJ 08053-3900 

Attorneys for Defendant, Medford Village

 East Associates, LLC

David C. Kistler, Esq. 

Seth J. Lapidow, Esq.

Blank Rome, LLP 

301 Carnegie Center 

3rd Floor 

Princeton, NJ 08540 

Attorneys for Intervenor Plaintiff, U.S. Home Corporation

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HILLMAN, District Judge:

Plaintiff, Pennoni Associates, Inc. (“Pennoni”), initiated

this action on February 18, 2011 by filing a complaint for a

declaratory judgment finding that Pennoni is “the exclusive owner

of copyrights in certain engineering plans that are in dispute

between the parties” and that Pennoni therefore is not obligated

to turn over possession of such plans to Defendant, Medford

Village East Associates, LLC (“MVE”). (Compl. ¶ 1.) Presently

before the Court is MVE’s motion seeking dismissal of Pennoni’s

claims, with prejudice, for lack of subject matter jurisdiction

pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). For the

reasons expressed below, MVE’s motion to dismiss is denied

without prejudice.

I. BACKGROUND

Although this case is in its procedural infancy, there is a

significant history of litigation between Pennoni and MVE which

is detailed more thoroughly in the Court’s Opinion of April 1,

2011 in the matter captioned Medford Commons, LLC v. Lexon

Insurance Company, Civil Action No. 11-188 (NLH) (hereinafter,

“Lexon litigation”). As noted in the Opinion, the history

“involves numerous parties, real estate agreements, engineering

plan proposals, and development approvals, as well as extensive

litigation in New Jersey state court, federal bankruptcy court,

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and, now, the federal district court.” (Op. 4-5, Apr. 1, 2011.) 

The Court shall recite here only those facts necessary to resolve

the pending motion to dismiss.

As noted in the April 1, 2011 Opinion in the Lexon

litigation, MVE owned a 280-acre property in Medford Township and

agreed to sell it to the Township, who, in turn, agreed to sell

portions of the property to different parties. (Id. at 5.) 

Pennoni contracted with one of the parties involved in the

property transaction to perform engineering services, including

the modification of engineering plans and data. (Id.) During

the course of the real estate transactions, Pennoni received the

engineering plans and assets of other companies or firms involved

in the property’s ongoing development in order to perform its

work. (Id.)

In a state court proceeding initiated in or around early

2008, MVE was named as a third-party defendant and filed a

fourth-party complaint against, inter alia, Pennoni. (Id. at 5.) 

In April 2009, MVE filed a more detailed amended fourth-party

complaint against Pennoni. (Id. at 7.) As part of the amended

complaint, MVE averred that it “‘retained rights in and to the

engineering plans prepared by Pennoni.’” (Id.) (quotation

omitted). In June 2009, Pennoni filed an answer and a

counterclaim for conversion against MVE, stating that Pennoni

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“‘holds an ownership interest in certain plans associated with

the project which is the subject of this litigation.’” (Id. at

7-8)(quotation omitted). Moreover, Pennoni averred: “‘MVE . . .

exercise[d] unauthorized and wrongful dominion and control over

the plans which dominion and control was to the exclusion and

inconsistent with the rights of Pennoni.’” (Id. at 8)(quotation

omitted). In a separate count, Pennoni asked the state court for

“‘a declaratory judgment determining that it is the sole owner of

the plans and other work product prepared for the Project to the

exclusion of MVE and Stephen D. Samost.’” (Id.) (quotation

omitted). 

After Pennoni filed an answer in the state court proceeding,

there was a clerical error which indicated that MVE’s fourthparty complaint had been dismissed. (Id. at 9.) Eventually, in

December 2010, MVE entered into a tentative settlement agreement

with other parties involved in the litigation concerning the

property. (Id. at 10.) However, because MVE and Pennoni

continued to dispute the ownership and use of the engineering

plans, MVE requested that the state court enter an order

directing Pennoni to show cause why MVE’s fourth-party amended

complaint should not be reinstated and why Pennoni should not

have to turn over the plans, reports, and other documentation to

which MVE had a right to retain. (Id.) The state court entered

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the order and scheduled a hearing for January 12, 2011. (Id.) 

On January 11, 2011, the day before the hearing in the state

court action, Pennoni filed a Notice of Removal –- thereby

instituting the Lexon litigation previously brought before this

Court -- on the grounds that MVE’s action implicated a federal

copyright issue, thereby engendering a federal question. (Id. at

10.) MVE moved to remand the case or, alternatively, for a

preliminary injunction against Pennoni. (Id.) 

In connection with the parties’ briefing on the remand issue

in the Lexon litigation, Pennoni submitted to the Court a letter

dated February 18, 2011 arguing that MVE raised copyright issues

in the state court litigation through its briefing in support of

the request for an order to show cause. (Cert. of Stephen

McNally, Esquire in Supp. of Opp. to Mot. to Dismiss Pl.’s

Compl., Ex. A at 3.) Pennoni argued that “[w]hat is apparent

from MVE’s submissions before both this Court and the State Court

is that MVE seeks to subvert exclusive Federal jurisdiction over

the copyright issues in this case, by attempting to mask them

through the vague pleading of State law claims in the Fourth

Amended Complaint.” (Id. at 4.) Pennoni further explained that

it was initiating a separate federal litigation –- which is the

litigation that is now before the Court -- to “clarify the

jurisdictional issue for the Court, and squarely present the

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copyright issues before the Court[.]” (Id.)

In the Lexon litigation, this Court granted MVE’s motion to

remand, finding that Pennoni did not attempt to remove the case

within the time designated by the federal removal statute. (Op.

20, Apr. 1, 2011.) In so finding, the Court concluded that MVE’s

amended fourth-party complaint sufficiently asserted a claim of

ownership by MVE over Pennoni’s engineering plans, reports and

other documents, and that Pennoni could have reasonably

anticipated that the matter implicated a federal question of

copyrights. (Id. at 14.) The case was remanded to the Superior

Court of New Jersey on April 1, 2011. (Order 2, Apr. 1, 2011.) 

A few days later, on April 6, 2011, MVE filed in the present

case a motion to dismiss the complaint for lack of subject matter

jurisdiction. MVE argues that Pennoni is attempting to “do an

end-run around its decision not to remove related state court

litigation to this Court in the Spring of 2009, and to avoid an

Order to Show Cause hearing in that litigation, which seeks the

turnover of reproducible copies of engineering plans and other

information to MVE.” (Br. in Supp. of Def.’s Mot. to Dismiss

Compl. (hereinafter, “Def.’s Br.”) 1.) MVE contends that Pennoni

is merely seeking to assert a federal defense to MVE’s state

court claims under the guise of a declaratory judgment action. 

(Id. at 6.) MVE notes that the complaint does not assert that

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MVE has infringed on any copyright purportedly held by Pennoni. 

(Id. at 8.) Given the purported absence of a justiciable federal

case or controversy, MVE argues that the Court lacks subject

matter jurisdiction. (Id. at 9.) MVE notes that Pennoni’s

actions contravene the limitation requirements on removal, as any

party attempting to remove a state court action on the basis of a

federal defense could bypass the requirements of the removal

statute by filing a separate declaratory judgment action and

seeking a stay of the state court action. (Id. at 10.) 

In opposition, Pennoni argues that it filed this action

because only federal courts can decide issues of copyright

ownership and infringement. (Pennoni Assoc., Inc.’s Br. in Opp.

to Medford Village East, LLC’s Mot. to Dismiss (hereinafter,

“Pl.’s Opp. Br.”) 1.) Pennoni acknowledges that in light of this

Court’s remand of the Lexon litigation, two of the three requests

for relief in this action – the requests for a declaration that

MVE has no ownership interest in the engineering plans and that

Pennoni is not obligated to surrender to MVE the engineering

plans – can only be decided in the state court action. (Id. at

3.) Pennoni argues that the Court can nonetheless resolve in

this case the issue of whether Pennoni is the exclusive owner of

the copyright in the engineering plans, which issue allegedly

does not arise as a defense to MVE’s state law claims. (Id. at

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3, 6.) According to Pennoni, MVE does not and cannot establish

in the state court action ownership of a copyright. (Id. at 8.) 

The issue of ownership of the copyright, Pennoni alleges, can

only be determined in federal court.1

II. JURISDICTION

Pennoni alleges in the complaint that this Court has subject

matter jurisdiction over the case pursuant to 28 U.S.C. §§ 1331

and 1338(a) because the matter arises under the Copyright Act, 17

U.S.C. § 101 et seq. and the Declaratory Judgment Act, 28 U.S.C.

§§ 2201 and 2202. Although MVE challenges this Court’s subject

matter jurisdiction, the Court has “an independent obligation to

satisfy itself that it has subject matter jurisdiction over a

case.” Adamczewski v. Emerson Elec. Co., No. Civ. A. 10-4862,

2011 WL 1045162, at *1 (D.N.J. Mar. 22, 2011) (citing Meritcare

Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir.

1999), overruled on other grounds by Exxon Mobil Corp. v.

Allapattah Svcs., Inc., 545 U.S. 546 (2005)). 

1. In connection with its attempt to establish ownership,

Pennoni alleges that it created the engineering plans which

purportedly are an original work of authorship belonging to

Pennoni and are protected under the Copyright Act. (Compl. ¶¶

15, 17.) Pennoni represents that in November 2010, it submitted

an application to the United States Copyright Office for

registration of the copyrights of the engineering plans and

obtained a Certificate of Registration for such plans on December

29, 2010. (Id. at ¶ 18.) 

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III. DISCUSSION

A. Standard of Review

Rule 12(b)(1) provides for dismissal of an action based on

lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1).

When the existence of subject matter jurisdiction is challenged

under Rule 12(b)(1), the plaintiff bears the burden to show that

the court has the requisite jurisdiction to hear the case. See,

e.g., Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005);

Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d

Cir. 1977). If a court lacks subject matter jurisdiction, it

must dismiss the case without prejudice. In re Orthopedic “Bone

Screw” Prod. Liab. Litig., 132 F.3d 152, 155–56 (3d Cir. 1997).

A motion to dismiss for lack of subject matter jurisdiction

may either (1) “attack the complaint on its face” or (2) “attack

the existence of subject matter jurisdiction in fact, quite apart

from any pleadings.” Mortensen, 549 F.2d at 891. In a facial

attack, all allegations in the complaint are considered true. 

Id. In a factual attack, by contrast, the court need not presume

the truth of the allegations and “is free to weigh the evidence

and satisfy itself as to the existence of its power to hear the

case.” Id. In such a case, “the court can consider affidavits

attached to the moving papers or even require such affidavits to

be submitted[.]” New Hope Books, Inc. v. Farmer, 82 F. Supp. 2d

9

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321, 324 (D.N.J. 2000) (citing Growth Horizons, Inc. v. Delaware

County, Pa., 983 F.2d 1277, 1281 n.4 (3d Cir. 1993)). 

2

A federal court does not have subject matter jurisdiction

simply because relief is requested under the federal Declaratory

Judgment Act. “[T]he operation of the Declaratory Judgment Act

is procedural only.” Aetna Life Ins. Co. v. Haworth, 300 U.S.

227, 240 (1937). A federal district court has jurisdiction to

render a declaratory judgment pursuant to the Declaratory

Judgment Act if an “actual controversy” exists. Id. The “actual

controversy” requirement under the Declaratory Judgment Act is

coextensive with the “case or controversy” requirement of Article

III of the United States Constitution. Id. 

A “controversy” under the Declaratory Judgment Act “must be

definite and concrete, touching the legal relations of parties

having adverse legal interests.” Id. at 240-41. In determining

whether a case satisfies the case-or-controversy requirement,

2. Although MVE argues that it is asserting a facial attack, the

Court finds that the motion to dismiss attacks the existence of

subject matter jurisdiction as a matter of fact. MVE is not

simply arguing that the averments set forth in the complaint fail

to demonstrate the existence of subject matter jurisdiction. 

Rather, MVE seeks dismissal of the complaint based upon the

litigation history of the parties and the claims already before

the state court. While the amended complaint certainly details

some of the procedural history, the challenge to jurisdiction is

not based solely on the sufficiency of the allegations in the

complaint. 

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courts should consider “‘whether the facts alleged, under all the

circumstances, show that there is a substantial controversy,

between parties having adverse legal interests, of sufficient

immediacy and reality to warrant the issuance of a declaratory

judgment.’” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,

127 (2007) (internal quotation omitted). 

Even if there is an immediate controversy, such controversy

must independently create jurisdiction. In a typical case, a

declaratory judgment action is brought as an anticipatory defense

to an expected action in state court. Under these circumstances,

the Court must consider the character of the threatened state

court action, and not the character of the defense, in deciding

whether the case arises under federal law. Public Service Comm’n

v. Wycoff Co., 344 U.S. 237, 248 (1952) (“Where the complaint in

an action for declaratory judgment seeks in essence to assert a

defense to an impending or threatened state court action, it is

the character of the threatened action, and not of the defense,

which will determine whether there is federal-question

jurisdiction in the District Court.”). 

Whether a particular case “arises under” federal law “must

be determined from what necessarily appears in the plaintiff's

statement of his own claim in the bill or declaration, unaided by

anything alleged in anticipation of avoidance of defenses which

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it is thought the defendant may interpose.” Taylor v. Anderson,

234 U.S. 74, 75-76 (1914). “[A] right or immunity created by the

Constitution or laws of the United States must be an element, and

an essential one, of the plaintiff's cause of action.” Gully v.

First Nat’l Bank, 299 U.S. 109, 112 (1936). Even if both parties

admit that the federal defense is the primary or only question at

issue in a case, under the well-pleaded complaint rule the Court

considers only the elements of the plaintiffs' legal claims, and

jurisdiction is not established by the presence of a federal

defense. See Franchise Tax Bd. v. Construction Laborers Vacation

Trust, 463 U.S. 1, 14 (1983). 

Applying these principles to cases for declaratory judgment

based on a threatened or impending suit, courts must determine

whether a federal question would appear on the face of the yetto-be-filed complaint. Courts cannot look to the nature of the

declaratory judgment claim itself, which is in essence a defense

to an impending action. While this inquiry may be difficult when

such claims are in the abstract, here the inquiry is simple

because the claims are already pending in the state court action. 

B. Analysis

This case does not involve a claim of copyright

infringement, but rather seeks a declaration concerning copyright

ownership. MVE concedes that there is a controversy between the

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parties given the history of the underlying state court action

and MVE’s attempt to obtain the purportedly copyrighted

engineering plans through that action. Under the circumstances,

there is a real and reasonable apprehension that MVE will obtain

a court order requiring Pennoni to produce the engineering plans

to MVE. Notwithstanding the existence of this controversy,

however, the Court must still decide whether Pennoni’s claim

independently creates subject matter jurisdiction given that it

is filed in anticipation of a state court order requiring

production of the allegedly copyrighted documents. 

Despite Pennoni’s efforts to couch this case as an attempt

to obtain ownership of a copyright that arises independently of

the state court litigation, the allegations of the complaint

demonstrate that this case was filed solely a result of

proceedings in the state court litigation. Pennoni contends that

MVE has challenged Pennoni’s ownership of and copyright in the

engineering plans and has sought in the state court action to

obtain an order requiring production of the engineering plans. 

(Compl. ¶¶ 24, 27.) Under these circumstances, Pennoni avers, a

controversy exists between the parties. (Id. at ¶ 35.) Pennoni 3

3. The Court also notes Pennoni’s admission in its brief that

this case “is before the Court to prevent threatened copyright

infringement.” (Pl.’s Opp. Br. 6.)

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alleges that MVE’s vague pleading in the state court action was

merely an attempt to “obscure the very real dispute between

Pennoni and MVE arising under the Copyright Act as to Pennoni’s

ownership of copyrights in the [engineering plans]” and to

“deprive the United States District Court of its exercise of

exclusive jurisdiction over claims arising under the Copyright

Act.” (Id. at ¶¶ 32-33.) Therefore, it is clear that this case

is not independent of the state court action; it is the state

court proceedings that provide the “case or controversy” at the

heart of this declaratory judgment action.4

Having concluded that Pennoni’s claim is not an independent

basis for the exercise of federal subject matter jurisdiction,

the Court next considers the nature of the state court action to

determine whether it presents a basis for jurisdiction. 

Generally, courts that undertake this inquiry look to the

hypothetical case that would be filed by a defendant. As noted

above, in this case the defense is not anticipatory; it is in

response to an actual state court action already commenced. It

is thus simple to determine the character of the state court

4. Indeed, if the state court action was not the basis for

Pennoni’s declaratory judgment claim, and Pennoni merely seeks a

declaration of copyright ownership without any practical need to

establish ownership, the Court would likely find that there is no

case or controversy under Article III.

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action to see whether that action involves a claim under federal

law.

This Court has already conducted such analysis in the Lexon

litigation. In that case, as previously noted, the Court

concluded that Pennoni’s attempt to remove the case exceeded the

thirty-day limit imposed by 28 U.S.C. § 1446(b). (Op. 14, Apr.

1, 2011.) In so finding, the Court noted that through MVE’s

fourth-party amended complaint, by which MVE asserted a claim of

ownership over Pennoni’s engineering plans, Pennoni could have

“reasonably ascertained that the matter implicated a federal

question of copyrights.” (Id.) The Court also noted that in

light of the averments in the fourth-party amended complaint,

“Pennoni could have reasonably ascertained a challenge to its

ownership over its plans that may have implicated a federal

copyright issue,” and that Pennoni had “knowledge of MVE’s claims

and the existence of a federal question[.]” (Id. at 15, 20.) As

such, it is clear based on the Court’s prior finding that the

claims in the fourth-party amended complaint in the state court

action implicate a federal question of copyright.5

MVE argues that the Third Circuit’s unpublished decision in

5. The Court notes both parties’ assertion that the fourthparty amended complaint does not assert a claim of copyright

ownership. The Court concluded otherwise in the Lexon

litigation, and neither party has challenged that decision. 

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Board of Chosen Freeholders of County of Burlington v. Tombs, 215

Fed. Appx. 80 (3d Cir. 2006), is dispositive of this matter. In

Tombs, the Burlington County Board of Chosen Freeholders

commissioned the creation of maps and provided free copies of the

maps to government agencies. Id. at 81. The Board sold the maps

to non-government entities for a fee. Id. Robert Tombs then

requested copies of the maps pursuant to the New Jersey Open

Public Records Act (hereinafter, “OPRA”), and the Board responded

that he may pay the ordinary fee for such maps. Id. Tombs then

threatened to obtain judicial relief, and the Board filed a

complaint in federal court seeking a declaration that the federal

copyright law preempts the OPRA request. Id. The district court

dismissed the action for lack of subject matter jurisdiction. 

Id. 

The Third Circuit affirmed on appeal in an unpublished

decision, finding that the complaint for declaratory judgment was

essentially a defense to a threatened state court action. Id. at

81-82. The Third Circuit noted that district courts must

determine whether they have federal question jurisdiction by

considering the character of the threatened state court action. 

Id. The Third Circuit found that the Board could not “invoke

federal jurisdiction by asserting its federal copyright as a

defense against Mr. Tombs’ OPRA claim.” Id. at 82. The Third

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Circuit also concluded that the complete preemption doctrine did

not apply to the threatened OPRA claim because federal copyright

law “does not wholly displace state statutory or common law

rights to public records[.]” Id.

 Pennoni attempts to distinguish Tombs on the basis that the

plaintiff in that case did not seek construction of the Copyright

Act. (Pl.’s Opp. Br. 8.) In deciding the jurisdiction issue,

the Third Circuit looked only to the character of the threatened

state court action; it did not look to the character of the

federal action. Tombs, 215 Fed. Appx. at 81. Therefore,

although the nature of the federal claim in Tombs is different

from the federal claim asserted by Pennoni here, the distinction

is irrelevant to the Third Circuit’s decision. 

The more compelling distinction between Tombs and the

present case is that in Tombs, the federal claim was asserted as

a defense to a threatened state law claim, whereas in this case

the claim in the state court action implicates a federal

question. The Third Circuit in Tombs applied the well-settled

principle discussed above that federal jurisdiction cannot be

based on a federal defense and must be based on the allegations

in a complaint. Such rationale is not instructive as to the

outcome when the claim in the underlying litigation itself

involves a question of federal law, as is the case here.

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The Court notes MVE’s argument that the copyright claim

asserted by Pennoni is a federal defense to a state law claim

(Def.’s Br. 2), but this argument is inconsistent with the

Court’s decision in the Lexon litigation. The Court in Lexon did

not remand the case on a finding that Pennoni was seeking to

assert a federal defense. Rather, the Court concluded that there

was a federal question in the fourth-party amended complaint that

triggered Pennoni’s time to remove the matter under 28 U.S.C. §

1446. Accordingly, the Court rejects MVE’s assertion in this 6

case that the copyright claim is merely a defense to a claim

based on state law.

6. The Court notes Pennoni’s assertion that it seeks

construction of the Copyright Act in establishing ownership of

the copyrights embodied in the engineering plans. Several cases

have held that establishing copyright ownership may not invoke a

federal question if the inquiry is limited to contractual rights,

even if the subject of the contract is a copyright. See Rogers

v. Younce, Civ. A. No. 07-CV-704, 2008 WL 2853207, at *5 (N.D.

Okla. July 21, 2008)(collecting cases in which courts held that

suits concerning copyright ownership do not present federal issue

when ownership turns on interpretation of contract). By

contrast, when a party seeks construction of the Copyright Act to

establish ownership, the claim is federal in nature. Id. at *3

(citing T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 1964)).

Pennoni does not explain in this case why the Copyright Act must

be interpreted in connection with its ownership claim. In any

event, Pennoni’s briefing in the Lexon litigation indicates that

Pennoni seeks construction of the Copyright Act because there is

a question as to whether MVE is a “joint author” of the

engineering plans. See Merchant v. Levy, 92 F.3d 51 (2d Cir.

1996) (“copyright ownership by reason of one's status as a

co-author of a joint work arises directly from the terms of the

Copyright Act itself.”), cert. denied, 519 U.S. 1108 (1997). 

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For all of the above reasons, the Court concludes that it

has subject matter jurisdiction in this action. This 7

determination, however, does not end the inquiry because the

Court is not required to exercise jurisdiction over a declaratory

judgment action. The Supreme Court held in Brillhart v. Excess

Ins. Co., 316 U.S. 491 (1942), and reaffirmed in Wilton v. Seven

Falls Co., 515 U.S. 277 (1995), that when a plaintiff brings a

declaratory judgment action, the district court has discretion in

deciding whether to assert jurisdiction over the action or

abstain from hearing it. This discretion stems from the

Declaratory Judgment Act, which expressly provides that district

courts “may declare the rights and other legal relations of any

interested party seeking [a] declaration, whether or not further

relief is or could be sought.” 28 U.S.C. § 2201(a). The Supreme

Court has noted that “[i]n the declaratory judgment context, the

7. Having so found, the Court does not address whether it also

may exercise diversity jurisdiction over the parties, as the

complaint does not provide a sufficient basis for such analysis. 

While Pennoni avers that it is a Pennsylvania corporation with a

principal place of business in Pennsylvania, and that MVE is a

limited liability company with its principal place of business in

New Jersey, the complaint does not set forth the citizenship of

each member of MVE or allege that the amount in controversy

exceeds $75,000. See Zambelli Fireworks Mfg. Co., Inc. v. Wood,

592 F.3d 412, 418 (3d Cir. 2010) (holding that LLC should be

treated as partnership for purposes of establishing citizenship

and noting that partnership “takes on the citizenship of each of

its partners.”); 28 U.S.C. § 1332. 

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normal principle that federal courts should adjudicate claims

within their jurisdiction yields to considerations of

practicality and wise judicial administration.” Wilton, 515 U.S.

at 288. Thus, even when a court has jurisdiction, it “is

authorized, in the sound exercise of its discretion, to stay or

to dismiss an action seeking a declaratory judgment[.]” Id.

In Brillhart, the Supreme Court provided some guidance as

the factors governing a district court’s exercise of discretion. 

Brillhart, 316 U.S. at 495. The Court indicated that a district

court should examine “the scope of the pending state court

proceeding and the nature of defenses open there.” Id. This

inquiry requires consideration of “whether the claims of all

parties in interest can satisfactorily be adjudicated in that

proceeding, whether necessary parties have been joined, whether

such parties are amenable to process in that proceeding, etc.” 

Id. The Supreme Court declined, however, to set forth a

“comprehensive enumeration of what in other cases may be revealed

as relevant factors governing the exercise of a district court’s

discretion.” Id. 

The parties have not addressed whether the Court should, in

its discretion, exercise jurisdiction over this declaratory

judgment action. Therefore, while the Court finds that it has

subject matter jurisdiction and shall deny MVE’s motion to

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dismiss, such dismissal is without prejudice because the Court is

not satisfied at this time that it should in its discretion

exercise jurisdiction in this case. 

The Court is hesitant to entertain this suit when it appears

to be an artful attempt to circumvent Pennoni’s failed attempt to

successfully remove the Lexon litigation. Allowing Pennoni to

pursue this case in federal court would permit Pennoni to

accomplish in its declaratory judgment case what could not be

accomplished under the removal statute.

The Court also notes that the parties have not briefed in

connection with the pending motion whether the state court can

resolve the issue of copyright ownership raised by Pennoni in

this case. As a general matter, state courts have concurrent

jurisdiction over federal claims, unless there is “‘an explicit

statutory directive, [an] unmistakable implication from

legislative history, or . . . a clear incompatibility between

state-court jurisdiction and federal interests[.]’” Hathorn v.

Lovorn, 457 U.S. 255, 266 (1982) (citation omitted). “[E]ven a

finding of exclusive federal jurisdiction over claims arising

under a federal statute usually ‘will not prevent a state court

from deciding a federal question collaterally.’” Id. (citation

omitted). 

Pennoni contends in conclusory fashion that only federal

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courts can decided issues of copyright. 28 U.S.C. § 1338(a)

provides that “[t]he district courts shall have original

jurisdiction of any civil action arising under any Act of

Congress relating to patents, plant variety protection,

copyrights and trademarks. Such jurisdiction shall be exclusive

of the courts of the states in patent, plant variety protection

and copyright cases.” 28 U.S.C. § 1338(a). Notwithstanding this

language, the Supreme Court has not extended the doctrine of

complete preemption to copyright claims, and there is

disagreement among circuits as to whether the doctrine is

applicable to such claims. Rogers v. Younce, Civ. A. No.

07-CV-704, 2008 WL 2853207, at *10 (N.D. Okla. July 21, 2008)

(collecting cases). The Court notes that the Third Circuit, in

Tombs, appears to have rejected complete preemption in the

copyright context. Tombs, 215 Fed. Appx. at 82. 

Furthermore, the Court notes that Pennoni has cited in its

opposition brief cases in which courts consider the abstention

doctrine set forth in Colorado River Water Construction Districts

v. United States, 424 U.S. 800 (1976). These cases are not

instructive with respect to the issue of whether the Court should

exercise its discretion in maintaining jurisdiction over a

declaratory judgment action. See State Auto Ins. Cos. v. Summy,

234 F.3d 131, 134 (3d Cir. 2000)(“Reviewing the declaratory

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judgment remedy at some length, the [Supreme Court] reaffirmed

Brillhart's standard of broad discretion and rejected Colorado

River's restrictive ‘exceptional circumstances’ test as

inappropriate for the Declaratory Judgment Act.”) (quoting

Wilton, 515 U.S. at 286). Therefore, to the extent Pennoni

argues that the Court should in its discretion exercise

jurisdiction in this case, it must provide the Court with more

compelling authority to support such contention. 

Finally, the Court questions whether resolution of the

copyright ownership issue will resolve issues concerning MVE’s

rights to the engineering plans. Pennoni argues that ownership

of a copyright is distinct from ownership of any material object

in which the work is embodied. (Pl.’s Opp. Br. 8.) Even

assuming that Pennoni owns the copyrights embodied in the

engineering plans, it is unclear whether MVE would be entitled to

the engineering plans pursuant to contractual agreements between

other parties. Cf. Huurman v. Foster, No. Civ. A. 07-9326, 2010

WL 2545865, at *10 (S.D.N.Y. June 21, 2010) (“An additional

factor that weighs against exercising our discretion to declare

ownership of the motion picture’s copyright is that doing so

would not necessarily resolve the dispute between the parties

regarding ownership of the master copy of the DVD. . . . In this

instance, ownership of the master copy of the DVD may be governed

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by the terms of agreements that apparently existed between

[various parties].”).

In view of the foregoing, the Court directs the parties to

file supplemental briefs addressing the above considerations and

any other factors that they believe should be considered by the

Court in deciding whether to exercise jurisdiction over this

declaratory judgment action. The Court shall thereafter make a

determination as to whether it will continue to maintain

jurisdiction in this case. 

IV. CONCLUSION

As set forth above, the Court finds that there is a

controversy between the parties based on the proceedings in the

state court and that the underlying state court litigation

implicates a federal question. Notwithstanding these findings,

the Court has not yet determined whether it should in its

discretion exercise jurisdiction over the sole remaining claim in

this case under the Declaratory Judgment Act. Therefore, MVE’s

motion to dismiss the complaint is denied without prejudice. The

parties shall be directed to file supplemental briefs addressing

whether the circumstances of this case warrant the exercise of

federal jurisdiction.

Dated: December 20, 2011 s/ Noel L. Hillman 

At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.

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