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Civil Practice – Removal – Federal Question – Remand – Attorney’s Fees & Expenses – Intellectual Property – Trademark License Agreement

International Legwear Group, Inc. v. Americal Corp. (Lawyers Weekly No. 10-02-0924, 7 pp.) (James C. Dever III, J.) E.D.N.C.

Holding: Even though the parties’ contract is a trademark-license agreement, the breach of contract action brought by plaintiff in state court does not raise a federal question.

Plaintiff’s motion to remand to state court is granted. Plaintiff’s motion for the attorney’s fees and expenses it incurred on account of removal is also granted.

Plaintiff seeks a declaratory judgment under G.S. § 1-253 that defendant breached the parties’ license agreement and that the license agreement is terminated. In an action for declaratory judgment, the character of the threatened state-court action dictates whether there is federal-question jurisdiction.

If plaintiff were to bring a claim for damages based on defendant’s alleged breach of the license agreement, such a claim would not present a federal issue. Accordingly, plaintiff’s request for declaratory judgment does not confer federal-question jurisdiction.

Plaintiff also alleges two breach-of-contract claims, relying exclusively upon state law. Federal law did not create the breach-of-contract causes of action, and plaintiff’s state-law claims do not require the resolution of an actually disputed and substantial federal issue. As such, plaintiff’s well-pleaded complaint presents no federal questions.

In its prayer for relief, plaintiff requests attorney’s fees and treble damages as “may be appropriate” in light of its breach-of-contract claims. Such a request does not allege a claim under the Lanham Act or transform plaintiff’s breach-of-contract claims into Lanham Act claims. Because federal law does not create plaintiff’s causes of action and because vindication of its rights under state law does not turn on some construction of federal law, general federal-question jurisdiction will not lie.

Defendant’s removal violates the well-pleaded complaint rule. The court lacks subject-matter jurisdiction.

Where a cursory examination of the complaint, relevant statutes, and binding precedent would have revealed to defendant that it could not remove the action that plaintiff filed in state court, defendant had no objectively reasonable basis for removal. Plaintiff is entitled to an award of reasonable costs and attorney’s fees incurred as a result of the removal. 28 U.S.C. § 1447(c).


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