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Keywords

jurisdictiondamagesinjunctionappealtrialpatentleasecivil procedure
defendantjurisdictioninjunctionappealpatent

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Buddy Systems, Inc. v. Exer-Genie, Inc., 545 F.2d 1164, 22 Fed.R.Serv.2d 545

Facts

In 1968, Exer-Genie filed a patent infringement suit against Buddy Systems and others, seeking a preliminary injunction to prevent Buddy Systems from selling a competitive exercise device. The court granted the injunction contingent upon Exer-Genie posting a $100,000 security bond. After a trial, the injunction was made permanent, and the security was exonerated. Buddy Systems objected to the exoneration but did not appeal the injunction's issuance. Following an appeal that invalidated Exer-Genie's patent, Buddy Systems filed a suit to recover damages for the wrongful injunction, claiming jurisdiction under 28 U.S.C. § 1352.

In 1968 Exer-Genie brought suit against Buddy Systems and several other defendants for infringement of a patent used in the manufacture of an exercise device.

Issue

Whether a district court may entertain jurisdiction over a suit on an injunction bond after the bond has been exonerated.

The issue we must decide is whether a district court may entertain jurisdiction pursuant to 28 U.S.C. s 1352 over a suit on an injunction bond after the bond has been exonerated.

Rule

The court applied 28 U.S.C. § 1352, which grants jurisdiction to hear actions on bonds executed under federal law, specifically Rule 65(c) of the Federal Rules of Civil Procedure, which requires security for the issuance of a preliminary injunction.

Section 1352 grants jurisdiction to hear an 'action on a bond' executed pursuant to Rule 65(c), Fed.R.Civ.P.

Analysis

The court determined that since the bond had been exonerated, there was no existing bond upon which an action could be based. The district court's reasoning that the bond and the security were distinguishable was rejected, as the bond's enforceability ceased once the security was released. The court emphasized that a suit for wrongful issuance of an injunction requires an existing bond, and without it, jurisdiction under § 1352 could not be established.

The simple fact is that the bond had been exonerated; therefore, there was no bond upon which an action could be brought.

Conclusion

The appellate court reversed the district court's judgment, concluding that it lacked jurisdiction over the suit due to the exoneration of the bond.

We hold that the district court was without jurisdiction to hear this suit and therefore reverse.

Who won?

Exer-Genie, Inc. prevailed in the appeal because the court found that the district court did not have jurisdiction to hear the case regarding the exonerated bond.

Exer-Genie raises several issues in its appeal from this second judgment. We need consider only one: whether the district court had subject matter jurisdiction over the suit pursuant to section 1352.

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