Buddy Systems, Inc., a California Corporation v. Exer-Genie, Inc., a Corporation, and E. E. Holkesvick

Exer-Genie, Inc., and Holkesvick (Exer-Genie) appeal from a judgment awarding damages to Buddy Systems, Inc., for the wrongful issuance of a preliminary injunction obtained by Exer-Genie in a pri- or action. The issue we must decide is whether a district court may entertain jurisdiction pursuant to 28 U.S.C. § 1352 over a suit on an injunction bond after the bond has been exonerated. We hold that the district court was without jurisdiction to hear this suit and therefore reverse.

I

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. Exer-Genie moved for a preliminary injunction in order to restrain Buddy Systems from making or selling a competitive exercise device. The preliminary injunction was granted on the condition that Exer-Genie post security in the amount of $100,000. Exer-Genie filed a certificate of deposit and the district court issued a writ of injunction. Buddy Systems did not appeal from the issuance of the preliminary injunction.

After a trial on the merits, the district judge found that Exer-Genie’s patent was valid and had been infringed and therefore made…