DYK, Circuit Judge.
Arris Group, Inc. ("Arris") brought suit against British Telecommunications, PLC ("BT") seeking a declaratory judgment that claims in BT's patents—U.S. Patent Nos. 5,142,532 ("'532 patent"); 5,526,350 ("'350 patent"); 6,538,989 ("'989 patent"); and 6,665,264 ("'264 patent") (collectively the "patents-in-suit")—are invalid and not infringed by Arris. Arris also sought an injunction preventing BT from suing Arris or its customers for infringement of the patents-in-suit. The United States District Court for the Northern District of Georgia dismissed for lack of subject matter jurisdiction, finding that there was no Article III case or controversy between the parties. Arris Group, Inc. v. British Telecomm. PLC, 694 F.Supp.2d 1330, 1332-33 (N.D.Ga.2010). Because we conclude that an actual controversy existed between Arris and BT, we reverse the district court's decision and remand for further proceedings.
The patents-in-suit claim systems and methods that relate in particular to cable networks that offer Voice over Internet Protocol ("VoIP") telephone services. Plaintiff-Appellant Arris develops and manufactures cable telephony and data products for cable system operators for use in VoIP systems. This declaratory judgment action stems from BT's allegations that Cable One, Arris' customer, has infringed the patents-in-suit by using equipment purchased from Arris to implement VoIP services on Cable One's network.
VoIP is a communications protocol under which voice data is transmitted over a packet-switched network such as the internet, rather than over the traditional Public Switched Telephone Network ("PSTN"). To originate a VoIP telephone call, the analog voice signal must first be digitized and encoded into packets. In Cable One's network, this essential function is performed by devices sold by Arris known as Embedded Multimedia Terminal Adapters ("E-MTAs"). An E-MTA is a user-end device that combines a Cable Modem ("CM") and a Multimedia Terminal Adapter ("MTA") to allow for the connectivity of both Ethernet-compatible devices and traditional analog telephones. The MTA converts the telephone's analog voice signal into digital IP packets, delivers a dial tone, and manages other essential call functions.
In addition to E-MTAs, Cable One's VoIP network uses other Arris products known as Cable Modem Termination Systems ("CMTSs"). A CMTS is an electronic device, typically used at a cable company's head-end or hub-site, which communicates with multiple subscribers' cable modems and routes traffic to and from the internet. The use of CMTSs in Cable One's network is essential to the functionality of its VoIP services. Cable One's network and Arris' CMTS and E-MTA products all operate in accordance with the industry standards of (1) Data Over Cable Service Interface Specification ("DOCSIS"), which defines interface standards for cable modems and supporting equipment; and (2) PacketCable, which is an extension of DOCSIS used for VoIP.
Following the October 23 meeting, Cable One sent a letter to Arris in November 2007 notifying Arris of BT's infringement accusations. Cable One additionally demanded in the letter that Arris "defend, indemnify and hold harmless Cable One from these assertions of infringement." J.A. 588.
On January 18, 2008, BT "proposed ... a face-to-face meeting with Cable One and its vendors ... to determine if we have a basis for further licensing discussions." J.A. 301. In late February 2008, Cable One requested that Arris be included in the next meeting. The meeting was held on March 14, 2008, at Arris' office in Suwanee, Georgia. During the meeting, BT presented the same 118-page presentation of BT's infringement contentions that it had presented to Cable One at the Phoenix meeting.
The parties—including Arris—met again at Arris' Suwanee office on August 29, 2008, where they discussed potential licensing for Cable One. At the meeting, Arris presented a response to BT's infringement contentions. Arris contended that certain relevant claim limitations were not met by Arris' CMTS or E-MTA products used in Cable One's network. See J.A. 730, 740-41, 749, 751, 760-61.
Following the August meeting, BT requested that Arris send "formal rebuttal information" regarding its infringement contentions, J.A. 590, and it further requested a telephone conference with the parties' "technical people," J.A. 592. On September 17, 2008, Arris sent BT further materials containing its non-infringement arguments, seeking to absolve Cable One of infringement by demonstrating how components within Cable One's network did not meet one or more of the limitations in the claims-at-issue. Two conference calls took place thereafter on September 24, 2008, and November 13, 2008, during which Arris presented its non-infringement arguments and BT responded to them.
On November 24, 2008, BT requested that both Arris and Cable One agree to receive a specific licensing proposal under the terms of a nondisclosure agreement BT had entered into with Cable One. Arris and Cable One agreed, and on December 15, 2008, BT sent copies of its licensing
On March 31, 2009, Arris filed this declaratory judgment action in the United States District Court for the Northern District of Georgia, seeking: (1) a declaration that Arris does not infringe the patents-in-suit; (2) an injunction preventing BT from instituting infringement actions against Arris or its customers; and (3) a declaration that the patents-in-suit are invalid. The district court found that there was no Article III case or controversy between Arris and BT, because throughout the parties' meetings and conversations, BT "only discussed Cable One's infringement and did not discuss any infringement by Arris." Arris, 694 F.Supp.2d at 1331-32; see also id. at 1331, 1332, 1333. In the district court's view, "the defendant's actions [were] directed [solely] toward Cable One, Arris' customer, rather than Arris itself," which the court found "[did] not constitute a real and immediate injury for Article III jurisdiction." Id. at 1333. The court accordingly dismissed Arris' declaratory judgment action for lack of subject matter jurisdiction. Id.
Arris appealed the district court's decision to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
We review the district court's dismissal for lack of subject matter jurisdiction de novo. Air Measurement Techs. Inc. v. Akin Gump Strauss Hauer & Feld, LLP, 504 F.3d 1262, 1267 (Fed.Cir.2007). A party has standing to bring an action under the Declaratory Judgment Act if an "actual controversy" exists, 28 U.S.C. § 2201(a), which "is the same as an Article III case or controversy." Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1338 (Fed.Cir.2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-41, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). The burden is on the party claiming declaratory judgment jurisdiction to establish that an Article III case or controversy existed at the time the claim for declaratory relief was filed. King Pharm., Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1282 (Fed. Cir.2010); Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed.Cir. 2007).
This case again presents a question of standing to bring a declaratory judgment action for a determination of non-infringement and invalidity. In MedImmune, Inc. v. Genentech, Inc., the Supreme Court rejected our prior, more stringent standard for declaratory judgment standing insofar as it required a "reasonable apprehension of imminent suit." 549 U.S. 118, 132 n. 11, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007); see also ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345, 1347-48 (Fed.Cir.2011) (recognizing MedImmune's rejection of the reasonable apprehension test); Teva Pharm., 482 F.3d at 1338-39 (same); SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1378-79 (Fed.Cir.2007) (same). Under the Court's new standard, an Article III case or controversy exists when "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, 549 U.S. at 127, 127 S.Ct. 764 (internal quotation marks and citation omitted). The dispute must be "definite and concrete, touching the legal relations of parties having adverse legal interests," such that the dispute is "real
Arris contends that it has standing and that there is an Article III case or controversy simply because it has suffered economic injury as a result of infringement threats made by BT against Arris' customer Cable One. This, says Arris, creates a risk that Cable One will cease purchasing Arris' CMTS and E-MTA products for its VoIP operations. While economic injury may confer standing in cases challenging government action,
We have recognized that, where a patent holder accuses customers of direct infringement based on the sale or use of a supplier's equipment, the supplier has standing to commence a declaratory judgment action if (a) the supplier is obligated to indemnify its customers from infringement liability, or (b) there is a controversy between the patentee and the supplier as to the supplier's liability for induced or contributory infringement based on the alleged acts of direct infringement by its customers.
Here, BT has accused Cable One of infringing system and method claims of the patents-in-suit. When the holder of a patent with system claims accuses a customer of direct infringement based on the customer's making, using, or selling of an allegedly infringing system in which a supplier's product functions as a material component, there may be an implicit assertion that the supplier has indirectly infringed the patent.
Pursuant to § 271(c) of the Patent Act, an act of contributory infringement may include either the sale of a "component of a patented machine, manufacture, combination or composition" (including a component used in a claimed system), or the sale of a "material or apparatus for use in practicing a patented process." 35 U.S.C. § 271(c). This covers both contributory infringement of system claims
There is no question here that BT accused Arris' customer Cable One of direct infringement of various system and method claims, including claims 1-15 of the '350 patent; claims 19-20 of the '989 patent; claim 23 of the '264 patent; and claims 1, 8-12, 15, 18, 20-21, 26-28, 30, 37-40, 42, 44, and 46-48 of the '532 patent. According to BT, the parties' discussions were limited solely to infringement by Cable One's network and the licensing of Cable One; BT contends "[t]here was no discussion of any potential infringement of the Patents-in-Suit, either directly or indirectly (i.e., inducing or contributing to infringement), by Arris." Appellee's Br. 7. The 118-page presentation of BT's infringement contentions, however, paints a different picture. While the presentation did not expressly
J.A. 184. The 118-page presentation then proceeded to discuss Arris' CMTS and E-MTA products on at least 77 pages, including in multiple claim tables purporting to match components of Cable One's network to elements of the system claims and method steps of the method claims of the patents-in-suit.
For example, with respect to the '989 patent, BT's presentation purported to "present two claims tables: Independent Claim 19—Reading on the operation of E-MTAs" and "Dependent Claim 20 — Reading on the operation of CMTSs." J.A. 208. Claim 19 claims "[a] packet network comprising one or more packet network elements, each packet network element comprising" a number of claimed limitations. '989 Patent col.21 ll.48-54 (emphases added). BT's analysis of claim 19 stated that the "one or more packet network elements is the E-MTA." J.A. 212 (providing a picture of Arris' E-MTA and a link to Arris' website) (emphasis in original). BT's claim table then purported to match every limitation of claim 19's "packet network element" to the functionality of Arris' E-MTA within Cable One's network. See J.A. 210-32. Similarly, claim 20 recites "[a] network as claimed in claim 19 further comprising one or more host elements ..., each said host element comprising" a number of limitations. '989 Patent col.22 ll.15-30 (emphases added). BT's presentation asserted that "[t]he CMTS is a Host Element in accordance with claim 20," J.A. 233 (emphasis added), and its claim table matched every limitation of claim 20's "host element" to the functionality of the "Arris Cadant® C4 CMTS" used in Cable One's network, J.A. 236. See J.A. 234-51. This section of BT's presentation concluded: "[A]s shown in the first claim table, Cable One's configuration and use of the CM component within E-MTAs infringes claim 19. In addition, Cable One's configuration and use of CMTSs with E-MTAs infringes claim 20." J.A. 252.
BT's presentation gave similar treatment to many of the asserted claims of the
At a minimum, BT identified Arris' CMTSs or E-MTAs (or the CM or MTA sub-components of the E-MTA) as satisfying at least one essential element or method step for every asserted claim analyzed in its presentation. BT's extensive focus on Arris' CMTS and E-MTA products in its infringement contentions implies that Arris' products are being used as a "material part" of the allegedly infringed invention—one of the required elements of contributory infringement under 35 U.S.C. § 271(c). Moreover, BT alleges that Arris' CMTSs and E-MTAs were designed specifically for use under the DOCSIS and PacketCable standards for VoIP,
In addition to the content of BT's infringement accusations against Cable One, we find it relevant that Arris was directly and substantially involved in BT's infringement and licensing negotiations. While direct communication between a patentee and a declaratory plaintiff is not necessary to confer standing, see Arrowhead, 846 F.2d at 736 ("[I]f the circumstances warrant," an actual controversy "may be found in the absence of any communication from the defendant to the plaintiff."), the nature and extent of any communications between the declaratory plaintiff and the patentee are certainly relevant factors to consider when evaluating whether there is an Article III case or controversy between the parties. Here, the communication to Arris of BT's infringement contentions was direct and repetitive. Arris was included in the latter two of the three meetings between BT and Cable One—both of which were held at Arris' office in Suwanee, Georgia. At the second meeting, BT presented the same 118-page presentation of infringement contentions that it had previously presented solely to Cable One at the first meeting
BT makes several arguments as to why there is no Article III case or controversy between it and Arris. None of them is convincing. First, BT argues the district court properly held that no case or controversy existed between it and Arris because BT did not explicitly accuse Arris itself of direct or indirect infringement. But such an express accusation is unnecessary. As we have repeatedly held, "a specific threat of infringement litigation by the patentee is not required to establish jurisdiction, and a `declaratory judgment action cannot be defeated simply by the stratagem of a correspondence that avoids magic words such as "litigation" or "infringement."'" ABB Inc., 635 F.3d 1345, 1347-48 (quoting Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed.Cir.2009) (holding that actual controversy as to infringement existed where patent owner sent plaintiff two letters seeking "to discuss" the patent)). Here, even in the absence of an express accusation against Arris, we think the circumstances indicate there is a dispute between Arris and BT concerning Arris' liability for contributory infringement that is sufficient to constitute an Article III case or controversy.
Second, BT argues that its allegations against Cable One should not be construed as including any implicit assertions of indirect infringement by Arris because BT included an express disclaimer of such in its infringement contentions. BT's 118-page presentation repeatedly included the following statement:
J.A. 178, 192, 206, 253, 270 (emphasis added). We are not persuaded by BT's disclaimer. Far from suggesting that BT did not have a claim against Arris, the disclaimer's use of the word "particular" appears to suggest that some supplier or suppliers are accused. It is clear that the accused supplier is Arris. BT's infringement contentions focused primarily on Arris' equipment, and BT expressly excluded the equipment of Arris' main competitor Cisco from its allegations. Arris and Cisco are direct competitors who sell similar
Third, BT surprisingly appears to contend that Arris' burden as the declaratory judgment plaintiff includes the burden of presenting evidence that Arris' actions indirectly infringe the patents-in-suit. Ironically, BT overlooks the fact that the very purpose for an accused infringer to bring a declaratory judgment action is to seek a judicial determination that a coercive claim by the patent holder would not succeed on the merits. While a declaratory plaintiff indeed has the burden of "demonstrating [that] an actual case or controversy" exists, King Pharm., 616 F.3d at 1282, that burden does not extend to showing that the defendant holds meritorious positions on the issues in controversy. As we have stated, "[i]t [would be] incongruous to require that one seeking a declaration of noninfringement prove its process or product is the `same as' or `identical' to the patented process or product." Arrowhead, 846 F.2d at 738. "To require declaratory judgment plaintiffs to allege or show that their products or processes are infringements ... would limit the judgments they seek to declarations of invalidity or unenforceability." Id. at 738 n. 10. The Declaratory Judgment Act is not so limited.
Finally, BT suggests that it has agreed not to sue Arris for infringement. In a line of cases beginning with Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059-60 (Fed. Cir.1995), we have held that a patentee's grant of a covenant not to sue a supplier for infringement can eliminate the supplier's standing to bring a declaratory judgment action.
Accordingly, we find that BT's infringement accusations against Cable One carried the implied assertion that Arris was committing contributory infringement, and BT repeatedly communicated this implicit accusation directly to Arris during the course of a protracted negotiation process. Arris certainly "had good reason to fear that it might be liable for contributory infringement." Sticker Indus., 367 F.2d at 747; see also ABB Inc., 635 F.3d 1345, 1348-50. From our consideration of "all the circumstances," MedImmune, 549 U.S. at 127, 127 S.Ct. 764, there is an Article III case or controversy between Arris and BT regarding Arris' potential liability for contributory infringement.
We reverse the district court's dismissal of this case for lack of subject matter jurisdiction and remand for further proceedings consistent with this opinion.