EDWARD M. CHEN, United States District Judge
Plaintiff ActiveVideo Networks, Inc. ("AV") initiated this lawsuit against Trans Video Electronics, Ltd. ("TVE"), asserting claims for declaratory relief. More specifically, AV seeks a declaration that it does not infringe on two TVE patents, i.e., the '936 patent and the '801 patent, and further seeks a declaration that the two patents are invalid. Currently pending before the Court is TVE's motion to dismiss. In the motion, TVE challenges both subject matter jurisdiction and personal jurisdiction. According to TVE, subject matter jurisdiction is lacking because the letter TVE sent to AV, which prompted AV to file suit, was not enough to give rise to a case or controversy. As for personal jurisdiction, TVE argues that it is lacking because it has insufficient contacts with the forum, particularly in the last few years.
Having considered the parties' briefs and accompanying submissions, the Court hereby
Federal Rule of Civil Procedure 12(b)(1) provides that a defendant may move for a dismissal based on a lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). A party can make either a facial or a factual attack on subject matter jurisdiction. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.2004).
In the instant case, AV has filed a claim for declaratory relief. The Declaratory Judgment Act provides that, "[i]n a case of actual controversy within its jurisdiction,... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). "The phrase `a case of actual controversy' in the Act refers to the types of `cases' and `controversies' that are justiciable under Article III of the Constitution." Association for Molecular Pathology v. U.S. Patent & Trademark Office, 689 F.3d 1303, 1318 (Fed.Cir.2012), rev'd in part on other grounds by Association for Molecular Pathology v. Myriad Genetics, Inc., ___ U.S. ___, 133 S.Ct. 2107, 186 L.Ed.2d 124 (2013). Thus, in a declaratory judgment case, if there is no case or controversy, there can be neither a claim for declaratory relief nor Article III subject matter jurisdiction. See SanDisk Corp. v. ST Microelecs., Inc., 480 F.3d 1372, 1378 (Fed.Cir.2007) (stating that, because "[t]he `actual controversy' requirement of the Declaratory Judgment Act is rooted in Article III of the Constitution, ... our jurisdiction extends only to matters that are Article III cases or controversies").
In MedImmune, Inc. v. Genentech, 549 U.S. 118, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007), the Supreme Court examined — in the context of a patent license dispute — the Article III case or controversy requirement as its relates to the Declaratory Judgment Act. It explained that all that the declaratory judgment plaintiff must do to show a case or controversy is prove that 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.'" Id. at 127, 127 S.Ct. 764 (emphasis added). This controversy must be "`definite and concrete, touching the legal relations of parties having adverse legal interests,'" such that the dispute is "`real and substantial'" and "`admi[ts] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.'"
Since MedImmune, the Federal Circuit
The Federal Circuit has indicated that, for an affirmative act, "more is required than `a communication from a patent owner to another party, merely identifying its patent and the other's product line.' [But] [h]ow much more is required is determined on a case-by-case analysis." 3M, 673 F.3d at 1378-79.
In Cepheid v. Roche Molecular Sys., Inc., No. C-12-4411 EMC, 2013 WL 184125, 2013 U.S. Dist. LEXIS 7446 (N.D.Cal. Jan. 17, 2013), this Court took note of factors that have typically been considered by courts in making this determination:
1. the strength of any threatening language in communications between the parties;
2. the depth and extent of infringement analysis conducted by the patent holder;
3. whether the patent holder imposed a deadline to respond;
4. any prior litigation between the parties;
5. the patent holder's history of enforcing the patent at issue;
6. whether the patent holder's threats have induced the alleged infringer to change its behavior;
7. the number of times the patent holder has contacted the alleged infringer;
8. whether the patent holder is simply a holding company with no source of income other than enforcing patent rights;
9. whether the patentee refused to give assurance it will not enforce its patent;
11. the extent of the patent holder's familiarity with the product prior to suit;
12. the length of time that transpired after the patent holder asserted infringement; and
13. whether communications initiated by the declaratory judgment plaintiff have the appearance of an attempt to create a controversy in anticipation of filing suit.
See id. at *6-7, 2013 U.S. Dist. LEXIS 7446 at *18-20.
Notably, the Federal Circuit has commented on many of the above factors. For example, with respect to the first factor above, the court has emphasized that there need not be an explicit threat to sue for infringement or an explicit demand to acquire a license. This is because
Hewlett-Packard, 587 F.3d at 1362; see also 3M, 673 F.3d at 1379 (noting that the declaratory judgment defendant "effectively charged [the declaratory judgment plaintiff] with infringement") (emphasis added). And "[o]f course, if `a party has actually been charged with infringement of the patent, there is, necessarily, a case or controversy adequate to support [declaratory judgment] jurisdiction.'" Hewlett-Packard, 587 F.3d at 1362 (emphasis in original).
As for the third factor above, the Federal Circuit has noted that the fact that the patentee does not impose a deadline to respond to its communication is not dispositive. "While a patentee's imposition of a deadline is a circumstance to consider ..., [the Federal Circuit has] found that declaratory judgment jurisdiction existed in cases in which the patentee's communications did not impose strict deadlines." 3M, 673 F.3d at 1380. In 3M itself, the court noted that "it would make little sense if a deadline to respond were imposed on 3M [the alleged infringer]" because it had already denied infringement and "it was [the patent holder] Avery's turn to act — [and] it represented that claim charts were forthcoming." Id. The court added that, by stating that it would send claim charts, "Avery perhaps signaled its intent to escalate the dispute." Id.
For the ninth factor above, the Federal Circuit has also noted that a patentee's failure to give assurances that it will not enforce its patent is not dispositive. See Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed.Cir.2008) (stating that "[a] patentee has no obligation to spend the time and money to test a competitors' product nor to make a definitive determination, at the time and place of the competitors' choosing, that it will never bring an infringement suit"). However, the Federal Circuit has noted that even a statement that the patentee has no plan to sue does not necessarily eliminate a case or controversy. In SanDisk, for example, the court gave such a statement little weight because the patentee had
SanDisk, 480 F.3d at 1383.
Finally, it is worth noting that one factor that the Federal Circuit has explicitly rejected as a consideration is
Hewlett-Packard, 587 F.3d at 1363 (emphasis in original).
Before analyzing whether TVE has engaged in adequate affirmative acts to give rise to a case or controversy, the Court takes into account several Federal Circuit cases where the Federal Circuit did find sufficient affirmative acts.
Given the above standards and cases, there would clearly a case or controversy in the instant case if the Court were to consider solely the letter that TVE sent to AV on or about April 11, 2013. The letter states as follows:
Compl., Ex. C (letter) (emphasis added).
While the letter does not, as TVE points out, contain an explicit threat to sue for infringement, as noted above, an explicit threat is not necessary. Indeed, there need not be any kind of threat. So long as there is an actual charge of infringement, Hewlett-Packard, 587 F.3d at 1362 (stating that, "if `a party has actually been charged with infringement of the patent, there is. necessarily, a case or controversy adequate to support [declaratory judgment] jurisdiction'") (emphasis in original), or even an effective charge of infringement, see 3M, 673 F.3d at 1379 (noting that the declaratory judgment defendant "effectively charged [the declaratory judgment plaintiff] with infringement"), that is enough to give rise to a case or controversy, particularly where a specific infringing product is identified by the patentee. Here, at very least, there was an effective charge of infringement by TVE with respect to AV's CloudTV H5 products and affiliated services. In the letter, TVE states that "we believe that at least [these] products require a license under the '936 Patent and/or the '801 Patent." Compl., Ex. C (letter) (emphasis added). Clearly there would be no need for a license if the AV products did not
None of TVE's other arguments is persuasive either. For example, TVE suggests that one letter is not enough to establish a case or controversy, but Federal Circuit has never held such. Rather, the Federal Circuit cases indicate that it is the content of a letter that matters. For instance, in Association of Molecular Pathology, the facts consisted of (1) a single letter from the patent holder basically demanding a royalty for a license and (2) knowledge on the part of the alleged infringer that the patent holder had initiated patent infringement lawsuits against others. Based on these facts — which are essentially much the same as the facts in the instant case — the Federal Circuit determined that there was subject matter jurisdiction.
TVE also puts significance on the fact that, in its letter, it never specified that any adverse consequences would flow if AV failed to comply with the thirty-day deadline. But similar to above, there is no Federal Circuit authority holding that a demand for a response within a certain deadline must be accompanied by a threat of adverse consequences before it can be given any weight. Indeed, the fact that a deadline is imposed in and of itself implies a threat of adverse consequences. And in any event, adverse consequences here were clearly put into play by the fact that TVE referenced, in its letter, the multiple patent infringement lawsuits that it was already litigating. That inference is strengthened by TVE's reference to the alternative to negotiating a license — the incurrence of "unnecessary expenses associated with other forms of resolving an issue." Compl., Ex. C (letter) (emphasis added).
In its papers, TVE makes the further point that there has been no history of litigation or contact between the parties. While that may be true, that is hardly dispositive and no case so holds. That fact does not detract from the content of the letter. Nor does it detract from the fact that TVE has engaged — as it admits in the letter — in multiple patent infringement lawsuits against other parties.
As for TVE's repeated argument that AV "only imagines that TVE was on the verge of filing suit" and that nothing "could reasonably indicate that a patent infringement suit was imminent," Mot. at 8, that argument is unavailing because it
Finally, the primary cases on which TVE relies are either distinguishable and/or actually lend support to AV's position. For instance:
The only question remaining for the Court is whether there is subject matter jurisdiction now that TVE has submitted a covenant not to sue. The most recent covenant not to sue offered by TVE reads as follows:
Docket No. 43 (Ex. D) (Djurovich Decl. ¶ 4). AV contends that the above covenant not to sue is insufficient to divest this Court of subject matter jurisdiction; AV asserts that a covenant would be adequate only if along the lines of the following:
Docket No. 43 (Ex. C) (letter).
There are several differences between the two covenants submitted by the parties. For example, AV's covenant refers to importation while TVE's does not. Also, TVE's covenant is restricted to the CloudTV H5 product and related services; AV's covenant seems broader, extending to any AV product or service related to the CloudTV H5 platform, its components, and its application. However, the critical difference between the two covenants is whether AV's customers are protected from suit for infringement. Under TVE's covenant, AV's customers are not protected; under AV's covenant, its customers are.
As to this issue, the Court first takes note of the Federal Circuit's decision in Microchip Technology Inc. v. Chamberlain Group, 441 F.3d 936 (Fed.Cir.2006).
The Court further takes note of Arris Group, Inc. v. British Telecommunications PLC, 639 F.3d 1368 (Fed.Cir.2011), where the Federal Circuit stated:
Id. at 1375. See Arkema Inc. v. Honeywell Int'l, 706 F.3d 1351, 1357 (Fed.Cir. 2013) (clarifying that "Arris did not set forth an overarching test for a supplier's standing to seek a declaratory judgment regarding its potential indirect infringement liability; rather, it identified circumstances that have been held sufficient (rather than necessary) for declaratory judgment jurisdiction") (emphasis omitted).
In the case at bar, it appears that AV's customers could be direct infringers simply by using AV's Cloud TV H5 products/services. However, as TVE has given up any claim of indirect infringement (or even direct) against AV, AV would only have an adverse legal interest vis-a-vis TVE if AV was obligated to indemnify its customers — e.g., under an indemnity agreement or by law. See, e.g., Arris Group, Inc., 639 F.3d at 1375; Visto Corp. v. Sproqit Techs., Inc., No. C-04-0651 EMC, 2006 U.S. Dist. LEXIS 96173, at *15-16 (N.D.Cal. Oct. 4, 2006) (rejecting argument that covenant not to sue was insufficient because it did not extend to, e.g., customers; noting that accused infringer had not provided any evidence that it had an indemnification agreement with any customer); Barnhardt Mfg. Co. v. Illinois Tool Works, Inc., No. 3:08-CV-617-W, 2010 WL 1571168, at *5-6, 2010 U.S. Dist. LEXIS 37729, at *16-17 (W.D.N.C. Apr. 16, 2010) (examining whether declaratory plaintiff would be required to indemnify its customers under case law and statutory law).
AV has submitted evidence that it has indemnity obligations with at least thirteen customers. See Docket No. 43 (Sereda Decl. ¶¶ 4-5). It has also submitted evidence that it often indemnifies its customers pursuant to customer agreements. See Docket No. 29 (Sereda Decl. ¶ 6). While TVE has challenged the evidence (e.g., disputing the interpretation of an indemnification provision and exceptions thereto
At the hearing, TVE argued that indemnity obligations on the part of AV still would not be enough to give rise to a case
Compl., Ex. C (letter) (emphasis added).
Furthermore, TVE steadfastly refuses to include AV's customers in its covenant not to sue, yet has failed to explain why it has chosen to do so if it has no plans to sue. While, as noted above, this fact alone is not dispositive, it is a relevant factor. The Court therefore concludes that AV has established a prima facie case of subject matter jurisdiction.
Federal Rule of Civil Procedure 12(b)(2) provides that a defendant may move for a dismissal based on a lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). Where a court considers only written materials (i.e., there is no full evidentiary hearing), a plaintiff need only make a prima facie showing of jurisdictional facts in order to overcome a defendant's motion to dismiss. See Data Disc, Inc. v. Systems Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir.1977). In deciding whether, in the instant case, this Court has personal jurisdiction over TVE, it must look to Federal Circuit, and not Ninth Circuit, precedent because patent law is implicated. See Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361 (Fed.Cir. 2006) (stating that "[t]he issue of personal jurisdiction in a declaratory action for non-infringement is `intimately related to patent law' and thus governed by Federal Circuit law regarding due process").
In the instant case, AV does not make any assertion that TVE is subject to general jurisdiction in this forum. Rather, its only contention is that there is specific jurisdiction over TVE. In support of this contention, AV points to the following facts: (1) TVE sent the letter accusing AV of infringement to AV in San Jose, California; (2) TVE has litigated multiple cases (a total of six) in this District regarding the very same or related patents; and (3) TVE has entered into licensing agreements with
Under Federal Circuit law, it is clear that "the sending of an infringement letter, without more, is insufficient to satisfy the requirements of due process when exercising jurisdiction over an out-of-state patentee." Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1361 (Fed.Cir.2001). This is because, "[a]s a matter of patent law policy,... `principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.'" Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 789 (Fed. Cir. 2011).
But "certain other patent enforcement actions, taken in conjunction with the issuance of cease-and-desist letters, are sufficient to support specific jurisdiction over a patentee in a foreign forum." Id. This principle was most clearly articulated in the Federal Circuit's decision Avocent Huntsville Corp. v. Aten International Co., 552 F.3d 1324 (Fed.Cir.2008). In Avocent, the Federal Circuit noted that, "[f]or the exercise of personal jurisdiction to comport with fair play and substantial justice, there must be other activities directed at the forum and related to the cause of action besides the letters threatening an infringement suit." Id. at 1333 (internal quotation marks omitted). Notably, those other activities need not be directed at the declaratory judgment plaintiff who is a resident of the forum. See id. at 1334. But those activities must
Id. The Avocent court noted, however, that,
Id. at 1335. See, e.g., Radio Sys., 638 F.3d at 790 (noting that "Mr. Sullivan's correspondence with Radio Systems was focused on generating a market for the Wedgit, not on enforcing or defending the '141 patent").
In the instant case, it is clear that TVE has engaged in judicial patent enforcement (with respect to the patents at issue or a related patent) in this District multiple times. As reflected in the parties' papers, it has initiated six patent infringement lawsuits in the District. TVE tries to argue that these lawsuits should not be given much, if any weight, because they are too old — the last case concluded in November 2011, and "no new cases [have been] initiated for almost four years."
As for TVE's licensing agreements with forum residents Apple and DirecTV, they are also part of the calculus. While there is nothing to indicate that those licenses were exclusive licenses, and while a patent holder's commercialization activity does not count as patent enforcement activity, here, TVE admits that the licenses resulted from patent infringement suits that TVE brought against the respective companies, not part of the regular business of commercialization. See Mot. at 16. Thus, the licenses are related to patent enforcement activity.
TVE fairly points out that the Apple lawsuit was not brought in this forum but rather was brought in the District of the District of Columbia. According to TVE, because the lawsuit was brought in a different forum, the license that resulted from the lawsuit should not count, even if the licensee (Apple) is a resident of the forum. See Mot. at 17 (citing CommVault Sys., Inc. v. PB & J Software, No. C-13-1332 MMC, 2013 WL 3242251, 2013 U.S. Dist. LEXIS 89168 (N.D.Cal. June 25, 2013)). This argument is not without some force — although the Court takes note that CommVault did not address that specific situation. Rather, in CommVault, Judge Chesney simply made note that a suit against a forum resident (California) in a different forum (Texas) should not be part of the calculus in determining whether there is personal jurisdiction within the forum (California) in that suit. CommVault did not address whether such a suit might inform the overall calculus of whether the patentee has engaged in affirmative acts of enforcement in the forum.
Even if the Apple licensing agreement should not count for the reason articulated by TVE, that does not negate the fact that there was a licensing agreement with DirecTV, a forum resident, that resulted from a lawsuit in this District, and not a different forum. To the extent TVE tries to argue that the DirecTV license should still be disregarded because the license has nothing to do with AV, see Mot. at 16 (noting that the "licenses are not directed at ActiveVideo" and "are unrelated to ActiveVideo's activities"), that argument is without merit. As noted above, the Federal Circuit has specifically noted that "other
Finally, TVE contends that, even if the Court finds that there are sufficient minimum contacts based on its patent enforcement activity in this District, the Court must still evaluate "whether assertion of personal jurisdiction [would be] reasonable and fair.'" See Inamed, 249 F.3d at 1360; see also International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (stating that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice'"). On this factor, the burden lies within TVE, as the declaratory judgment defendant, to convince the Court that the exercise of personal jurisdiction over it is not reasonable and fair. See Inamed, 249 F.3d at 1363. More specifically, TVE has the burden of "`present[ing] a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Most such considerations usually may be accommodated through means short of finding jurisdiction unconstitutional. For example, ... a defendant claiming substantial inconvenience may seek a change of venue.'" Id. (emphasis added).
Id. The Federal Circuit has noted that "cases where a defendant may defeat otherwise constitutional personal jurisdiction should be `limited to the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum.'" Id. (emphasis added). See, e.g., id. at 1364 (stating that, "[g]iven California's substantial interest in `providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors,' and [declaratory judgment plaintiff] Inamed's obvious interest in being able to obtain relief in such convenient forum, we conclude that [declaratory judgment defendant] Dr. Kuzmak's has failed to present `a compelling case' that the exercise of jurisdiction would be unreasonable").
In the instant case, TVE has not met its burden of making a compelling case of unreasonableness. For example, TVE argues that factor (1) above weighs in its favor because it its a small D.C.-based company and is already litigating five separate matters in the District of Delaware regarding the patents at issue. (The Delaware cases were initiated from December 2012 to January 2013.) See Mot. at 2-3, 18. But, as noted above, the Federal Circuit has indicated that "a defendant claiming substantial inconvenience may seek a
As for factors (2), (3), and (5), TVE contends that any interest on the part of California or AV is limited because the Court has before it what is, in essence, a premature business dispute. See Mot. at 19. But as discussed above, based on the letter of April 11, 2013, that TVE sent to AV alone, there is clearly a case or controversy. Furthermore, AV has a substantial relationship with this forum given that its principal place of business is in California. For that reason as well, California has an interest in adjudicating this dispute.
Finally, as to factor (4) above, TVE contends that it would be a burden for both this court and the court in Delaware to address the same patents. See Mot. at 1; Reply at 14. But this Court has already addressed at least one patent previously (the '801 patent), and other courts in this District have also addressed one of the patents or related patents. Moreover, it is not uncommon for the same patents to be litigated in different fora, even at the same time. Finally, even though the Delaware court would be addressing the same patents, that does not mean, e.g., that the same claim terms would be construed as there are different defendants in those cases.
For the foregoing reasons, the Court denies TVE's motion to dismiss based on lack of subject matter jurisdiction and personal jurisdiction.
This order disposes of Docket No. 8.
IT IS SO ORDERED.
