Plaintiff filed a declaratory judgment action of non-infringement after it received a letter from IP Navigation Group ("IP Nav"). The letter invited the plaintiff to engage in a licensing discussion regarding the patent or patent of IP Nav's client, which remained anonymous. After filing the declaratory judgment, the plaintiff sought and was granted permission by the district court to serve a subpoena on IP asking IP Nav to identify the anonymous patent holder along with the patent numbers for the patents referenced in the letter.
IP Nav then filed a motion to quash the subpoena in the United States District Court for the Eastern District of Texas, arguing that the subpoena was invalid for lack of subject matter jurisdiction. The district court in Texas issued an order finding that IP Nav had raised "substantial questions" regarding the district court's jurisdiction but determined it was appropriate for the district court in Wisconsin where the action was pending to determine that issue.
After quoting the "Duck Test"--"if it walks like a duck, swims like a duck and quacks like a duck, it's a duck"--the district court analyzed the recent United States Supreme Court and Federal Circuit decisions on declaratory judgment. The district court noted that in "general, a communication from a patent owner to another party that merely identifies its patent and the other party's product line is insufficient to establish declaratory judgment jurisdiction." The district court also noted that "a party cannot defeat declaratory judgment jurisdiction merely by 'the stratagem of a correspondence that avoids the magic words such as 'litigation' or 'infringement.'" Rather, the "operative question is whether the patent owner engaged in 'conduct that can be reasonably inferred as demonstrating intent to enforce a patent.'"
Focusing on that operative question, the district court stated that "[s]ome might look at the silky wording of IP Nav's letter to Renaissance and see a close question; this court, however, sees an unmistakable and intentional warning shot across the bow." The district court focused particularly on the language in the letter stating "we are focused on addressing these issues without the need for costly and protracted litigation" and "our client's preferred approach is to conclude licensing discussions without resorting to litigation. We hope you share this objective."
The district court found that the "implied 'or else!' oozes from this letter like lye from lutefisk. To paraphrase an observation attributed to Anton Chekhov, you don't hang a gun over the mantle in Act I unless someone is going to fire it in Act III."
Accordingly, the district court concluded that it had subject matter jurisdiction over the declaratory judgment action. "In sum, the facts and circumstances, viewed through the lenses of common sense, experience and the case law, establish that IP Nav's meticulous attempt to create plausible deniability of any intent by Doe to sue Renaissance is futile and unpersuasive. The actual and intended message to Renaissance is loud and clear: negotiate a license with Doe quickly and confidentially or expect Doe to sue you. This case presents a sufficiently real and immediate controversy to establish declaratory judgment jurisdiction."
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.