Court Grants Motion to Dismiss for Lack of Case or Controversy Even Though Patent Holder Did Not Provide Covenant Not to Sue

Tech Pharmacy filed a patent infringement action against Defendant Alixa Rx LLC and Defendant Golden Gate National Senior Care LLC d/b/a Golden LivingCenters (collectively, “Defendants”). Tech Pharmacy subsequently filed its Second Amended Complaint to add the Fillmore Defendants as named defendants with respect to the misappropriation of trade secret, breach of contract, and related state tort claims.

In response, the Fillmore Defendants asserted counterclaims for declaratory judgment of invalidity, non-infringement, and inequitable conduct directed at Tech Pharmacy’s patents. Tech Pharmacy then filed a motion to dismiss the declaratory judgment claims for lack of subject matter jurisdiction because Tech Pharmacy had not asserted the patent claims against the Fillmore Defendants.

The district court then explained that the Declaratory Judgment Act, provides, “In a case of actual controversy within its jurisdiction . . . any court of the United States . . . 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 party seeking a declaratory judgment bears the burden of proving “whether 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, Inc. v. Genetech, Inc., 549 U.S. 118, 127 (2007) (internal quotation marks omitted) (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). A patentee can moot a controversy between the parties by disclaiming any intent to sue the opposing party. Organic Seed Growers & Trade Ass’n v. Monsanto Co., 718 F.3d 1350, 1358 (Fed. Cir. 2013).

Here, the district court concluded that Tech Pharmacy “disclaimed any intent to sue the Fillmore Defendants for patent infringement. Tech Pharmacy states in its motion to dismiss that it ‘has never threatened a patent infringement suit against [the Fillmore Defendants], and they are not known to practice any technology that could conceivably expose them to an infringement charge.'” Tech Pharmacy also stated that it “has not sued the Fillmore Defendants for patent infringement because Tech Pharmacy is “unaware of any facts that would give rise to such a claim”

Based on these statements, the district court concluded that “[w]hile Tech Pharmacy’s representations are not a covenant not to sue the Fillmore Defendants, taken together they disclaim any intent to sue the Fillmore Defendants for patent infringement.”

Accordingly, the district court determined that the Fillmore Defendants lacked standing to assert its patent-related counterclaims and dismissed the counterclaims.

Tech Pharmacy Services, LLC v. Alixa RX LLC, Case No. 4:15-CV-00766 (E.D. Tex. Dec. 2016)