Opinion
Civil Action No. 3:01-CV-1222-L.
May 6, 2002
MEMORANDUM OPINION AND ORDER
Before the court are Defendant's Motion to Dismiss or, in the Alternative, for a Transfer to the Northern District of California, filed July 23, 2001; and Plaintiffs Motion for Summary Judgment, filed July 17, 2001. After having considered the parties' motions, the evidence submitted, and the applicable law, the court grants Defendant's Motion to Dismiss and denies without prejudice Plaintiff's Motion for Summary Judgment.
I. Factual and Procedural Background
Digital Recorders, Inc. ("DRI") filed this declaratory judgment action against NextBus Information Systems, Inc. ("NextBus") on June 25, 2001, seeking a declaration regarding the scope of Nextbus's United States Patent No. 6,006,159 (the '159 patent). Shortly after filing its complaint, DRI moved for summary judgment. NextBus responded with a motion to dismiss for lack of subject matter jurisdiction.
NextBus, a California corporation with its principal place of business in California, owns the 159 patent. which describes a system to inform passengers regarding the status and arrival time of public transportation vehicles. The system couples a central processor with a global positioning device. As the global positioning device receives the vehicle's location, the central processor estimates its arrival time by evaluating factors such as traffic and weather conditions. All of this information, including the vehicle's estimated time of arrival, its current location, and other news and information, is displayed at bus stops and made accessible to personal computers, telephones, and pagers.
On February 7, 2001, NextBus filed suit in the Northern District of California, alleging that DRI, a North Carolina corporation with its principal place of business in Dallas, Texas, had developed and was distributing a system that infringed the '159 patent (the "February 7th action"). Specifically, NextBus alleged that DRI's "Talking Bus" system employed global positioning technology to locate public transit vehicles along their routes, and from this information, provided passengers with audible announcements of the vehicle's position and upcoming stops. NextBus alleged DRI distributed this system widely in California, including to the San Francisco International Airport for use on its shuttle buses. Additionally, NextBus alleged that DRI acquired an exclusive license from the University of Washington to develop systems called "MyBus" and "BusView." The "MyBus" technology collects vehicle location information and calculates estimated arrival times. The "BusView" technology displays public transit information on computerized maps. NextBus alleged that DRI is combining or has combined these technologies with its "Talking Bus" system to create a passenger information system that infringes the '159 patent.
DRI moved to dismiss the February 7th action for lack of ripeness, contending the device or system that allegedly infringed the '159 patent did not exist. On April 12, 2001, the Northern District of California heard argument on DRI's motion, in which counsel for DRI confirmed that no infringing device existed or that DRI was engaged in any further effort to develop such a device or system. Apparently. based on DRI's arguments in open court and on private discussions between the parties, NextBus voluntarily dismissed the February 7th action without prejudice on May 16, 2001, before the Northern District of California ruled on DRI's then pending motion to dismiss.
Specifically, counsel for DRI stated
[T]he license which DRI has acquired from University of Washington is a panorama of technology. It may have within it a prediction function, but DRI is not required and does not plan to implement that function. Other aspects of the technology are what they are looking at. And the prediction part is something they have no interest in.
So just because we have a license under technology which has myriad component parts, does not mean we have any intention of using any of those component parts, have never suggested we are going to use any of the component parts that they have objected to.
So until the system is designed, which it is not, until the system is marketed, which it has not been, until the system exists, there is no basis for a patent infringement claim or an unfair competition claim.
. . . What DRI does and plans to do is to provide information as to where the bus is. That's it. Nothing more.
. . . We don't say when, and have no plan 10 say when, and have no plan to make that bridge.See App. at 67-69 (emphasis added).
On June 25, 2001, slightly over one month after NextBus voluntarily dismissed its suit in California, DRI filed the present declaratory action in the Northern District of Texas, contending that DRI "is under the constant threat of imminent litigation due to [NextBus's] allegations that [DRI's] technology development efforts constitute infringement of the '159 patent." Pl.'s Compl. ¶ 9. DRI further contends that because NextBus voluntarily dismissed the February 7th action, "the issue of [DRI's] alleged infringement of the '159 patent remains unresolved." Id. Shortly after receiving DRI's complaint, NextBus filed suit in the Northern District of California, reasserting in substantial part the claims it made in its earlier filed action.
II. Analysis
NextBus argues the court lacks subject matter jurisdiction over DRI's declaratory action because there is no "case or controversy." The Declaratory Judgment Act ("the Act") provides in pertinent part:
In 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 Act requires an actual controversy between the parties before a federal court may exercise its jurisdiction. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-41 (1937). The declaratory plaintiff bears the burden of proving an actual controversy, Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479, 1481 (Fed. Cir. 1998), and must demonstrate "that the conflict be real and immediate." Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 735 (Fed. Cir. 1988). When a putative patent infringer seeks a declaration of patent rights against a patentee, the declaratory plaintiff must prove both (1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the putative infringer that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity. BP Chem. Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed. Cir. 1993). The first element "turns on the conduct of the patentee, while the [second] element depends on the conduct of the asserted infringer." Id. at 978.
The court finds that Plaintiff fails to satisfy, either element of the test for justiciability. The first element requires proof of either an explicit threat or other conduct undertaken by NextBus that creates a reasonable apprehension on the part of DRI that it will face an infringement suit. Id The court must apply an objective test to determine whether DRI suffered a "reasonable apprehension." See Phillips Plastics v. Kato Hatsujou K.K., 57 F.3d 1051, 1053 (Fed. Cir. 1995). "Absent an express charge of infringement, the court must respect `the realities of business life' and consider the `totality of the circumstances' in determining whether plaintiff possessed a reasonable apprehension." Kosmeo Cosmetics Inc. v. Lancome Parfums et Beaute Cie., 44 U.S.P.Q.2d 1472, 1474 (E.D. Tex. 1996) ( quoting Arrowhead Indus., 846 F.2d at 736).
In support of the first element of the justiciability test, DRI contends the history of litigation between the parties, including NextBus's filing of the February 7th action, gives it sufficient reason to believe it will be sued by NextBus again in the future. The court finds these facts insufficient to create a reasonable apprehension of suit. A history of litigation between the parties may in some cases satisfy the "reasonable apprehension" element. See, e.g., Interdynamics, Inc. v. Firma Wolf, 698 F.2d 157, 169 n. 15 (Fed. Cir. 1983) (describing four year history of litigation between the parties as "intense"). The facts of this case, however, demonstrate that NextBus voluntarily dismissed its only infringement action against DRI based on DRI's representation that it would conduct no development activities that would potentially infringe the '159 patent. Assuming DRI's representations to the Northern District of California were truthful and well-founded when made, NextBus's dismissal of its earlier infringement action should have removed any apprehension of future suit. Moreover, DRI offers no other evidence to indicate NextBus had engaged in any further conduct after the voluntary dismissal to create a reasonable apprehension of suit on the part of DRI.
DRI next points out that NextBus filed another complaint in the Northern District of California shortly after having received a copy of the complaint in this action. The court notes that NextBus filed its second action in California only after having learned that DRI filed a declaratory judgment action in Texas. The court finds NextBus's subsequent filing irrelevant for the purposes of its "reasonable apprehension" analysis. See Kosmeo Cosmetics, 44 U.S.P.Q.2d at 1475 ("A plaintiff may not file a complaint, wait for the defendant to respond and then use that response as proof of reasonable apprehension."). Based on the facts of this case, the representations made by DRI in the Northern District of California, and the timing of DRI's decision to file this declaratory action, the court believes the present filing was not based on a reasonable apprehension of suit, but instead on DRI's desire to secure a more favorable forum. In any event, the court holds, based on the totality of the circumstances, that Plaintiff fails to meet its burden in showing an objectively reasonable apprehension of suit.
Plaintiff also fails to satisfy the second element of the justiciability test. The second element "requires that the putative infringer's `present activity' place it at risk of infringement liability." Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059 (Fed. Cir. 1995); see also Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 634 (Fed. Cir. 1991) ("[T]he accused infringer must have actually produced or prepared to produce an allegedly infringing product.") (emphasis added); Arrowhead Indus., 846 F.2d at 736 ("Plaintiff must be engaged in an actual making, selling or using activity subject to an infringement charge or must have made meaningful preparation for such activity.") (emphasis added). DRI offers no evidence, by affidavit or otherwise, to suggest it presently develops or is prepared to develop a device or system that places it at risk of infringing the '159 patent. In fact, Plaintiff itself emphatically denied engaging in any such activities little more than one month before this case was filed. As noted above, Plaintiffs counsel represented to the Northern District of California that DRI had not designed or marketed a device that infringes the '159 patent or had any intention to design such a system. Def. App. at 67-69. Further, Plaintiff does not offer any evidence to indicate it has begun to develop or has engaged in any meaningful preparation to develop such a system after having made these representations in the Northern District of California.
Finally, Plaintiff does not even allege facts that demonstrate a present activity that places it at risk of infringement liability. Instead, DRI alleges it seeks declaratory relief "to ascertain the scope of the '159 patent so that it may develop non-infringing systems for the publication transportation industry without the constant threat of litigation by [NextBus]." Pl's Compl. ¶ 9 (emphasis added). Plaintiffs may not, however, "obtain a declaratory judgment merely because it would like an advisory opinion on whether it would be liable for patent infringement if it were to initiate some mere contemplated activity." Arrowhead Indus., 846 F.2d at 736; see also Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999) ("[A]n actual controversy cannot be based on a fear of litigation over future products."); Super Sack, 57 F.3d at 1060 ("The residual possibility of a future infringement suit based on [Plaintiffs] future acts is simply too speculative a basis for jurisdiction."). The court finds that DRI fails to satisfy, the second element of the test for justiciability. Having failed to meet its burden on both elements of test, the court dismisses the DRI's complaint for lack of federal subject matter jurisdiction.
III. Conclusion
For the reasons stated herein, the court grants Defendant's Motion to Dismiss for lack of subject matter jurisdiction. Because the court finds it has no jurisdiction over the declaratory action, the court denies without prejudice Plaintiffs Motion for Summary Judgment. Accordingly, this case is dismissed without prejudice.
As an alternative basis for dismissal, the court declines to exercise its jurisdiction over this declaratory action. A court has substantial discretion to decide whether to exercise jurisdiction over a declaratory judgment action. See, e.g., Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995) (stating the Act confers on federal courts "unique and substantial discretion in deciding whether to declare the rights of litigants"); Serco Servs. Co. v. Kelley Co., 51 F.3d 1037, 1039 (Fed. Cir. 1995) (finding "no absolute right to a declaratory judgment" even when there exists an actual controversy).
Even if an actual controversy exists in this case, the court declines to exercise its jurisdiction. In Serco, the district court dismissed the plaintiffs declaratory action so the declaratory defendant's patent infringement suit, filed three days after the declaratory action, could proceed in another jurisdiction. 51 F.3d at 1039. The Serco court acknowledged the general rule favoring the forum in which the first suit is filed, but stated that "considerations of judicial and litigant economy, and the just and effective disposition of disputes" may in some cases require otherwise. Id. The Federal Circuit held that a district court may properly decline to exercise its jurisdiction under the Act when its decision rests on "sound reason that would make it unjust or inefficient to continue the first-filed action" Id.
Based on the facts articulated above, the court believes the exercise of jurisdiction under the Act would be unjust and inefficient. The evidence strongly indicates that DRI induced NextBus to dismiss an action properly filed in the Northern District of California so that it might later file suit in a more favorable forum, without the inconvenience of having to litigate what would have been NextBus's first-filed suit. The court believes it more equitable and more efficient to allow the litigation to proceed in California.