Declaratory Judgment Jurisdiction: Later Filed Lawsuit by Patentee Serves as Admission that an Actual Controversy Exists

Micron v. Mosaid (Fed. Cir. 2008)

Of the four major DRAM manufacturers. MOSAID first sued Samsung. On the day that MOSAID settled with Samsung, the patent holder sued Hynix, then sued Infineon and settled. After a series of communications, Micron began to understand MOSAID’s unstated assertion of patent infringement.

Not wanting to be sued next, Micron (the fourth major DRAM manufacturer) filed a declaratory judgment action, asking the N.D. Cal. federal court to find the patent not-infringed. A day later, MOSAID sued in E.D. Tex.

On appeal, the CAFC found that the lower court had improperly dismissed Micron’s DJ action — noting again that a DJ Plaintiff is not required to show any apprehension of suit in order to request declaratory action. Rather, the Supreme Court’s MedImmune test only requires that the controversy be definite, concrete, real, substantial, and have some specific relief that is possible.

Here, it is clear that there is an actual controversy between the parties based on communications between the parties and MOSAID’s actions against all manufacturers who could potentially be accused of infringement. MOSAID’s annual report promising “aggressive” enforcement of its patents also helps Micron’s cause.

What is most interesting here, is the fact that MOSAID’s lawsuit, filed the next day in Texas, also serves as evidence of a controversy.  By filing suit, MOSAID admits that there is an actual controversy between the parties.

Indeed, that suit, filed only one day later, was actually pending in Texas at the time that the California district court made its ruling. Thus, the parties in this dispute are really just contesting the location and right to choose the forum for their inevitable suit.

In a foray into policy grounds, Judge Rader’s opinion notes that the “more lenient” MedImmune standards for declaratory judgment jurisdiction will likely lead to “forum-seeking race[s].” Judge Rader suggests that district courts (and litigants) may need to change their focus from jurisdiction (which will now almost always exist) to the convenience factors of 28 USC 1404(a).

Moving to the CAFC role as a district court, the panel then found that the more convenient forum is the Northern District of California. In particular, the court relied on the fact that (1) the California case was first filed and (2) MOSAID’s US home office is in California. The fact that the Eastern District of Texas had previously seen and decided cases involving the identical patents in suit was discounted because the record did not show any ‘ongoing litigation’ in that locale. Because of no ongoing litigation, the CAFC found that the prior litigation “does not suggest a better forum in Texas.”

Applying these factors, the panel unanimously agreed that “it would be an abuse of discretion to transfer the action.”

Reversed and Remanded

Notes

• In what looks like a subtle jab at the Eastern District of Texas, the appellate court discussed the district as the “well-known patent forum.”
• Judge Rader took a hard stance against using related litigation in another district as a factor in making a transfer decision. The implication from the opinion is that related litigation should only be considered as a factor if it “ongoing litigation requiring consolidation.”