3D Systems, Inc. v. Envisiontec, Inc.

• Decision Date: 12 August 2008
• Docket Number: Case No. 08-11734.
• Citation: 575 F.Supp.2d 799
• Parties: 3D SYSTEMS, INC., Plaintiff, v. ENVISIONTEC, INC., and Envisiontec GmbH, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

575 F.Supp.2d 799

3D SYSTEMS, INC., Plaintiff, v. ENVISIONTEC, INC., and Envisiontec GmbH, Defendants.

Case No. 08-11734.

United States District Court, E.D. Michigan, Southern Division.

August 12, 2008.

Alan N. Harris, Susan M. Kornfield, Bodman, Ann Arbor, MI, Jonathan A. David, Sidney David, Lerner, David, Westfield, NJ, for Plaintiff.

Leigh C. Taggart, R. Terrance Rader, Rader, Fishman, Bloomfield Hills, MI, for Defendants.

MEMORANDUM AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS AND DISMISSING CASE FOR LACK OF SUBJECT MATTER JURISDICTION

AVERN COHN, District Judge.

I. Introduction

This is a declaratory judgment action under 28 U.S.C. § 2201-02 relating to a patent dispute. Plaintiff, 3D Systems, Inc., (3D) is a manufacturer of three-dimensional rapid prototyping equipment, particularly the V-Flash Desktop Modeler. Defendants, Envisiontec, Inc., a Michigan corporation and Envisiontec GmbH, a German corporation, (collectively, Envisiontec) also manufacture three-dimensional rapid prototyping equipment.

3D and its German counterpart defendants each hold numerous patents covering rapid prototyping equipment. As to Envisiontec's patents, the Amended Complaint alleges:

16. Upon information and belief, Envisiontec GmbH is the owner of a number of United States patents related to three-dimensional prototyping and manufacturing systems that would likely be asserted in an infringement action brought by Envisiontec, Inc. and Envisiontec GmbH against 3D Systems and/or its customers for the manufacture, use, and sale of the V-Flash TM Desktop Modelers, such patents being U.S. Patent Nos. 6,942,830, 7,052,263, and 7,195,472 (the "Envisiontec Patents").

3D says that Envisiontec has threatened its customers and potential customers interested in purchasing the V-Flash with patent infringement lawsuits and that such threats make out an "Article III case or controversy . . . such that [3D] and its customers need not risk a suit for infringement by [Envisiontec] for engaging in [selling and purchasing the V-Flash] before seeking a declaration of their legal rights." Amended Complaint at ¶ 20. 3D asks for the following relief:

A. A declaration that neither 3D Systems, nor its customers, have infringed induced infringement of, or contributorily infringed, and does not infringe, induce infringement of, and/or contributorily infringe any valid or enforceable claim of U.S. Patent Nos. 6,942,830, 7,052,263, and 7,195,472;

B. A declaration that U.S. Patent Nos. 6,942,830, 7,052,263, and 7,195,472 are invalid and void for failure to comply with one or more sections of Title 35 of the U.S.Code, including, without limitation, 35 U.S.C. §§ 101, 102, 103 and/or 112;

C. A declaration that this case is "exceptional" within the meaning of 35 U.S.C. § 287;

D. An award to 3D Systems of its costs, attorney fees, and expenses pursuant to 35 U.S.C. § 285;

E. An award to 3D Systems of all further and additional relief as the Court deems just and proper.

Envisiontec has moved¹ to dismiss the case for lack of subject matter jurisdiction, Fed.R.Civ.P. 12(b)(1), or in the alternative for summary judgment, Fed.R.Civ.P. 56, because the Amended Complaint fails to allege:

• that defendants have asserted any specific patents against anyone

• that defendants have made any threat of patent infringement against 3D

• that defendants have identified any specific patent claims that covers the V—Flash.

In sum, Envisiontec says the allegations of the Amended Complaint fall short of allowing the case to blossom into a full-blown patent dispute.

Envisiontec is correct. For the reasons which follow, Envisiontec's motion to dismiss is GRANTED and the case is DISMISSED. The alternative motion for summary judgment is MOOT.

II. Legal Standards

A. Declaratory Judgment Action

The applicable law related to declaratory judgment actions in patent disputes was recently stated in The Hertz Corporation, et al. v. Enterprise Rent-A-Car, et al., 557 F.Supp.2d 185, 198-99 (D.Mass.2008) as follows:

"[T]he purpose of the Declaratory Judgment Act ... in patent cases is to provide the allegedly infringing party relief from uncertainty and delay regarding its legal rights." Goodyear Tire & Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 956 (Fed.Cir.1987). As the Supreme Court has stated, "the question in each cases is 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. Genentech, Inc., 549 U.S. 118, ___, 127 S.Ct. 764, 771, 166 L.Ed.2d 604 (2007) (citation omitted). Prior to Medlmmune, the Federal Circuit applied a more stringent two-pronged test to determine whether there was a "reasonable apprehension of suit" involving an assertion of patent rights. After that test was abrogated by the Supreme Court, the Federal Circuit summarized the new test as follows:

Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do. We need not define the outer boundaries of declaratory judgment jurisdiction, which will depend on the application of the principles of declaratory judgment jurisdiction to the facts and circumstances of each case. We hold only that where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights.

SanDisk Corp. v. STMicroelecs., Inc., 480 F.3d 1372, 1381 (Fed.Cir.2007). The Federal Circuit has remarked that "[w]hether intended or not, the now more lenient legal standard facilitates or enhances the availability of declaratory judgment jurisdiction in patent cases. The resulting ease of achieving declaratory judgment jurisdiction in patent cases is accompanied by unique challenges. For instance, the ease of obtaining a declaratory judgment could occasion a forum-seeking race to the courthouse between accused infringers and patent holders." Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 902 (Fed.Cir.2008) (internal citations omitted).

Additionally, whether or not to hear a declaratory judgment action is a matter of discretion. This is explained in Teva Pharmaceuticals USA, Inc. v. Pfizer, Inc., 395 F.3d 1324, 1331-32 (Fed.Cir.2005) as follows:

The Act, which parallels Article III of the Constitution, "requires an actual controversy between the parties before a federal court may exercise jurisdiction over an action for a declaratory judgment." EMC Corp. v. Norand Corp., 89 F.3d 807, 810 (Fed.Cir.1996). Generally, the presence of an "actual controversy," within the meaning of the Act, depends on "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment" Id. (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941)). Even if there is an actual controversy, the district court is not required to exercise declaratory judgment jurisdiction, but has substantial discretion to decline that jurisdiction. Id.; see also Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.E d.2d 214 (1995) (reaffirming that since its inception, "the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants"). As we summarized in Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 634 (Fed. Cir.1991): "When there is no actual controversy, the court has no discretion to decide the case. When there is an actual controversy and thus jurisdiction, the exercise of that jurisdiction is discretionary."

As one commentator has stated; "[e]ven if the conditions for declaratory judgment jurisdiction are met, the court has discretion to decline to hear a declaratory judgment action." Herbert F. Schwartz, Patent Law and Practice Fifth Edition § 3.I.B. (Fed. Judicial Center 2006).

B. Motion to Dismiss

In determining whether the Court has subject matter jurisdiction of a claim under Fed.R.Civ.P. 12(b)(1), the Court must assume that plaintiffs' allegations are true and must construe the allegations in a light most favorable to them. Little Traverse Bay Bands of Odawa Indians v. Great Spring Waters of America, Inc., 203 F.Supp.2d 853, 855 (W.D.Mich. 2002). "Relief is appropriate only if, after such construction, it is apparent to the district court that there is an absence of subject matter jurisdiction." Id. Where jurisdiction is challenged under Fed. R.Civ.P. 12(b)(1), a plaintiff bears the burden of proving jurisdiction in order to survive the motion. Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir.1986).

III. Envisiontec's Motion to Strike

A.

As an initial matter, Envisiontec has moved to strike the declarations of Charles W. Hull, Keith A. Roberson and William Scott Polk on the grounds that they are inadmissible under the Federal Rules of Evidence and applicable case law because they are

• irrelevant to the issue of whether or not defendants made a threat to assert the U.S. Patents against 3D

• conclusory and insufficiently detailed to make any material fact more or less likely

• based on hearsay

3D opposes the motion on the grounds it is baseless and "amounts to nothing less than an effort to sweep all adverse facts under the rug," and goes on to describe in some detail why each of the declarations contain...