ARRIS GROUP, INC. v. BRITISH TELECOMMUNICATIONS

• Citation: 694 F. Supp.2d 1330
• Decision Date: 18 February 2010
• Docket Number: Civil Action No. 1:09-CV-671-CAP.
• Parties: ARRIS GROUP, INC., Plaintiff, v. BRITISH TELECOMMUNICATIONS PLC, Defendant.
• Court: U.S. District Court — Northern District of Georgia

694 F. Supp.2d 1330

ARRIS GROUP, INC., Plaintiff, v. BRITISH TELECOMMUNICATIONS PLC, Defendant.

Civil Action No. 1:09-CV-671-CAP.

United States District Court, N.D. Georgia, Atlanta Division.

February 18, 2010.

Arianna Frankl, Matthew L. Kaufman, Seth H. Ostrow, Ostrow Kaufman & Frankl LLP, New York, NY, Armando Francisco Rois-Mendez, Jerry Chieh Liu, Arris Group, Inc., Suwanee, GA, Jeffrey C. Morgan, Troutman Sanders, Atlanta, GA, for Plaintiff.

James H. Shalek, Proskauer Rose, New York, NY, Christina M. Baugh, Fellows Johnson & La Briola, Henry Milton Quillian, III, Taylor English Duma LLP, Atlanta, GA, for Defendant.

ORDER

CHARLES A. PANNELL, JR., District Judge.

This matter is now before the court on the defendant's motion to dismiss for lack of subject matter and personal jurisdiction Doc. No. 17, the plaintiff's motion for jurisdictional discovery Doc. No. 30, and the plaintiffs motion for leave to file a surreply Doc. No. 45. As an initial matter, the plaintiffs motion for leave to file a sur-reply Doc. No. 45 is GRANTED. The plaintiff's sur-reply was considered by the court in ruling on the defendant's motion to dismiss Doc. No. 17.

I. Factual Background

The plaintiff, Arris, develops, manufactures, and supplies cable telephony, video, and high-speed data products, as well as outside plant construction and maintenance equipment, for cable system operators Doc. No. 32-2, ¶ 3. CableOne has been Arris's customer for over a decade; Arris supplies CableOne with certain components used in CableOne's network Doc. No. 32-2, ¶ 6. On July 17, 2007, the defendant first contacted CableOne, alleging that CableOne's cable network infringed certain claims of the patents involved in this suit Doc. No. 17-3, ¶ 7. The patents generally concern systems and methods that relate to cable networks that route both voice and data traffic and the operation of those networks Doc. No. 19, Exhibit A. In its July 2007 letter, the defendant stated that it wanted to negotiate a license with CableOne and that IPValue would serve as the defendant's agent in negotiating such a license Doc. No. 17-3, Exhibit A. The letter stated that the defendant "would like to assure CableOne that our current intention is to allow Cable One to continue its use of these patents through a license from BT, on reasonable terms and conditions" Id..

In response to this letter, on August 15, 2007, CableOne requested that it be provided a "specific comparison of the claims of those patents to our cable systems or operations" Doc. No. 17-3, Exhibit B. IPValue sent the requested comparisons showing "the applicability of selected claim elements in the four BT patents to Cable One's services" to CableOne via email on August 23, 2007 Doc. No. 19, Exhibit A. The comparison analysis did not allege infringement by any party other than CableOne, and it specifically stated on its cover that no particular component manufacturer was accused of infringement Id.. IPValue and CableOne met on October 23, 2007, at CableOne's offices in Phoenix Doc. No. 19-7, ¶ 11. At this meeting, IPValue and CableOne only discussed CableOne's infringement and did not discuss any infringement by Arris Doc. No. 19-7, ¶¶ 12-13.

In November 2007, CableOne sent a letter to Arris notifying Arris of the infringement assertions made by the defendant as to the patents at issue in this case, and CableOne stated its expectation that Arris would "defend, indemnify and hold harmless Cable One from these assertions of infringement" Doc. No. 19-1, ¶¶ 7-8. Subsequent to the initial meeting between IPValue and CableOne, CableOne indicated that it had involved its vendors, such as Arris and Nortel, in these licensing discussions because of contractual obligations that it believed that it had to those vendors Doc. No. 19-7, ¶ 14. In February 2008, when the parties decided to hold another face-to-face meeting for continuing negotiations, CableOne proposed that the next meeting include its vendor Arris and be held in Atlanta near Arris' offices Doc. No. 19-8. During this March 2008 meeting, IPValue again discussed CableOne's infringement; there was no discussion of whether Arris was infringing the patents at issue here, and no effort was made to negotiate a license to Arris Id..

Beginning in April 2008, IPValue and CableOne negotiated a non-disclosure agreement to facilitate further licensing discussions between IPValue and CableOne; this agreement was executed on July 8, 2008 Doc. No. 19-8, ¶ 17. Arris was not involved in any negotiations related to the agreement and was not a signatory Doc. No. 17-2, Exhibit C. On August 29, 2008, the parties again met in Atlanta to discuss licensing CableOne under the patents at issue here, and IPValue did not accuse Arris of direct or indirect infringement at this meeting Doc. No. 19, ¶ 19.

Following the August 29, 2008, meeting, on September 17, in rebuttal to IPValue's presentation made to CableOne regarding CableOne's infringement, Arris sent IPValue an analysis of certain claim elements that it believed were not met by CableOne's network Id., ¶ 20. Two further conference calls took place in which Arris presented its rebuttal materials and IPValue responded to them Id., ¶¶ 21-22. Consistent with prior discussions, IPValue did not accuse Arris of direct or indirect infringement during these calls, and the discussions related solely to licensing the patents at issue here Id.. In December 2008, IPValue sent a licensing proposal to CableOne, and this license explicitly stated that the "license is granted to Cable One only" Doc. No. 19-12.

On March 31, 2009, Arris filed an action in this court Doc. No. 1 seeking: (1) a declaration that Arris has not infringed and does not infringe any claim of the patents-in-suit, (2) an injunction preventing the defendant from charging infringement or instituting any action for infringement against Arris or Arris' customers, (3) a declaration of patent invalidity, and (4) attorneys' fees pursuant to 35 U.S.C. § 285. British Telecommunications has moved for dismissal Doc. No 17 under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(2) on the grounds that the court lacks subject matter and personal jurisdiction.

II. Motion to Dismiss—Subject Matter Jurisdiction Doc. No. 17

To determine whether subject matter jurisdiction exists in a declaratory judgment action, a court must analyze the "totality of circumstances" to determine whether there exists: "(1) an injury-infact, i.e., a harm that is concrete and actual or imminent, not conjectural or hypothetical, (2) that is fairly traceable to the defendant's conduct, and (3) redressable by a favorable outcome." Prasco, LLC v. Medicis Pharmaceutical Corp., 537 F.3d 1329, 1338 (Fed.Cir.2008). The dispute at issue must be "`definite and concrete, touching the legal relations of the parties having adverse legal interests,'" must be "`real and substantial,'" and must allow for "`specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.'" Med-Immune, Inc. v. Genentech, Inc., 549 U.S. 118, 126, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (quoting Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 81 L.Ed. 617 (1937)).

At a minimum, a patentee must cause a real and immediate injury or threaten future injury to a plaintiff in order to give rise to an Article III case or controversy. Prasco, 537 F.3d at 1339. A patentee fails to create a controversy even when that patentee routinely enforces its patent rights against members of an industry of which the plaintiff is a part. Prasco, 537 F.3d at 1340; Panavise Products, Inc. v. National Products, Inc., 306 Fed.Appx. 570, 572-73 (Fed.Cir.2009) (affirming dismissal under Rule 12(b)(1) because a litigious defendant never threatened to sue the plaintiff). Similarly, suing or threatening to sue third parties falls short of a controversy. Panavise, 306 Fed.Appx. at 573; Document Security Systems, Inc. v. Adler Technologies, Inc., ...