Broadsign Int'l, LLC v. Ab
| Decision Date | 13 July 2018 |
| Docket Number | No. 16-CV-04586-LTS-HBP,16-CV-04586-LTS-HBP |
| Parties | BROADSIGN INTERNATIONAL, LLC, Plaintiff, v. T-REX PROPERTY AB, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff BroadSign International, LLC ("Plaintiff" or BroadSign") brings this action against Defendant T-Rex Property AB ("Defendant" or "T-Rex"), seeking declaratory judgments of noninfringement and invalidity of U.S. Patent No. RE39,470 ("the '470 patent"), U.S. Patent No. 7,382,334 ("the '334 patent"), and U.S. Patent No. 6,430,603 ("the '603 patent") (collectively, the "Patents-in-Suit"), as well as a declaratory judgment that BroadSign has intervening rights with respect to the '470 patent.
On January 10, 2018, this Court issued a Memorandum Opinion and Order (Docket Entry No. 40, the "January Opinion") granting T-Rex's motion to dismiss the Amended Complaint (Docket Entry No. 10, the "AC") in its entirety. In the January Opinion, the Court granted BroadSign permission to move for leave to file a further Amended Complaint.
On February 1, 2018, BroadSign moved for leave to file a Second Amended Complaint (Docket Entry No. 42) and, in accordance with the Court's instructions, appended to its motion its proposed Second Amended Complaint (Docket Entry No. 44-1, the "SAC"), a blackline comparison showing all proposed changes to the AC, and a memorandum of law.
The Court has jurisdiction of this action pursuant to 35 U.S.C. §§ 271 et seq., and 28 U.S.C. §§ 1331 and 1338.
The Court has considered carefully all of the parties' submissions, and for the reasons stated below, BroadSign's motion for leave to file the SAC is granted.
The Court assumes the parties' familiarity with the underlying context of the case, which is laid out in detail in the January Opinion. (January Opinion at 2-4.) In the January Opinion, the Court dismissed BroadSign's complaint for lack of subject matter jurisdiction, concluding that the allegations regarding Defendant's suits against BroadSign's customers and Defendant's actions in connection with discussions initiated by BroadSign, as described in Plaintiff's Amended Complaint, did not constitute an "aggressive enforcement strategy" warranting a finding of a case or controversy. (Id. at 9.) The Court further concluded that BroadSign had failed to allege facts indicating that T-Rex could state a contributory infringement cause of action against BroadSign. (Id. at 9-10.) Specifically, BroadSign failed to allege its product was especially made or especially adapted for use in an infringement of the Patents-in-Suit at the time it sold its products to customers, and that its software was not a staple article or commodity of commerce suitable for substantial noninfringing use. (Id. at 8-10.) Because Plaintiff had not demonstrated that a "substantial controversy" existed between the parties, it had not met its burden of proving by a preponderance of the evidence that subject matter jurisdiction exists. (Id. at 10.)
The following abbreviated recitation of facts is drawn from BroadSign's SAC, the well-pleaded factual allegations of which are taken as true for purposes of this motion practice.
BroadSign supplies "hardware and software solutions to operators of networks of digital displays." (SAC ¶ 11.) T-Rex is the "assignee and owner of the right, title, and interest in and to the Patents-in-Suit," which concern the control and coordination of digital displays. (Id. ¶¶ 9, 10.) Over the last several years and during the course of this lawsuit, T-Rex has sued "at least seven" of BroadSign's customers, which are various entities that make, use, or sell complete digital signage systems, "for [direct] patent infringement on one or more of the Patents-in-Suit." (Id. ¶ 29.) The SAC includes new allegations that, in its suits against BroadSign's customers, T-Rex has specifically identified components supplied by BroadSign that allegedly infringe the Patents-in-Suit, and has compared the limitations of at least one claim of each patent to a product that includes BroadSign components and software. (Id. ¶¶ 30-40.) The SAC also proffers new allegations that T-Rex has filed complaints against at least 15 other "suppliers of digital out-of-home media software and/or hardware" that are direct industry competitors of BroadSign, alleging that those suppliers' digital signage products infringe upon the Patents-in-Suit. (Id. ¶¶ 12-28.) Plaintiff also proposes expanded allegations regarding contacts in which T-Rex allegedly demanded that BroadSign enter into a licensing agreement. (Id. ¶ 47.)
BroadSign proffers new allegations that it "has knowledge of T-Rex's allegations" that certain components of a product it supplies "function in a way that meets each limitation of at least one claim of each of the" Patents-in-Suit. (Id. ¶¶ 42, 45.) BroadSign also alleges that its products are built to order for its customers. (Id. ¶ 46.) Plaintiff alleges that "T-Rex's actions have placed a cloud over BroadSign and its business," and that it seeks to "move forward without the imminent and ever-present threat of litigation." (Id. ¶ 49.) The SAC also adds causes of action seeking declarations that the Patents-in-Suit are invalid. (Id. ¶¶ 76-87.)
Federal Rule of Civil Procedure 15 provides that the court may permit a party to amend its pleading when justice so requires. Fed. R. Civ. P. 15(a)(2). Such leave may be denied on grounds of futility, however, if the proposed amended pleading could not withstand a motion to dismiss, such as a motion under Rule 12(b)(1) asserting lack of subject matter jurisdiction, or one under Rule 12(b)(6) for failure to state a claim. Griffith-Fenton v. Coldwell Banker Mortg., No. 13 CV 7449, 2014 WL 6642715, at *1 (S.D.N.Y. Oct. 17, 2014); Oneida Indian Nation of N.Y. v. City of Sherrill, 337 F.3d 139, 168 (2d Cir. 2003) (citation omitted). The party opposing the motion to amend bears the burden of establishing that the amendment would be futile. Ballard v. Parkstone Energy, LLC, No. 06 CV 13099, 2008 WL 4298572, at *3 (S.D.N.Y. Sep. 19, 2008).
Under the Rule 12(b)(1) standard, the Court is authorized to dismiss a complaint for lack of subject matter jurisdiction "when the district court lacks the statutory or constitutional power to adjudicate it." Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008) () (internal citations and quotation marks omitted). ICOS Vision Sys. Corp., N.V. v. Scanner Techs. Corp., 699 F. Supp. 2d 664, 667 (S.D.N.Y. 2010) (citation omitted).
In reviewing a motion to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(1), "the court must take all facts alleged in the complaint as true and draw allreasonable inferences in favor of plaintiff." Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (quoting Natural Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir. 2006)). However, "[a] plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists," id. (quoting Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000)), and such a showing may not be "made by drawing from the pleadings inferences favorable to the party asserting" subject matter jurisdiction. Id. (quoting APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2000)). In determining whether subject matter jurisdiction over the claims exists, the Court "may consider evidence outside the pleadings." Id.
Defendant asserts that the proffered amendments would be futile because Plaintiff has not proffered facts sufficient to demonstrate that there is a justiciable case or controversy concerning BroadSign's potential infringement of the Patents-in-Suit. Declaratory relief is "intended to . . . settle legal rights and remove uncertainty and insecurity from legal relationships without awaiting a violation of the right or a disturbance of the relationships." Nat'l Union Fire Ins. Co. of Pittsburgh v. Int'l Wire Grp., Inc., No. 02 CV 10338, 2003 WL 21277114, at *4 (S.D.N.Y. June 2, 2003) (citations and internal quotation marks omitted).
When a court is determining whether there is subject matter jurisdiction to render a declaratory judgment, "the question in each case 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 (2007) (citations and quotation marks omitted). The controversy between defendant and plaintiff must be "'real and substantial' and 'admit of specific relief through a decree of a conclusive character, as distinguished from anopinion advising what the law would be upon a hypothetical state of facts.'" Id. A in the language of the Declaratory Judgment Act, is one falling into the category of "Cases" and "Controversies" that are justiciable under Article III of the Constitution of the United States. Id.
There is no bright-line rule for whether a dispute is "a case of actual controversy" between parties within the meaning of the Declaratory Judgment Act. Prasco LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1336 (Fed. Cir. 2008). However, courts have found a direct, substantial controversy in patent disputes when parties pursue an aggressive litigation strategy, Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 906-07 (Fed. Cir. 2014), or establish a valid induced contributory infringement claim. See Arris Grp. v. British Telecomm., 639 F.3d 1368, 1375-81 (Fed. Cir. 2011).
...
To continue reading
Request your trial
-
Braun v. Corr. Officer Sterno
...any legal relationships or issues that require resolution by declaratory relief. See BroadSign Int'l, LLC v. T-Rex Prop. AB, No. 16-CV-04586-LTS-HBP, 2018 WL 3418778, at *5 (S.D.N.Y. July 13, 2018) ("A declaratory judgment action allows a party who is reasonably at legal risk because of an ......