Cerro Wire Inc. v. Southwire Co.

• Decision Date: 04 March 2011
• Docket Number: No. 3:10–CV–87–BMGL.,3:10–CV–87–BMGL.
• Citation: 777 F.Supp.2d 1334
• Parties: CERRO WIRE INC., Plaintiff,v.SOUTHWIRE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Georgia

777 F.Supp.2d 1334

CERRO WIRE INC., Plaintiff,

v.SOUTHWIRE COMPANY, Defendant.

No. 3:10–CV–87–BMGL.

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

March 4, 2011.

Arthur Daniel Brannan, James F. Cirincione, Paul Monnin, DLA Piper US LLP, Atlanta, GA, Monica L. Thompson, Piper Rudnick, Roger L. Longtin, DLA Piper LLP, Chicago, IL, for Plaintiff.Eric Justin Andalman, Robert L. Lee, Alston & Bird, LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION AND ORDER

BARBARA M.G. LYNN, District Judge.

Before the Court is Defendant Southwire Company's Motion to Dismiss for Lack of Subject Matter Jurisdiction [Docket Entry # 4]. For the reasons stated below, Defendant's Motion is DENIED in part, and the Court will decide remaining issues when it receives further briefing in accordance with the Court's instructions.

Factual and Procedural Background

This case involves two lawsuits: the suit now before this Court, in which Plaintiff Cerro Wire Inc. seeks a declaratory judgment of non-infringement and invalidity regarding one of Defendant Southwire's patents, U.S. Patent No. 7,749,024 (the “'024 Patent”); and a patent infringement suit filed minutes later in the Eastern District of Texas, in which Southwire, there the plaintiff, alleges that Cerro infringed the '024 Patent.

The '024 Patent was issued to Southwire on July 6, 2010. Cerro commenced this suit by filing the Complaint at 12:02 a.m. Eastern Daylight Time (“EDT”) on July 6, 2010,¹ seeking a declaratory judgment of non-infringement and invalidity of the ' 024 Patent. At 1:10 a.m. EDT/12:10 a.m. Central Daylight Time (“CDT”), Southwire filed suit against Cerro in the Eastern District of Texas, alleging infringement of the ' 024 Patent.

In its Motion to Dismiss, Southwire argues that Cerro filed its Complaint before the '024 Patent was issued and that the Court thus lacks subject matter jurisdiction over this case. In support of this contention, Southwire offers the declaration of one of its attorneys, Jason W. Cook. The declaration states that on July 5 and 6, 2010, Mr. Cook monitored two websites maintained by the PTO to determine when the '024 Patent would issue and that at 12:15 a.m. EDT on July 6, both pages indicated that the '024 Patent had not issued yet. Mr. Cook's declaration further states that after 12:15, but before 12:30, one of the websites, the “PAIR page,” ² indicated that the ' 024 Patent had issued.

Alternatively, Southwire argues that even if Cerro filed its Complaint after the '024 Patent issued, the Court should depart from the “first-to-file rule,” which generally favors the action filed first in time when parties file competing lawsuits in different forums.

Therefore, Southwire's Motion and the related briefing present the Court with two issues: 1) whether the Court has subject matter jurisdiction over Cerro's declaratory judgment suit; and 2) if so, whether the Court should exercise its discretion to assert jurisdiction over this suit or dismiss it in favor of the infringement suit pending in the Eastern District of Texas.

Discussion

The Court first addresses whether it has subject matter jurisdiction over Cerro's declaratory judgment claims. Southwire argues that Cerro's claims do not present a justiciable case or controversy because the ' 024 Patent had not issued at the time Cerro filed its Complaint. In order to present a justiciable case and controversy, a complaint seeking a declaratory judgment related to a patent's enforceability or validity must be filed after the patent has been issued. GAF Bldg. Materials Corp. v. Elk Corp. of Dall., 90 F.3d 479, 482 (Fed.Cir.1996). Neither party disputes this well-settled principle of law. Rather, the parties' dispute revolves around the question of when a patent issues. Southwire argues that patents are issued at a particular time and the Court thus lacks subject matter jurisdiction over any action filed before that time, even on the date of issue. Conversely, Cerro contends that patents are not issued at a particular time, but only on a particular day, and therefore, that a declaratory judgment plaintiff in a patent case may file suit at any time on the day the patent issues, beginning with the moment immediately after midnight.

Neither party has presented the Court with legal authority addressing this precise question, and the Court is aware of none. Several courts have exercised jurisdiction over suits filed in the first minutes of a patent's issue date. See, e.g., D2L, Ltd. v. Blackboard, Inc., 671 F.Supp.2d 768, 779 n. 14 (D.Md.2009); Hertz Corp. v. Enterprise Rent–a–Car Co., 557 F.Supp.2d 185, 188 n. 2 (D.Mass.2008); Abbott Labs. v. Johnson & Johnson, Inc., 524 F.Supp.2d 553, 556, 557–58 (D.Del.2007). One court even stated in dicta that 12:01 a.m. was “the minute the ... patent issued.” D2L, 671 F.Supp.2d at 779 n. 14.³ However, in none of the cases did the defendant contend that the patent, as a matter of fact, had not issued before the plaintiff filed a complaint. Thus these cases do not provide guidance for evaluating Southwire's contention that the ' 024 patent was issued after 12:15 a.m. EDT, twelve minutes after Cerro filed its Complaint.

The language of 35 U.S.C. § 154, which Cerro also relies on, is similarly inconclusive. That statute states that the rights granted in a patent “shall be for a term beginning on the date on which the patent issues.” 35 U.S.C.A. § 154(a)(2) (West, Westlaw through 2002 legislation). Based on this language, Cerro contends that that the enforceability of a patent is measured from the first moment of the day of its issuance. (Pl.'s Resp. 8, ECF No. 9.) However, even if that contention were correct, it would not support a conclusion that the patent itself was also issued at that moment; how the law measures the length of a patent's protection is not the same question as whether a patent was in existence at the time a complaint was filed.

Lacking any conclusive legal authority one way or the other, each party contends that the other's approach would be difficult to administer. Cerro contends that “Southwire may be the first and only patent owner to argue that enforcement of [a] patent should not begin until it is posted on [the PTO website].” (Pl.'s Resp. 9, ECF No. 9.) This approach raises important questions about how one proves issuance of a patent. Unlike the electronic filing systems utilized by federal courts, neither the PTO websites nor the patent itself displays the time a patent was issued. Without such concrete data, parties would have to rely on affidavits stating the time the PTO website first showed the patent had issued. Thus, it seems that under Southwire's approach, the race to the courthouse would be preceded by a race to first observe a patent's issuance on the PTO website.

In its Reply, Southwire urges that Cerro's approach comes with its own adverse public policy implications. First, Southwire argues that Cerro's approach would encourage forum shopping by allowing a declaratory judgment plaintiff to file suit at the stroke of midnight on a day it thinks, based on the issue notification,⁴ a particular patent is going to issue. If the patent does issue that day, the declaratory judgment plaintiff wins the race to the courthouse; if the patent does not issue, the plaintiff can simply withdraw the complaint, suffering limited repercussions, if any. Even if this is so, a patent holder could also file an infringement suit at midnight on the expected issue date and, like the declaratory judgment plaintiff, suffer limited repercussions for withdrawing it if the patent does not issue. Thus, the two approaches differ only as to which event triggers the starting of the race to the courthouse: the stroke of midnight, or the patent's appearance on the PTO website.

Second, Southwire argues that Cerro's approach favors parties that wish to file in the Eastern Time Zone. According to Southwire, if patents issue on a day only, rather than at a particular time, a party wishing to file a patent suit in the Central Time Zone must wait to file until midnight Central Time on the issue date—a full hour after those wishing to file in the Eastern Time Zone. However, this situation is easily avoided if courts use “absolute time” to determine if a complaint is filed after a patent is issued, just as courts do when determining which of two complaints is filed first. See Third Dimension Semiconductor, Inc. v. Fairchild Semiconductor Int'l, Inc., No. 6:08–cv–200, 2008 WL 4179234, at *1 (E.D.Tex. Sept. 4, 2008) (“Courts use ‘ “absolute time,” (as opposed to “time zone” time) to determine which petition is filed first.’ ” (quoting Mead Corp. v. Stuart Hall Co., Inc., 679 F.Supp. 1446, 1453 (S.D.Ohio 1987) (interpreting 5th Circuit case law))). Thus, applying absolute time, if a patent does indeed issue at the first moment of the day in the Eastern Time Zone, a complaint filed just after 11:00 p.m. the previous day in the Central Time Zone is filed after the patent issues.

Considering the arguments presented by both parties, the Court is persuaded that Cerro's approach is correct and holds that the '024 Patent was issued just after 12:00 a.m. EDT on July 6, 2010, and thus Cerro's Complaint was filed after the Patent issued. Therefore, the Court has subject matter jurisdiction over this declaratory judgment action. Further, the Court finds that this action is the first-filed case regarding the parties' dispute over the '024 Patent.

The Court's inquiry does not end there, however. Even where a declaratory judgment suit presents a justiciable case or controversy, “there is no absolute right to a declaratory judgment, for the [declaratory judgment] statute specifically entrusts courts with discretion to hear declaratory suits or not depending on the circumstances.” Serco Servs. Co., L.P. v. Kelley Co., Inc., 51 F.3d 1037, 1039 (Fed.Cir.1995). This discretion is broad but not absolute. Innovative Therapies, Inc. v. Kinetic Concepts, Inc., ...