D2L Ltd. v. Blackboard, Inc.

• Decision Date: 02 December 2009
• Docket Number: Civil No.: WDQ-09-1763.
• Parties: D2L LTD. and Desire2Learn, Inc., Plaintiffs, v. BLACKBOARD, INC., Defendant.
• Court: U.S. District Court — District of Maryland

671 F.Supp.2d 768

D2L LTD. and Desire2Learn, Inc., Plaintiffs, v. BLACKBOARD, INC., Defendant.

Civil No.: WDQ-09-1763.

United States District Court, D. Maryland, Northern Division.

December 2, 2009.

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Hugh J. Marbury, John Caleb Dougherty, Sonia S. Cho, DLA Piper LLP, Baltimore, MD, Brian K. Erickson, John Michael Guaragna, DLA Piper LLP, Austin, TX, John Allcock, DLA Piper LLP, San Diego, CA, for Plaintiffs.

Michael S. Nadel, McDermott Will & Emery LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

WILLIAM D. QUARLES, JR., District Judge.

D2L Ltd. and Desire2Learn, Inc. sued Blackboard, Inc. for a declaratory judgment of non-infringement and invalidity of U.S. Patent No. 7,558,853 ("the '853 patent"). Pending are Blackboard's motions to dismiss for lack of subject matter jurisdiction and to transfer the case to the Eastern District of Texas. Also pending are the Plaintiffs' motions to correct the filing date of the complaint and to file a surreply to Blackboard's motion to transfer. For the following reasons, Blackboard's motion to dismiss will be granted in part and denied in part, and its motion to transfer will be granted. The Plaintiffs' motions to correct the filing date of the complaint and to file a surreply will be denied.

I. Background

Desire2Learn, a Canadian corporation based in Ontario, develops and sells online course management (or "eLearning") software. Compl. ¶ 4. D2L Ltd.—a wholly-owned subsidiary of Desire2Learn—is a Maryland corporation based in Baltimore. Id. ¶ 2. Blackboard—the Plaintiffs' chief eLearning competitor—is a Delaware corporation based in Washington, DC. Id. ¶ 6. Blackboard is the larger company and has a greater share of the U.S. market. Id.

Blackboard filed an infringement suit against Desire2Learn in the Eastern District of Texas on July 26, 2006. Id. ¶ 9. The suit alleged that "all [Desire2Learn] products based on the D2L learning system or platform" infringed U.S. Patent No. 6,998,138 ("the '138 patent"), which had been issued to Blackboard on January 17, 2006. Id.; Pl.'s Opp., Guaragna Decl. Ex. 9. The court found that claims 1 through 35 of the patent were invalid as a matter of law, and a jury found that Desire2Learn infringed claims 36 though 38.¹

On February 17, 2009, Blackboard was issued U.S. Patent No. 7,493,396 ("the '396" patent), which is a continuation of the '138 patent. Compl. ¶ 12; Def.'s Mot. to Dismiss 4. On March 16, 2009, Blackboard sued Desire2Learn in the Eastern District of Texas for infringing the '396 patent. Compl. ¶ 13. This case is pending.

On March 10, 2009, Blackboard was issued Canadian Patent No. 2,378,200 ("the CA '200 patent"), the Canadian counterpart of the '138 patent. Id. ¶ 14. On April 24, 2009, Blackboard sued Desire2Learn in Canada for infringing that patent. Id. This case is also pending.

On April 20, 2009, Blackboard filed a complaint with the United States International Trade Commission ("ITC"), alleging that Desire2Learn's products infringed the '138 patent and their importation violated 19 U.S.C. § 1337. Id. ¶ 15. The ITC's investigation has been stayed during the appeal from the Texas '138 infringement suit. Guaragna Decl., Ex. 14.

On April 28, 2009, the Patent and Trademark Office issued a notice that the '853 patent would be issued to Blackboard on July 7, 2009. Id., Ex. 6. The '853 patent is a continuation of the '396 patent; they share the same subject matter and have been described as "very similar" by Blackboard. Id., Ex. 3; Def.'s Mot. to Dismiss 9; Def.'s Mot. to Transfer ¶ 3. Blackboard has alleged that the '853 and '396 patents cover the same Desire2Learn technology. Def.'s Mot. to Transfer ¶ 6.

Desire2Learn and D2L Ltd. expected that Blackboard would sue for infringement of the '853 patent. Pl's Opp. to Mot to Dismiss 1. This expectation was based on Blackboard's having asserted other members of the '138 family against Desire2Learn, Pl.'s Opp. 1, and on a statement by Blackboard's General Counsel during settlement negotiations in a previous suit that Blackboard expected to add more continuation patents to the '138 family.² Compl. ¶ 18; Def's Mot. to Dismiss, Small Decl. ¶ 10. Desire2Learn thought this statement implied that Blackboard planned to assert the '853 patent against Desire2Learn. Pl.'s Opp. to Mot. to Dismiss 9.

On June 29, 2009, Desire2Learn contacted Blackboard's counsel to find out whether Blackboard planned to assert the '853 patent in the ITC suit. Def.'s Mot. to Dismiss, Nadel Decl. ¶ 5. Blackboard's counsel responded that he did not know Blackboard's plans. Id. ¶ 3-4. On July 6, 2009, Desire2Learn requested a "standstill agreement" with Blackboard, under which neither party would sue on the '853 patent for 30 days after its issuance. Def.'s Mot. to Dismiss, Nadel Decl. ¶ 5. Blackboard declined because it had not investigated whether Desire2Learn's products infringed the '853 patent. Def.'s Mot. to Dismiss, Ex. B.

On July 7, 2009³, the Plaintiffs filed this complaint, which seeks a declaratory judgment that the '853 patent is invalid and has not been infringed. Paper No. 1. On August 10, 2009, Blackboard moved to dismiss for lack of subject matter jurisdiction. Paper No. 16. On September 15, 2009, Blackboard moved to transfer venue to the Eastern District of Texas. Paper No. 27.⁴ On October 29, 2009, the Plaintiffs moved to file a surreply to Blackboard's motion to transfer. Paper No. 34.

II. Analysis

A. Blackboard's Motion to Dismiss for Lack of Subject Matter Jurisdiction

1. Standard of Review

The plaintiff has the burden of proving subject matter jurisdiction. See Richmond, Fredericksburg & Potomac R.R. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). When, as here, "the challenge is made, not to the sufficiency of the jurisdictional allegations, but to the underlying facts supporting those allegations, a trial court may go beyond the allegations of the complaint and may consider evidence by affidavit, depositions or live testimony without converting the proceeding to one for summary judgment." Kim v. United States, 609 F.Supp.2d 499, 504 (D.Md.2009) (quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982)) (internal quotation marks omitted).

2. Blackboard's Motion

The Plaintiffs assert that this Court has subject matter jurisdiction under the Declaratory Judgment Act⁵ ("the DJA") and 28 U.S.C. § 1338. Blackboard counters that the Court lacks jurisdiction because this suit is not a "case" or "controversy" under Article III of the Constitution.

Under the DJA, "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201 (2006).⁶ Jurisdiction under the DJA is restricted by Article III to the adjudication of "Cases" or "Controversies." U.S. Const. art. III, § 2; Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1335 (Fed.Cir.2008). The DJA's "requirement of a `case of actual controversy' simply [acknowledges] this Constitutional requirement." Prasco, 537 F.3d at 1335.

a. Article III's Case or Controversy Requirement

A case or controversy requires a dispute that is "definite and concrete, touching the legal relations of the parties having adverse legal interests . . . and admit[s] of 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." Id. at 1335-36 (citing MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007)). "[T]here is no bright-line rule for determining whether an action satisfies [this] requirement"; the Court's analysis "must be calibrated to the particular facts of each case." Id. at 1336 (internal citations and quotation marks omitted). The Court considers "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."⁷ Id. (quoting MedImmune, 549 U.S. at 127, 127 S.Ct. 764.).

The Federal Circuit has viewed "this inquiry through the lens of [Article III] standing" doctrine. Id. at 1338. If the declaratory judgment plaintiff can show an injury in fact traceable to the patentee, the dispute is a case or controversy under Article III. See id. "A patentee can cause . . . an injury in a variety of ways [including] by creating a reasonable apprehension of an infringement suit, demanding the right to royalty payments, or creating a barrier to the regulatory approval of a product that is necessary for marketing." Id. at 1339. D2L Ltd. and Desire2Learn contend that they were injured because Blackboard created a reasonable apprehension of an infringement suit on the '853 patent. The Court must determine whether each plaintiff has standing. See Brown v. Hovatter, 2006 WL 2927547, at *3 (D.Md. Oct. 11, 2006).

b. Reasonable Apprehension of Suit

"The reasonableness of a party's apprehension [of suit] is judged using an objective standard." Vanguard Research Inc. v. PEAT, Inc., 304 F.3d 1249, 1254 (Fed.Cir.2002).⁸ "Although the best evidence of a reasonable apprehension of suit comes in the form of an express threat of litigation, an express threat is not required." Id. The Court looks to the totality of the circumstances as they were when the declaratory judgment suit was filed. Id.; Prasco, 537 F.3d at 1337. A plaintiff "must show more than the nervous state of mind of a possible infringer, but does not have to show that the patentee is poised on the courthouse steps." Vanguard Research, 304 F.3d at 1254-55.

The Plaintiffs argue that Blackboard created a reasonable apprehension of suit on the '853 patent by (1) suing on the '138 and '396 patents, which cover the same technology; (2) implying in settlement...