Hewlett-Packard Co. v. Acceleron LLC

• Citation: 587 F.3d 1358
• Decision Date: 04 December 2009
• Docket Number: No. 2009-1283.,2009-1283.
• Parties: HEWLETT-PACKARD Company, Plaintiff-Appellant, v. ACCELERON LLC, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

587 F.3d 1358

HEWLETT-PACKARD Company, Plaintiff-Appellant, v. ACCELERON LLC, Defendant-Appellee.

No. 2009-1283.

United States Court of Appeals, Federal Circuit.

December 4, 2009.

Charlene M. Morrow, Fenwick & West LLP, of Mountain View, CA, argued for plaintiff-appellant. With her on the brief were Erin C. Jones; Lauren E. Whittemore and Darryl M. Woo and Heather N. Mewes, of San Francisco, CA.

Jason W. Cook, Alston & Bird LLP, of Dallas, TX, argued for defendant-appellee. With him on the brief were Patrick J. Flinn and George D. Medlock, Jr., of Atlanta, GA, and Sarah C. Hsia, of New York, NY.

Before MICHEL, Chief Judge, NEWMAN, and MOORE, Circuit Judges.

MICHEL, Chief Judge.

Hewlett-Packard Company ("HP") sued Acceleron LLC ("Acceleron"), the owner of U.S. Patent No. 6,948,021 ("'021 patent"), in the United States District Court for the District of Delaware, seeking declaratory judgment of non-infringement and invalidity of the '021 patent. The district court granted Acceleron's motion to dismiss for lack of declaratory judgment jurisdiction. For the reasons set forth below, we reverse.

I. BACKGROUND

Acceleron is a patent holding company. It is incorporated in Delaware and headquartered in Tyler, Texas. Acceleron acquired the '021 patent on May 31, 2007. On September 14, 2007, Thomas B. Ramey, III, President of Acceleron, wrote to Michael J. Holston, HP's "Executive Vice-President, General Counsel/Secretary," regarding "U.S. Patent No. 6,948,021 to Derrico et al...." The letter reads:

I am writing to call your attention to the referenced patent.... This patent was recently acquired by Acceleron, and relates to Blade Servers.

We would like an opportunity to discuss this patent with you. In order to provide a productive atmosphere in which we can do so, we ask that you agree that all information exchanged between the parties will not be used for any litigation purposes whatsoever, including but not limited to any claim that Acceleron has asserted any rights against any of your ongoing or planned activities, or otherwise created any actual case or controversy regarding the enclosed patent.

Should you wish to engage in discussions regarding this patent with us, please return an executed copy of this letter to me in the enclosed stamped, self-addressed envelope. When we receive your acknowledgement, we will send you a package of information relating to this patent. I will look for your response by September 28, 2007, and if I do not hear from you by that time, I will assume you have no interest in discussing this patent.

On October 1, 2007, a senior litigation counsel at HP responded, writing:

I have been evaluating the patent you sent and am interested to learn any further information you have so that I am able to conduct a complete and accurate assessment. HP shares your interest in creating a productive atmosphere for us to discuss the '021 patent. Accordingly, in response to your request that HP not file a declaratory judgment action, HP would be willing to agree not to file such an action for a period of 120 days if Acceleron similarly will agree not to file an action against HP during the same 120 day period. If such a mutual standstill agreement is acceptable, please let me know and I will send you an agreement to that effect directly.

Four days later, Mr. Ramey replied:

I do not believe that HP has any basis for filing a declaratory judgment action and I think that my letter provides both parties appropriate protections to create a productive atmosphere in which to discuss the '021 patent.

So, if you are interested in discussing this patent with us, please send me a signed copy of my previous letter to you by no later than October 19, 2007. If I do not receive [one] by then, I will understand that you are not interested in discussing this patent, and you do not have anything to say about the merits of this patent, or its relevance to your Blade Server products.

On October 17, 2007, HP filed this declaratory judgment suit in the United States District Court for the District of Delaware. Acceleron moved to dismiss the case for lack of subject matter jurisdiction. On March 11, 2009, the district court granted Acceleron's motion. Hewlett-Packard Co. v. Acceleron, LLC, 601 F.Supp.2d 581 (D.Del.2009). The court observes that, on one hand, Acceleron's "failure to specifically request a confidentiality agreement and to accept [HP's] 120-day stand-still proposal weigh[ed] the scale in favor of finding jurisdiction." Id. at 589. On the other hand, however, other circumstances in this case, including the lack of "a statement of infringement, identification of specific claims, claim charts, prior pleadings or litigation history, or the identification of other licensees" in Mr. Ramey's letters to HP, weighed against finding declaratory judgment jurisdiction. Id. After taking Acceleron's business model as a non-competitor patent holding company into consideration, the court held that, under the totality of the circumstances, at the time HP filed the suit, the litigation was "too speculative a prospect to support declaratory judgment jurisdiction." Id.

HP timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

II. DISCUSSION

A. Standard of review

This court reviews a grant or denial of a motion to dismiss for lack of subject matter jurisdiction de novo. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1377 (Fed.Cir.2007). It reviews underlying factual findings for clear error. Id.

B. Analysis

A court has subject matter jurisdiction under the Declaratory Judgment Act only if "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, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007). In patent cases, declaratory judgment jurisdiction exists "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." SanDisk, 480 F.3d at 1381.

HP asserts that its declaratory judgment claims fall squarely within the standard set by SanDisk. According to HP, the fact that Acceleron wrote to HP, specifically identifying the '021 patent and HP's product line, i.e., an ongoing activity, is all that is required under SanDisk for the court to find declaratory judgment jurisdiction. We see nothing "squarely" about this case and SanDisk does not support HP's proposition. Intentionally or not, MedImmune may have lowered the bar for determining declaratory judgment jurisdiction in all patent cases; certainly it did so in the licensor-licensee context. See, e.g., Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 902 (Fed.Cir. 2008) ("[T]he now more lenient legal standard facilitates or enhances the availability of declaratory judgment jurisdiction in patent cases."). But a lowered bar does not mean no bar at all. Indeed, a declaratory judgment plaintiff must show that the dispute is "definite and concrete, touching the legal relations of parties having adverse legal interests; and that it be real and substantial and admit 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." MedImmune, 549 U.S. at 127, 127 S.Ct. 764 (internal quotation marks and brackets omitted). Thus, a communication from a patent owner to another party, merely identifying its patent and the other party's product line, without more, cannot establish adverse legal interests between the parties, let alone the existence of a "definite and concrete" dispute. More is required to establish declaratory judgment jurisdiction.

Acceleron argues that it never asserted its rights under the '021 patent because its correspondence with HP did not contain language threatening to sue for infringement or demand a license. As a result, Acceleron contends that there is no justiciable case or controversy giving rise to declaratory judgment jurisdiction. We disagree.

Judge Markey eloquently described the dilemma facing a potential infringement defendant as

the sad and saddening scenario that led to enactment of the Declaratory Judgment Act. In the patent version of that scenario, a patent owner engages in a danse macabre, brandishing a Damoclean threat with a sheathed sword. Guerrilla-like, the patent owner attempts extra-judicial patent enforcement with scare-the-customer-and-run tactics that infect the competitive environment of the business community with uncertainty and insecurity. Before the Act, competitors victimized by that tactic were rendered helpless and immobile so long as the patent owner refused to grasp the nettle and sue. After the Act, those competitors were no longer restricted to an in terrorem choice between the incurrence of a growing potential liability for patent infringement and abandonment of their enterprises; they could clear the air by suing for a judgment that would settle the conflict of interests.

Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 734-35 (Fed.Cir. 1988) (citations omitted). The purpose of a declaratory judgment action cannot be defeated simply by the stratagem of a correspondence that avoids the magic words such as "litigation" or "infringement." Of course, if "a party has actually been charged with infringement of the patent, there is, necessarily, a case or controversy adequate to support [declaratory judgment] jurisdiction." Cardinal Chem. Co. v. Morton Int'l, 508 U.S. 83, 96, 113 S.Ct. 1967, 124 L.Ed.2d 1 (1993). But it is implausible (especially after MedImmune and several post-MedImmune decisions from this court) to expect that a competent lawyer drafting such correspondence for a patent owner...