Medidata Solutions, Inc. v. Datatrak Int'l, Inc.

• Decision Date: 10 May 2013
• Docket Number: Civ. No. 12-4748 (WJM)
• Parties: MEDIDATA SOLUTIONS, INC. Plaintiff, v. DATATRAK INTERNATIONAL, INC. Defendant.
• Court: U.S. District Court — District of New Jersey

MEDIDATA SOLUTIONS, INC. Plaintiff, v. DATATRAK INTERNATIONAL, INC. Defendant.

Civ. No. 12-4748 (WJM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

Date: May 10, 2013

OPINION

WILLIAM J. MARTINI, U.S.D.J.:

This matter comes before the Court on Defendant DATATRAK International, Inc.'s ("DATATRAK's") motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), or in the alternative, to transfer this matter to the Northern District of Ohio pursuant to 28 U.S.C. § 1404. Plaintiff Medidata Solutions Inc. ("Medidata") opposes the motion. For the reasons set forth below, DATATRAK's motion is GRANTED in part and DENIED in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

The facts relevant to resolution of this motion are largely undisputed: Medidata is a Delaware corporation whose corporate headquarters are located in New York. DATATRAK is an Ohio corporation with a place of business in Ohio. Both parties conduct business in New Jersey.

At the outset, it is important to note that presently, Defendant DATATRAK owns the rights to two United States patents: (1) U.S. Patent No. 7,464,087, issued by theUnited States Patent and Trademark Office (the "USPTO") on December 9, 2008 (the "'087 Patent"); and U.S. Patent No. 8,234,294, issued by the USPTO on July 31, 2012 (the "'294 Patent").

As explained by Medidata, "[the '294 Patent] is a 'continuation' of the '087 Patent, meaning that it shares the same specification and pertains to the same subject matter and technology as the '087 Patent." (Def.'s Opp. Br. 4, ECF No. 28.) For purposes of the present Opinion, it is sufficient to further note: (1) that Medidata asserts that the '087 and '294 Patents are "very closely related" ¹ (Id.); (2) that DATATRAK does not challenge - and in fact appears to agree with - that statement;² and (3) that the Court's independent review of both patents further confirms that Medidata's characterization is accurate.

The Parties' Prior Patent Infringement Litigation as to the '087 Patent

Bearing that in mind, on March 4, 2011, DATATRAK initiated a patent infringement action against Medidata in the United States District Court for the Northern District of Ohio at No. 1:11-cv-458, DATATRAK International, Inc. v. Medidata Solutions, Inc., stemming from Medidata's alleged infringement of DATATRAK's rights in the earlier-issued '087 Patent (the "Ohio Litigation"). The Ohio Litigation was stayed on December 16, 2011, pending an ex parte reexamination of the '087 Patent (the "Reexamination Process").Subsequently, on December 31, 2011 and March 31, 2012, DATATRAK made public statements evincing its intent to resume vigorous prosecution of its claims against Medidata at the conclusion of the Reexamination Process. (Compl. ¶¶ 18-20.)

The Parties' Present Patent Infringement Litigation as to the '294 Patent

Thereafter, on July 31, 2012 - during the pendency of the Reexamination Process and the presently-stayed Ohio Litigation - the USPTO issued the '294 Patent. On that same day, ³ Medidata initiated the present action pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking declarations: (1) that Medidata "has not infringed and does not infringe any valid claim of the '294 [P]atent" (Compl., First Count); and (2) that the claims of the '294 Patent are invalid "for failure to comply with one or more of the requirements of patentability . . . , including without limitation, the requirements of 35 U.S.C. §§ 101, 102, 103 and/or 112." (Compl., Second Count).

In response, DATATRAK filed the present motion, asserting that Medidata's Complaint should be dismissed under Rule 12(b)(1) for lack of subject matter jurisdiction and under Rule 12(b)(6) for failure to state a claim, and, alternatively, that this matter should be transferred to the Northern District of Ohio pursuant to 28 U.S.C. § 1404.

II. DISCUSSION

A. Lack of Subject Matter Jurisdiction

DATATRAK first moves to dismiss Medidata's Complaint under Rule 12(b)(1),based on its assertion that Medidata has failed to establish the existence of an actual case or controversy sufficient to confer this Court with jurisdiction under Article III of the Constitution. (Def.'s Br. in Supp. of Mot. to Dismiss 5, ECF No. 27.)

As an initial matter, the Court notes, first, that because DATATRAK's motion "calls into question the essential facts underlying a claim of subject matter jurisdiction," Med. Soc'y of N.J. v. Herr, 191 F.Supp.2d 574, 578 (D.N.J. 2002), the Court "may consider evidence outside the pleadings." Gould Elec. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000).

Second, that Medidata brought this action under the Declaratory Judgment Act ("DJA"), which states: "[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(a).

Third, that jurisdiction under the DJA is restricted by Article III of the Constitution to the adjudication of "Cases" or "Controversies." 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") (citing U.S. Const. art. III, § 2) (hereinafter, "Article III Jurisdiction").

And fourth, that Medidata bears the burden of establishing that the Court has Article III Jurisdiction. Petruska v. Gannon Univ., 462 F.3d 294, 302 n. 3 (3d Cir. 2006); Med. Soc'y of N.J., 191 F.Supp.2d at 578.

i. Article III Jurisdiction

For purposes of determining Article III Jurisdiction, 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." MedImmune Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quotation omitted). "[T]here is no bright-line rule for determining whether an action satisfies [this] requirement." Id. See also SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir. 2007). ("Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably [patent-infringing] behavior or abandoning that which he claims a right to do [based on his belief that his activity does not infringe on that patent.]").

For purposes of determining whether the Court has Article III Jurisdiction under Medimmune's "all the circumstances" standard, it is appropriate for the Court to consider: (1) whether there has been prior litigation between the parties on related patents; and (2) whether the declaratory judgment defendant has indicated that it will protect its arguable patent rights against the declaratory judgment plaintiff. Arkema Inc. v. Honeywell Int'l, Inc., 706 F.3d 1351, 1357-58 (Fed. Cir. 2013). See also Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., 482 F.3d 1330, 1344-45 (Fed. Cir. 2007) ("related litigation involving the same technology and the same parties is relevant in determining whether a justiciable declaratory judgment controversy exists on other related patents").

ii. Application

In this case, it is undisputed: that DATATRAK presently owns the rights to the '087 and '294 Patents; that DATATRAK has already initiated a patent infringementaction against Medidata in the Northern District of Ohio based on Medidata's alleged infringement of the '087 Patent; that after the Ohio Litigation was stayed as a result of a reexamination of the '087 Patent, DATATRAK stated publically on at least two occasions that it intends to resume its vigorous prosecution against Medidata when that stay is lifted; that the USPTO thereafter issued the '294 Patent; and that the '087 and '294 Patents share the same specification, pertain to the same subject matter and technology, and are otherwise "very closely related."

In light of these facts, and when considering the foregoing principles, the Court finds that based on the totality of the circumstances, Medidata has established the existence of an actual case or controversy sufficient to confer this Court with Article III Jurisdiction. Accordingly, DATATRAK's motion to dismiss pursuant to Rule 12(b)(1) will be DENIED. See Arkema, 706 F.3d at 1357 (Article III Jurisdiction established where, among other things, defendant made it clear that it would protect its patent rights against any activity by plaintiff which allegedly infringed on those rights and defendant already asserted claims against plaintiff for infringement of other patents covering the same technology); D2L Ltd. v. Blackboard, Inc., 671 F.Supp.2d 768, 775-77 (D. Md. 2009) (Article III Jurisdiction established where plaintiff filed declaratory judgment action on newly-issued patent, defendant previously sued plaintiff for infringement of two other patents covering the same technology, and defendant implied that it would sue on the newly issued patent during settlement negotiations between the parties).

B. Failure to State a Claim

DATATRAK next moves to dismiss under Rule 12(b)(6) for failure to state claim upon which relief can be granted, based on its assertion that Medidata's Complaint contains insufficient facts demonstrating Plaintiff's entitlement to a declaration of its non-infringement of, or the overall invalidity of, the '294 Patent.

In addressing DATATRAK's Rule 12(b)(6) motion, the Court notes, first, that "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations. [However,] a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citation omitted). "While legal conclusions can provide the framework of a...