The opinion of the court was delivered by: JEFFREY WHITE, District Judge
ORDER GRANTING IN PART AND DENYING IN PART BRITESMILE'S MOTION TO
DISMISS DISCUS DENTAL'S COUNTERCLAIMS IV-XII
Now before the Court is the motion of Plaintiffs BriteSmile,
Inc. and BriteSmile Development, Inc. (collectively "BriteSmile")
to dismiss the fourth through twelfth counterclaims filed by
Defendant Discuss Dental, Inc. ("Discus"). Having carefully
considered the parties' arguments and the relevant legal
authority, the Court hereby GRANTS IN PART and DENIES IN PART the
motion to dismiss.
On May 3, 2005, BriteSmile sent a letter to dentists who use
Discus' teeth whitening products. The letter stated in pertinent
. . . BriteSmile believes that your use of certain
teeth whitening products of Discus Dental, Inc.
("Discus") infringes valuable property rights of
BriteSmile, and that this activity must cease and
BriteSmile is the owner of a substantial patent
portfolio dedicated to tooth whitening technology,
including the following U.S. patents which may be of
interest to you: U.S. Patent Nos. 6,343,933;
6,514,543; 6,536,628; 6,331,292; 5,922,307;
6,312,670; 6,322,773; and 6,488,914. BriteSmile has
made a significant investment in its patent portfolio
and is vigorous in its enforcement of these and other
patents. You should be aware that BriteSmile is suing
Discus over Discus' making, using and selling of
technology that infringes several of these patents.
As a seller of Discus products, you are also
infringing one or more of the BriteSmile patents. In particular, Discus' Zoom!
Chairside system infringes one or more BriteSmile
patents. In addition, several of Discus' take home
products, including Zoom! Take Home, Nite White and
Excel, which use a two component gel and a dual
chamber static mixer, infringe other BriteSmile
patents. Your use and sale of these Discus products
constitutes infringement under U.S. patent laws.
As an alternative to Discus' Zoom! Chairside system,
BriteSmile is interested in granting you rights under
BriteSmile's substantial patent portfolio by inviting
you to become a licensed provider of BriteSmile
products and services. Whether or not you are
interested to become part of the BriteSmile
opportunity, BriteSmile insists that you immediately
cease and desist from all infringing use and sale of
the Discus products covered by the above patents.
(Declaration of Shirish Gupta ("Gupta Decl."), Ex. 1.) On June
15, 2005, BriteSmile sent a follow-up letter to dentists stating:
. . . [T]he patent infringement litigation between
BriteSmile and Discus is ongoing, with Discus still
accused of infringement of three BriteSmile patents:
U.S. Patent Nos. 6,343,933; 6,514,543; 6,536,628. In
fact, Discus has changed its formulations for its
products, and many of those changes were just
revealed to BriteSmile.
As a result of Discus' formulation changes,
BriteSmile is not interested at this time in pursuing
Discus' customers, the dentists, for past
infringement based on those old formulations.
BriteSmile will seek damages in that regard from
As far as the new formulations are concerned,
BriteSmile is currently evaluating whether those
formulations infringe any BriteSmile intellectual
property. If so, BriteSmile will consider all of its
legal options for addressing the infringement by
Discus and its customers.
(Gupta Decl., Ex. 3.)
Based in large part on these letters, Discus filed amended
counterclaims against BriteSmile, seeking a declaratory judgment
of non-infringement and invalidity of U.S. Patent Nos. 6,488,914
("'914 Patent"), 6,331,292 ("'292 Patent"), 5,922,307 ("'307
Patent"), 6,312,670 ("'670 Patent"), and 6,322,773 ("'773
Patent") pursuant to 22 U.S.C. § 2201.*fn1 Based on these
letters accusing Discus' products of infringement and initially
threatening to sue the dentists, Discus also filed counterclaims
for tortious interference with prospective economic advantage and
economic business relations, unfair competition under California
Business and Professional Code § 17200, common law unfair
competition, and trade libel.
BriteSmile now moves to dismiss the declaratory relief
counterclaims for lack of subject matter jurisdiction, arguing
that Discus does not have a reasonable apprehension of being sued over the above patents. Alternatively, BriteSmile urges the Court
to exercise its discretion to decline to hear the declaratory
relief counterclaims. BriteSmile also moves to dismiss the state
law counterclaims, arguing that they are preempted by the patent
laws and that Discus failed to sufficiently allege these claims.
The Court will address these arguments in turn.
A. Legal Standards Applicable to Declaratory Relief
In order to establish subject matter jurisdiction, Discus bears
the burden of establishing that an "actual controversy" existed
at, and has continued since, the time it filed its counterclaims.
See Super Sack Mfg. Corp. v. Chase Packaging Corp.,
57 F.3d 1054, 1058 (Fed. Cir. 1995). The Federal Circuit applies a
two-part test to determine if there is an actual controversy.
See, e.g., Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479,
1481 (Fed. Cir. 1998). First, the patentee must make an explicit
threat or take other action that creates a reasonable
apprehension on the part of the declaratory plaintiff that it
will face an infringement suit. Super Sack, 57 F.3d at 1058.
Second, there must be present activity that could constitute
infringement or concrete steps taken with the intent to conduct
such activity. Id. The focus of BriteSmile's motion is whether
Discus has met its burden under the first prong.
B. Discus Has Not Met Its Burden to Show It Had A Reasonable
Apprehension of Suit.
"The reasonableness of a party's apprehension is judged using
an objective standard" based on the totality of the
circumstances. Vanguard Research, Inc. v. Peat, Inc.,
304 F.3d 1249, 1254 (Fed. Cir. 2002). "To put a putative infringer in
reasonable apprehension of suit does not require an express
charge of infringement and threat of suit; rather, such
apprehension may be induced by subtler conduct if that conduct
rises `to a level sufficient to indicate an intent [on the part
of the patentee] to enforce its patent,' i.e., to initiate an
infringement action." EMC Corp. v. Norand Corp., 89 F.3d 807,
811 (Fed. Cir. 1996) (quoting Shell Oil Co. v. Amoco Corp.,
970 F.2d 885, 887 (Fed. Cir. 1992)).
The facts of this case establish that on May 3, 2005,
BriteSmile sent to dentists informing them of its belief that
their use of certain Discus' teeth whitening products "infringes valuable intellectual property rights of BriteSmile." BriteSmile
then listed eight patents, the three of which BriteSmile has sued
Discus for infringement in this action plus the '914, '292, '307,
'670, and '773 Patents, "which may be of interest to [the
dentists]." BriteSmile stated that it is suing Discus over
"several of these patents" and accused the dentists of infringing
"one or more of the BriteSmile patents," without specifying which
one or ones. Due to the number of patents lists in the letter and
the fact that BriteSmile has only sued Discus over three of these
patents in this lawsuit which has been proceeding now for over
three years, the Court concludes that the letter is ambiguous as
to whether it indicates an intent by BriteSmile specifically to
initiate an infringement action on the '914, '292, '307, '670, or
Discus' reliance on Fina Research for the proposition that a
letter referring to multiple patents may create a reasonable
apprehension of suit over any of those patents is misplaced. In
Fina Research, the patentee sent two letters in which it
directly accused the declaratory plaintiff of infringing "one or
both" of two patents and stated the patentee's intent to
"vigorously protect and enforce its rights in the subject
patents, including the filing of suit if necessary." Fina
Research, 141 F.3d at 1482 (emphasis in original). The patentee
averred that the product at issue did not infringe one of these
patents, and thus, the declaratory plaintiff only faced potential
liability over the other patent. Under these circumstances, the
court concluded that the letters created a reasonable
apprehension of suit with respect to the patent on which the
declaratory plaintiff faced potential liability. Id. at
In contrast here, BriteSmile's letter refers to eight patents,
three of which are the subject of the infringement lawsuit which
was been proceeding for over three years. The Court finds that
BriteSmile's stated intent to initiate infringement actions with
respect to the '914, '292, '307, '670, and '773 Patents is much
more ambiguous than the patent at issue in Fina Research.
Moreover, here, BriteSmile sent a follow-up letter in which
BriteSmile only refers to the '933, '543, and '628 Patents and
clarifies that it has no current intent to sue the dentists for
infringement based on Discus' old formulations. These two
letters, read together, in conjunction with the fact that
BriteSmile has sued Discus over only three of the eight patents
in a lawsuit which is now over three years old, do not create a
reasonable apprehension of suit at this time. Accordingly, the Court grants BriteSmile's motion as
to Discus' fourth through eight counterclaims without prejudice
to Discus refiling such claims if BriteSmile makes any further
threatening statements regarding these patents.
Even assuming arguendo that these letters do create a
reasonable apprehension of suit, the Court exercises its "unique
and substantial" discretion to decline to hear these
counterclaims for declaratory relief. See Wilton v. Seven Falls
Co., 515 U.S. 277, 286 (1995); EMC, 89 F.3d at 810. "Even if
there is an actual controversy, the district court is not
required to exercise declaratory judgment jurisdiction, but has
discretion to decline that jurisdiction" EMC, 89 F.3d at 810;
see also Serco Servs. Co., L.P. v. Kelley Co., Inc.,
51 F.3d 1037, 1039 (Fed. Cir. 1995) (court may ...