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Digitech Image Techs., LLC v. Newegg Inc. and Newegg.Com Inc

May 3, 2013

DIGITECH IMAGE TECHS., LLC, PLAINTIFFS,
v.
NEWEGG INC. AND NEWEGG.COM INC., DEFENDANTS, NEWEGG INC., COUNTER-PLAINTIFF,
v.
DIGITECH IMAGE TECHNS., LLC, AND ACACIA RESEARCH CORP., COUNTER-DEFENDANTS.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

ORDER GRANTING ACACIA RESEARCH CORP.'S MOTION TO DISMISS [30]

I.INTRODUCTION

Acacia Research Corporation moves to dismiss itself as a defendant in this case for a lack of subject-matter jurisdiction or, in the alternative, for Digitech's failure to state a claim. Because Acacia has no legal interest in U.S. Patent No. 6,128,415 Patent and, consequently, would not have standing to sue for infringement, the Court finds that that there is no controversy sufficient to confer jurisdiction under the Declaratory Judgment Act. The Court therefore GRANTS Acacia's motion to dismiss for lack of subject-matter jurisdiction.*fn1

II.FACTUAL BACKGROUND

On October 2, 2012, Digitech, the present owner of the '415 Patent, sued Newegg for patent infringement. (Compl. ¶ 7.) Acacia, Digitech's ultimate parent company,*fn2 was not a party to the initial Complaint. (See Compl. 1.) Rather, Acacia was brought into this case on October 25, 2012, when Newegg counterclaimed against Digitech and Acacia. (ECF No. 16.) Newegg's counterclaim seeks a declaratory judgment of noninfringement and invalidity of the '415 Patent. (Id.)

Newegg alleges that the Court has subject-matter jurisdiction over Acacia under the Declaratory Judgment Act. (Answer ¶ 6.) In support of this contention, Newegg asserts that the parent-subsidiary relationship between Acacia and Digitech creates a controversy sufficient to confer standing under the Act. (Id.) Specifically, Newegg argues that Acacia has an interest-which it styles an "equity interest"-in the '415 Patent because Acacia "has an ownership interest in Digitech directly or indirectly." (Id. ¶ 7.) Newegg claims that this equity interest creates a justiciable controversy between the parties, thus making Acacia a proper counter-defendant. (Opp'n 5.)

Newegg alleges three facts to support Acacia's alleged equity interest:

(1) Digitech is a subsidiary of Acacia; (2) Digitech and Acacia share the same physical address and place of business; and (3) Acacia stated in a press release filed with the Securities and Exchange Commission that "in May 2012 [Acacia and its affiliates] acquired patents, originally issued to Polaroid, covering digital imaging and related technologies." (ECF No. 16.) These are the only allegations in the counterclaim that address Acacia's relationship to the '415 Patent. Notably, Newegg does not allege that Acacia is the owner, assignee, or exclusive licensee of the '465 Patent. (See id.)

III.LEGAL STANDARD

The purpose of the Declaratory Judgment Act in patent cases is to provide the allegedly infringing party relief from uncertainty and delay regarding its legal rights. Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 902 (Fed. Cir. 2008). But the Act "is not an independent basis for subject-matter jurisdiction." Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1335 (Fed. Cir. 2008). Rather, the Act affords a remedy only "if the court has jurisdiction from some other source." Id. Additionally, the party instituting the declaratory action must have standing to bring suit, and the issue presented to the Court must be ripe. Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1337 (Fed. Cir. 2007).

A.Subject-matter jurisdiction under the Declaratory Judgment Act

The Declaratory Judgment Act provides that in the case of "an 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, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The situations in which a potential infringer may challenge the validity of a patent via declaratory judgment are thus limited: A court may exercise subject-matter jurisdiction under the Act only when the claim presents an actual controversy. U.S. Const. art. III, § 2.

In the patent context, an actual controversy exists where "the facts alleged show 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). The declaratory-judgment plaintiff bears the burden of proving that there is an actual controversy. Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479, 1481 (Fed. Cir. 1998). Moreover, even if an actual controversy exists, the exercise ...


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