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Adobe Systems Incorporated v. Select Retrieval, LLC

United States District Court, S.D. California

February 6, 2014

ADOBE SYSTEMS INCORPORATED, a Delaware Corporation, Plaintiff,
v.
SELECT RETRIEVAL, LLC, a Texas Limited Liability Corporation, Defendant.

ORDER DENYING SELECT RETRIEVAL, LLC'S MOTION TO DISMISS PLAINTIFF ADOBE SYSTEM INCORPORATED'S FIRST AMENDED COMPLAINT FOR DECLARATORY JUDGMENT (ECF NOS. 51, 55)

GONZALO P. CURIEL, District Judge.

INTRODUCTION

Before the Court in this patent case is defendant Select Retrieval, LLC's ("Select Retrieval") Motion to Dismiss plaintiff Adobe System Incorporated's ("Adobe") currently operative First Amended Complaint ("FAC") pursuant to the first-to-file rule. (ECF Nos. 51, 54.) Adobe has filed a response in opposition, (ECF No. 59), and Select Retrieval has filed a reply, (ECF No. 65). The Court find's Select Retrieval's Motion to Dismiss suitable for disposition without oral argument. See CivLR 7.1.d.1. Having considered the parties' submissions and the applicable law, and for the reasons that follow, the Court will DENY Select Retrieval's Motion to Dismiss.

BACKGROUND

Adobe filed this case on September 25, 2012, [1] following Select Retrieval's decision to sue several of Adobe's customers for infringement of U.S. Patent No. 6, 128, 617 ("617 patent") and U.S. Patent No. 5, 953, 724 ("724 patent"). (ECF Nos. 41, 43.) The patent-infringement cases Select Retrieval filed included at least one case each in this District ("California Action"), the Northern District of Illinois ("Illinois Action"), the Middle District of Florida ("Florida Action"), the District of Oregon ("Oregon Action"), and the District of Maine ("Maine Action"). (Id. ¶¶ 16-18, 20-21.)

All defendants in the California Action have been dismissed, and the case is closed.[2] Before the California Action was closed, however, Adobe sought to intervene per Select Retrieval's allegations against a licensee of Adobe's Digital Marketing technology ("DM technology")-Pacific Sunwear of California, Inc. ("Pacific Sunwear"). Unsuccessful in its attempt to intervene, Adobe agreed to defend and indemnify Pacific Sunwear and, in doing so, filed counterclaims against Select Retrieval for declarations of invalidity and non-infringement of the 617 patent. Select Retrieval thereafter executed a covenant not to sue Pacific Sunwear, which led to the parties' joint motion to dismiss their respective claims and counterclaims.

Only two defendants remain in the Illinois Action-OfficeMax, Inc. ("OfficeMax") and Sears Holdings Corp. ("Sears")-both of which are licensees of Adobe's DM technology. (ECF No. 43 ¶ 17.) The Illinois Action has been stayed pending resolution of this action. (ECF No. 63.) The Florida Action has been dismissed. (ECF No. 43 ¶ 18.) The Oregon Action has been dismissed. (Id. ¶ 20.) The Maine Action involves one licensee of Adobe's DM technology, L.L. Bean, Inc. ("L.L. Bean"), and is currently stayed pending resolution of this action. (Id. ¶ 21.)

Select Retrieval also filed at least two patent-infringement cases in the District of Delaware, the first of which ("First Delaware Action") is still pending, and the second of which has been dismissed. (Id. ¶¶ 19, 22.) Select Retrieval filed the First Delaware Action on September 13, 2011, naming, among others, five licensees of Adobe's DM technology as defendants: B&H Foto & Electronics Corp. ("B&H") Charming Shoppes, Inc. ("Charming"); Hayneedle, Inc. ("Hayneedle"); Macys.com, Inc. ("Macy's"); and Ross-Simons of Warwick, Inc. ("Ross-Simons"). (Id. ¶ 19.)

Adobe's successfully moved to intervene in the First Delaware Action for the limited purpose of filing a motion to sever and stay proceedings against its customers. (ECF No. 55-5.) And while Adobe's motion to sever was granted, its motion to stay was denied. Because Adobe agreed to defend and indemnify its licensees, the First Delaware Action has been proceeding with Adobe's counsel at the helm of its licensees' defense, even though Adobe is not itself a party to that action.

The parties in the First Delaware Action have exchanged initial disclosures, preliminary infringement contentions, preliminary invalidity contentions. The parties have also engaged in significant discovery, including document productions and depositions. On October 23, 2013, the court there issued a claims construction order, (ECF No. 55-6), in which the court addressed nearly all of the claim terms that Adobe, in its representation of Pacific Sunwear in the case related to this one, would have had this Court construe.[3] Fact discovery is set to close on February 5, 2014; expert discovery is set to close on May 14, 2014; the dispositive motion filing deadline is set for June 13, 2014; and trial is scheduled for November 3, 2104. (ECF No. 55-7.)

As to Select Retrieval's allegations against Adobe's customers in the First Delaware Action, the Maine Action, and the Illinois Action, Adobe explains: "Select Retrieval alleges that Pacific Sunwear, [4] OfficeMax, Sears, B&H, Charming, Hayneedle, Macy's, [5] Ross-Simons, and L.L. Bean, all of whom are Adobe licensees (collectively, the "Adobe Licensees"), infringe the 617 patent by making, using, owning, operating, and/or maintaining one or more websites... that embody the inventions claimed in the 617 Patent.'" (ECF No. 43 ¶ 23.) In other words, Select Retrieval's allegations against each of Adobe's customers are essentially the same, varying only to the extent that each Adobe customer maintained its own website.

Adobe further explains that "Select Retrieval has also alleged that OfficeMax infringes the 724 patent by making, using, selling, offering for sale or license, advertising and/or importing in the United States, including within this judicial district [i.e., the Northern District of Illinois], their products and services on the Internet using methods or instrumentalities that embody the inventions claimed in the 724 Patent.'"[6] (Id. ¶ 24.)

Adobe asserts the "Adobe Licensees provided to Adobe copies of the allegations made against them by Select Retrieval, represented that these allegations are based on customer use of the Adobe [DM] technology, and requested defense and indemnity from Adobe." (Id. ¶ 26.) "Adobe has agreed to defend and indemnify all of the Adobe Licensees Select Retrieval has accused of infringing the 617 patent." (Id. ¶ 33.)

Adobe explains that, while two district courts (this one and the District Court for the District of Oregon) have found that Adobe did not have a significant protectable interest in Select Retrieval's allegations, these decisions were issued before Adobe filed notices as to Adobe's agreement to defend and indemnify its licensees. (Id. ¶ 34 n.1.) Adobe explains that, once it agreed to defend and indemnify the Adobe Licensees, the District Courts for the District of Maine and the District of Delaware "held that Adobe ...


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