The Software IP Report

When Can a Patent Owner Sue for a Declaratory Judgment?

Does jurisdiction exist over a declaratory judgment action (i.e., is there a case or controversy) where the plaintiff alleges that a party’s possible future use of software would infringe patent claims?  The court in Auburn University v. International Business Machines Corp., No. 3:09-cv-694 (M.D. Ala. April 23, 2012), held that there was no justiciable controversy where (1)  IBM “made sufficient representations to eliminate any reasonable apprehension of infringement,” (2) there was “no current infringement, and (3) no harm appears immediately threatened.”

The question of declaratory judgment jurisdiction in this case was different from the usual scenario in which a party that does not own the patent at issue seeks to clear up questions of infringement.  Typical questions of declaratory judgment jurisdiction in patent cases can be resolved with a covenant not to sue from the patent owner.  In cases where a patent owner brings a declaratory judgment action, in contrast, “the non-holder may eliminate a justiciable controversy by representing to the Court that the non-holder has abandoned all potentially infringing conduct and that it has no plans to resume these activities in the future.”  However, evaluating such representations can be much more difficult than the determination of whether a patent holder has provided a covenant not to sue.

In this case, after reviewing documents provided by IBM in discovery, Auburn sought to amend its complaint “to add a claim for declaratory judgment that if Sony were to use the software provided by IBM, such use would infringe” Auburn’s patent.  However, Auburn did not dispute that the accused methods, and IBM’s accused software, were never implemented in Sony’s product.  Further, IBM “affirmatively represent[ed] that it will not use, or cause any other persons to use, any” accused methods to test Sony products, or in software in connection with Sony products.  For its part, Auburn complained that IBM would not, among other things, represent that it would not induce others to use the accused methods, nor would it promise to delete all accused software developed in connection with Sony products.

Looking to applicable precedent, the court explained that whether a case or controversy existed depended on whether IBM had made representations “sufficient to eliminate any reasonable apprehension of future infringement, and thus eliminate jurisdiction in this Court.”  Because IBM’s past and present activity created no “risk that the accused methods will be used on the Sony products,” and “IBM has made binding representations that its future activity with relation to the Sony products will not infringe,” there was no case or controversy.

The Court distinguished the Federal Circuit’s 2011 decision in Arris Group, Inc. v. British Telecommunications PLC, 639 F.3d 1368 (Fed. Cir. 2011).  Arris was a covenant-not-to-sue case in which the patent owner made a representation that appeared designed to preserve the possibility of a future suit.  IBM’s representations were far more comprehensive than were made in Arris, and also there was a much greater apprehension of future infringement in that case.

Therefore, the court denied Auburn’s motion to amend its pleadings, explaining that “Auburn’s proposed claim for a declaratory judgment against IBM regarding the use of the accused methods would be futile, because IBM’s representations have eliminated any actual case or controversy between the parties on this issue.”