Declaratory Judgment Jurisdiction Considerations in Patent Cases: The District of New Jersey Speaks

IP practitioners should read and heed Judge Martini’s recent decision in Medidata Solutions, Inc. v. DATATRAK Int’l, Inc., 2-12-cv-04748 (D.N.J. May 13, 2013, Docket 33), which addresses considerations for declaratory judgment jurisdiction in a patent dispute.

The case involved two patents owned by DATATRAK, the “parent” ‘087 patent, and the “child” ‘294 patent, which issued from a continuation application.

In March 2011, DATATRAK sued Medidata in the Northern District of Ohio for patent infringement of the ‘087 patent. That case was stayed in December 2011 pending reexamination of the ‘087 patent. At the end of December 2011, and then again at the end of March 2012, DATATRAK made public statements indicating it would vigorously prosecute its claims against Medidata as soon as reexamination by the USPTO was complete.

Several months later on July 31, 2012, while the Ohio case was stayed and the ‘087 patent reexamination was in progress, DATATRAK’s ‘294 patent issued as a continuation of its ‘087 patent. That same day, Medidata filed a Declaratory Judgment Action in the District of New Jersey pursuant to 28 U.S.C. §§ 2201, seeking declarations that it did not infringe the ‘294 patent and that the ‘294 patent was invalid on various statutory grounds. DATATRAK responded by filing a motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction. (DATATRAK also filed a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim, and alternatively moved to transfer the action to the Northern District of Ohio under 28 U.S.C. § 1404. Only DATATRAK’s first basis — its Rule 12(b)(1) argument — is germane to this article.)

Judge Martini’s opinion set forth the standard for determining Article III jurisdiction by the District Court, based on the seminal decision in MedImmune Inc. v. Genentech, Inc., 549 U.S. 118 (2007), namely, “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.” Id. at 127 (quotation omitted). The Court went on to note that under MedImmune’s “all the circumstances” benchmark, the Court should consider facts such as the prior litigation history between the parties on related patents; and the declaratory judgment defendant’s indication about protecting its patent rights against the declaratory judgment plaintiff.

Applying this framework to the facts before him, Judge Martini found it indisputable that DATATRAK sued Medidata in the Northern District of Ohio based on alleged infringement of the related ’087 patent; that after that case was stayed pending reexamination of the ‘087 patent, DATATRAK stated publicly its intent to resume its vigorous prosecution against Medidata once the stay was lifted; and that the ‘294 patent issued after that and it relates to the same subject matter and technology as the ‘087 patent. Accordingly, and based on the totality of the circumstances, the Court found the existence of an actual case or controversy sufficient to confer Article III jurisdiction, and dismissed DATATRAK’s motion to dismiss.

This decision once again highlights the jurisdictional interplay between (i) asserted and (ii) non-asserted, but related patents. For parties looking to assert similar declaratory judgment claims or hoping to rebut the same, careful attention should be made to the public record, including court dockets and SEC filings, for evidence of the patent holder’s intent to enforce its rights.

Ralph A. Dengler, a former Director in the Gibbons Intellectual Property Department, and Todd M. Nosher, a former Associate in the Gibbons Intellectual Property Department, co-authored this post.
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