United States Court of Appeals for the Federal Circuit
2009-1283
HEWLETT-PACKARD COMPANY,
Plaintiff-Appellant,
v.
ACCELERON LLC,
Defendant-Appellee.
Charlene M. Morrow, Fenwick & West LLP, of Mountain View, California, argued
for plaintiff-appellant. With her on the brief were Erin C. Jones; Lauren E. Whittemore
and Darryl M. Woo and Heather N. Mewes, of San Francisco, California.
Jason W. Cook, Alston & Bird LLP, of Dallas, Texas, argued for defendant-
appellee. With him on the brief were Patrick J. Flinn and George D. Medlock, Jr., of
Atlanta, Georgia, and Sarah C. Hsia, of New York, New York.
Appealed from: United States District Court for the District of Delaware
Judge Sue L. Robinson
United States Court of Appeals for the Federal Circuit
2009-1283
HEWLETT-PACKARD COMPANY,
Plaintiff-Appellant,
v.
ACCELERON LLC,
Defendant-Appellee.
Appeal from United States District Court for the District of Delaware in case no. 07-CV-
650, Judge Sue L. Robinson.
__________________________
DECIDED: December 4, 2009
__________________________
Before MICHEL, Chief Judge, NEWMAN, and MOORE, Circuit Judges.
MICHEL, Chief Judge.
Hewlett-Packard Company (“HP”) sued Acceleron LLC (“Acceleron”), the owner
of U.S. Patent No. 6,948,021 (“’021 patent”), in the United States District Court for the
District of Delaware, seeking declaratory judgment of non-infringement and invalidity of
the ’021 patent. The district court granted Acceleron’s motion to dismiss for lack of
declaratory judgment jurisdiction. For the reasons set forth below, we reverse.
I. BACKGROUND
Acceleron is a patent holding company. It is incorporated in Delaware and
headquartered in Tyler, Texas. Acceleron acquired the ’021 patent on May 31, 2007.
On September 14, 2007, Thomas B. Ramey, III, President of Acceleron, wrote to
Michael J. Holston, HP’s “Executive Vice-President, General Counsel/Secretary,”
regarding “U.S. Patent No. 6,948,021 to Derrico et al. . . .” The letter reads:
I am writing to call your attention to the referenced patent. . . . This patent
was recently acquired by Acceleron, and relates to Blade Servers.
We would like an opportunity to discuss this patent with you. In order to
provide a productive atmosphere in which we can do so, we ask that you
agree that all information exchanged between the parties will not be used
for any litigation purposes whatsoever, including but not limited to any
claim that Acceleron has asserted any rights against any of your ongoing
or planned activities, or otherwise created any actual case or controversy
regarding the enclosed patent.
Should you wish to engage in discussions regarding this patent with us,
please return an executed copy of this letter to me in the enclosed
stamped, self-addressed envelope. When we receive your
acknowledgement, we will send you a package of information relating to
this patent. I will look for your response by September 28, 2007, and if I
do not hear from you by that time, I will assume you have no interest in
discussing this patent.
On October 1, 2007, a senior litigation counsel at HP responded, writing:
I have been evaluating the patent you sent and am interested to learn any
further information you have so that I am able to conduct a complete and
accurate assessment. HP shares your interest in creating a productive
atmosphere for us to discuss the ’021 patent. Accordingly, in response to
your request that HP not file a declaratory judgment action, HP would be
willing to agree not to file such an action for a period of 120 days if
Acceleron similarly will agree not to file an action against HP during the
same 120 day period. If such a mutual standstill agreement is acceptable,
please let me know and I will send you an agreement to that effect
directly.
Four days later, Mr. Ramey replied:
I do not believe that HP has any basis for filing a declaratory judgment
action, and I think that my letter provides both parties appropriate
protections to create a productive atmosphere in which to discuss the ’021
patent.
So, if you are interested in discussing this patent with us, please
send me a signed copy of my previous letter to you by no later than
October 19, 2007. If I do not receive [one] by then, I will understand that
2009-1283 2
you are not interested in discussing this patent, and you do not have
anything to say about the merits of this patent, or its relevance to your
Blade Server products.
On October 17, 2007, HP filed this declaratory judgment suit in the United States
District Court for the District of Delaware. Acceleron moved to dismiss the case for lack
of subject matter jurisdiction. On March 11, 2009, the district court granted Acceleron’s
motion. Hewlett-Packard Co. v. Acceleron, LLC, 601 F. Supp. 2d 581 (D. Del. 2009).
The court observes that, on one hand, Acceleron’s “failure to specifically request a
confidentiality agreement and to accept [HP’s] 120-day stand-still proposal weigh[ed]
the scale in favor of finding jurisdiction.” Id. at 589. On the other hand, however, other
circumstances in this case, including the lack of “a statement of infringement,
identification of specific claims, claim charts, prior pleadings or litigation history, or the
identification of other licensees” in Mr. Ramey’s letters to HP, weighed against finding
declaratory judgment jurisdiction. Id. After taking Acceleron’s business model as a
non-competitor patent holding company into consideration, the court held that, under
the totality of the circumstances, at the time HP filed the suit, the litigation was “too
speculative a prospect to support declaratory judgment jurisdiction.” Id.
HP timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
II. DISCUSSION
A. Standard of review
This court reviews a grant or denial of a motion to dismiss for lack of subject
matter jurisdiction de novo. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372,
1377 (Fed. Cir. 2007). It reviews underlying factual findings for clear error. Id.
2009-1283 3
B. Analysis
A court has subject matter jurisdiction under the Declaratory Judgment Act only if
“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.” MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 127 (2007). In patent cases, declaratory judgment
jurisdiction exists “where a patentee asserts rights under a patent based on certain
identified ongoing or planned activity of another party, and where that party contends
that it has the right to engage in the accused activity without license.” SanDisk, 480
F.3d at 1381.
HP asserts that its declaratory judgment claims fall squarely within the standard
set by SanDisk. According to HP, the fact that Acceleron wrote to HP, specifically
identifying the ’021 patent and HP’s product line, i.e., an ongoing activity, is all that is
required under SanDisk for the court to find declaratory judgment jurisdiction. We see
nothing “squarely” about this case and SanDisk does not support HP’s proposition.
Intentionally or not, MedImmune may have lowered the bar for determining declaratory
judgment jurisdiction in all patent cases; certainly it did so in the licensor-licensee
context. See, e.g., Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 902 (Fed.
Cir. 2008) (“[T]he now more lenient legal standard facilitates or enhances the availability
of declaratory judgment jurisdiction in patent cases.”). But a lowered bar does not mean
no bar at all. Indeed, a declaratory judgment plaintiff must show that the dispute is
“definite and concrete, touching the legal relations of parties having adverse legal
interests; and that it be real and substantial and admit of specific relief through a decree
2009-1283 4
of a conclusive character, as distinguished from an opinion advising what the law would
be upon a hypothetical state of facts.” MedImmune, 549 U.S. at 127 (internal quotation
marks and brackets omitted). Thus, a communication from a patent owner to another
party, merely identifying its patent and the other party’s product line, without more,
cannot establish adverse legal interests between the parties, let alone the existence of a
“definite and concrete” dispute. More is required to establish declaratory judgment
jurisdiction.
Acceleron argues that it never asserted its rights under the ’021 patent because
its correspondence with HP did not contain language threatening to sue for infringement
or demand a license. As a result, Acceleron contends that there is no justiciable case
or controversy giving rise to declaratory judgment jurisdiction. We disagree.
Judge Markey eloquently described the dilemma facing a potential infringement
defendant as
the sad and saddening scenario that led to enactment of the Declaratory
Judgment Act. In the patent version of that scenario, a patent owner
engages in a danse macabre, brandishing a Damoclean threat with a
sheathed sword. Guerrilla-like, the patent owner attempts extra-judicial
patent enforcement with scare-the-customer-and-run tactics that infect the
competitive environment of the business community with uncertainty and
insecurity. Before the Act, competitors victimized by that tactic were
rendered helpless and immobile so long as the patent owner refused to
grasp the nettle and sue. After the Act, those competitors were no longer
restricted to an in terrorem choice between the incurrence of a growing
potential liability for patent infringement and abandonment of their
enterprises; they could clear the air by suing for a judgment that would
settle the conflict of interests.
Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 734-35 (Fed. Cir. 1988)
(citations omitted). The purpose of a declaratory judgment action cannot be defeated
simply by the stratagem of a correspondence that avoids the magic words such as
2009-1283 5
“litigation” or “infringement.” Of course, if “a party has actually been charged with
infringement of the patent, there is, necessarily, a case or controversy adequate to
support [declaratory judgment] jurisdiction.” Cardinal Chem. Co. v. Morton Int’l, 508
U.S. 83, 96 (1993). But it is implausible (especially after MedImmune and several post-
MedImmune decisions from this court) to expect that a competent lawyer drafting such
correspondence for a patent owner would identify specific claims, present claim charts,
and explicitly allege infringement.
In its first letter to HP, Acceleron identified itself as the owner of the ’021 patent,
which it described as “relat[ing] to Blade Servers.” The district court found that, in this
letter, Mr. Ramey requested that HP “not file suit.” Hewlett-Packard, 601 F. Supp. 2d at
587. Acceleron imposed a two-week deadline on HP to respond. In its second letter to
HP, Acceleron again imposed a two-week deadline on HP and insisted that if HP did not
respond to its original letter by the deadline, it would understand that HP did not “have
anything to say about the merits of this patent, or its relevance to [HP’s] Blade Server
products.” (emphases added). The district court found that this was a case where “a
non-competitor patent holding company … directly contacted plaintiff regarding its rights
in the ’021 patent.” Id. at 586. The court also found that (1) Acceleron failed to propose
a confidentiality agreement, and (2) Acceleron failed to accept the terms of HP’s 120-
day standstill proposal or to provide a counter-proposal or some other reassurance it
would not sue HP. Id. at 586-87. Acceleron does not dispute any of the district court’s
findings on appeal.
Acceleron argues that a patent owner may contact another party to suggest
incorporating the patented technology into the other party’s product, or to attempt to sell
2009-1283 6
the patent to the other party. Given the circumstances of this case, such an assertion
appears disingenuous. We do not doubt that such scenarios as presented by Acceleron
occur, and perhaps quite frequently. However, we doubt that in those situations, the
patent owners would assert a patent as “relevant” to the other party’s specific product
line, impose such a short deadline for a response, and insist the other party not file suit.
As the district court correctly recognized, these factors “must be considered along with
all the circumstances at bar.” Hewlett-Packard, 601 F. Supp. 2d at 587. We also agree
with the district court that “the receipt of such correspondence from a non-competitor
patent holding company . . . may invoke a different reaction than would a meet-and-
discuss inquiry by a competitor, presumably with intellectual property of its own to place
on the bargaining table.” Id. at 589. Under the totality of the circumstances, therefore, it
was not unreasonable for HP to interpret Acceleron’s letters as implicitly asserting its
rights under the ’021 patent.
Acceleron repeatedly emphasizes that “[a]t the time HP filed its complaint,
Acceleron could not have asserted its rights in the ’021 patent against HP because it
had not even determined if it had a basis to assert the patent against HP.” However, it
is irrelevant whether Acceleron had conducted an adequate investigation or whether it
subjectively believed HP was infringing. “The test [for declaratory judgment jurisdiction
in patent cases], however stated, is objective . . . .” Arrowhead, 846 F.2d at 736
(emphasis added). “Indeed, it is the objective words and actions of the patentee that
are controlling.” BP Chems. v. Union Carbide Corp., 4 F.3d 975, 979 (Fed. Cir. 1993).
Thus, conduct that can be reasonably inferred as demonstrating intent to enforce a
patent can create declaratory judgment jurisdiction.
2009-1283 7
Acceleron points to the language in the letter from Mr. Ritz, a counsel from HP, in
which he stated that HP was “interested to learn any further information” Acceleron had
in order to “conduct a complete and accurate assessment.” Acceleron thus argues that
“HP’s letter admits that HP had not determined that its legal interests were adverse to
Acceleron.” We are not persuaded. First of all, Mr. Ritz’s letter was dated October 1,
2007. HP did not file the declaratory judgment action until October 17. HP may well
have conducted a thorough infringement analysis in the interim. More importantly, HP
is not required to make a formal declaration of having an adverse legal interest. Indeed,
HP’s filing of the suit seeking declaratory judgment is indicative of its belief that
Acceleron was threatening to assert its rights to the ’021 patent against HP.
Finally, we observe that Acceleron is solely a licensing entity, and without
enforcement it receives no benefits from its patents. This adds significance to the fact
that Acceleron refused HP’s request for a mutual standstill—and such a limited standstill
is distinguishable from a covenant not to sue, such as that cited by the district court in
Prasco, LLC, v. Medicis Pharmaceutical Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008).
This court has explained that “declaratory judgment jurisdiction generally will not
arise merely on the basis that a party learns of the existence of a patent owned by
another or even perceives such a patent to pose a risk of infringement, without some
affirmative act by the patentee.” SanDisk, 480 F.3d at 1381. The facts of this case,
when viewed objectively and in totality, show that Acceleron took the affirmative step of
twice contacting HP directly, making an implied assertion of its rights under the ’021
2009-1283 8
patent against HP’s Blade Server products, and HP disagreed. 1 Therefore, we hold that
there is declaratory judgment jurisdiction arising from a “definite and concrete” dispute
between HP and Acceleron, parties having adverse legal interests.
III. CONCLUSION
As the district court recognized in its careful opinion analyzing declaratory
judgment jurisdiction, there is no bright-line rule for distinguishing those cases that
satisfy the actual case-or-controversy requirement from those that do not. See
MedImmune, 549 U.S. at 127. Our decision in this case undoubtedly marks a shift from
past declaratory judgment cases. However, MedImmune has altered the way in which
the Declaratory Judgment Act applies to patent law cases, requiring that legal interests
be evaluated in patent cases under the general criteria of the Act. Our jurisprudence
must consequently also evolve, and in this case the facts demonstrate adverse legal
interests that warrant judicial resolution. The dismissal of the district court is reversed
and the action is remanded.
IV. COSTS
Each party shall bear its own costs.
REVERSED AND REMANDED
1
The district court found that there was no history of litigation by Acceleron
regarding the ’021 patent. Hewlett-Packard, 601 F. Supp. 2d at 589. A history, or the
lack thereof, of litigating in the industry can certainly be a factor to be considered. See
Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008) (“Prior
litigious conduct is one circumstance to be considered in assessing whether the totality
of circumstances creates an actual controversy.”). However, we note that Acceleron
only acquired the ’021 patent on May 31, 2007 and initiated the contact with HP merely
three and half months later. Therefore, in this case, the fact that Acceleron had not filed
any suit against others in such a short period is not a factor weighing against finding
declaratory judgment jurisdiction.
2009-1283 9