Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-02777/USCOURTS-cand-3_04-cv-02777-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:183 Patent Infringement

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PLUMTREE SOFTWARE, INC, a

Delaware corporation,

Plaintiff

v

DATAMIZE, LLC, a Wyoming limited

liability corporation,

Defendant. /

No C-04-2777 VRW

ORDER

Plaintiff Plumtree Software, Inc (“Plumtree”) brings this

action to obtain a declaratory judgment that its products do not

infringe on two of defendant Datamize, LLC’s (“Datamize”) patents. 

Doc #1 (Compl). Datamize moves the court to dismiss Plumtree’s

complaint pursuant to FRCP 12(b)(1). Doc #13 (Mot Dis). Plumtree

opposes. Doc #33 (Opp Dis). Additionally, Plumtree moves for

summary judgment in its favor on the ground that Datamize’s

patents, US Patent Nos 6,460,040 (“‘040 patent”) and 6,654,418

(“‘418 patent”), are invalid pursuant to the on-sale bar doctrine,

35 USC § 102(b). Doc #8 (MSJ). Datamize opposes. Doc #30 (MSJ

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Opp). Based on the parties’ memoranda and the applicable federal

law, the court DENIES Datamize’s motion to dismiss and GRANTS

Plumtree’s motion for summary judgment.

I

A

Plumtree is a publicly traded computer software company

located in San Francisco, California. Mot Dis at 2. Plumtree

develops, markets and licenses “corporate portal” software. A

“corporate portal” is web-based software that brings together a

variety of applications and information in a comprehensive platform

within an organization. MSJ at 3. Plumtree’s customers use its

software to develop their own corporate Intranet sites, which allow

employees to access, manage and search a variety of information

from within and outside of the organization. Id.

Datamize is a start-up software company located in

Missoula, Montana. Mot Dis at 2. In early 1993, Datamize’s single

employee, Kevin Burns, invented the two patents at issue in this

case: the ‘040 and the ‘418 patents. Id. The ‘040 and the ‘418

patents were entitled “Authoring System for Computer-based

Information Delivery System” and were continuations of Burns’s US

Patent No. 6,014,137 (“‘137 patent”). In December 1994, Burns

first completed a version of his kiosk authoring tool “reduc[ing]

to practice the inventions claimed in the claims of the three

patents.” Levin Decl, Ex 3 (Burns Depo) at 78:18-24. The ‘137,

‘040 and ‘418 patents were issued on January 11, 2000, October 1,

2002, and December 2, 2003, respectively. Doc #9 (Levin Decl), Ex

1-2; Doc #1, Ex A (VRW 02-05693). 

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The kiosk authoring tool that Burns designed using the

‘040 and ‘418 patents is a “multimedia kiosk authoring system for

use in developing and maintaining user interface screens for

multimedia kiosk systems.” Levin Decl, Ex 1-2. Burns designed the

authoring system to “be used by persons with little or no

experience in the intricate details of computer programming thereby

making it easier for a large number of persons to set up kiosk

interface screens.” Burns Decl at ¶ 3. The system “accomplishes

this by providing pre-defined building blocks or screen elements

(ie, pre-defined windows, buttons, and images) to be used in

constructing an interface screen.” Id. Burns described the

invention as “a method used to build interface screens for a kiosk

or computer system.” Id.

In 1993, Kevin Burns and his father, Emmett Burns, formed

Multimedia Adventures (“MA”) to pursue the commercialization of the

inventions disclosed in the ‘137, ‘040 and ‘418 patents. Burns

Decl at ¶ 4; Levin Decl, Ex 5 (Emm Burns Depo) at 28:18-29:16. 

Kevin Burns described MA as “a marketing company that developed the

computer system to market different entities with the first focus

being the ski industry.” Burns Depo at 20:8-10. In 1994, MA hired

Jim Lorence to handle MA’s sales and marketing. Levin Decl, Ex 4

(Burns Depo 2) at 194:9-13. Between October 1994 and February

1995, Lorence pitched MA’s kiosk systems to Bally’s Entertainment

Corporation, Ski Lake Tahoe and Ski Industries America (“SIA”). 

Levin Decl, Ex 17-18. 

In the winter of 1994-1995, MA learned that SIA planned

to hold a trade show in March 1995. Doc #30 (MSJ Opp) at 4. The

trade show included the “Mountain Visions” store, at which thirtyCase 3:04-cv-02777-VRW Document 45 Filed 09/12/05 Page 3 of 27
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one companies paid $2,000 to $10,000 for booth space to feature

their products. Emm Burns Depo at 129-130. On January 17, 1995,

MA made a presentation to SIA consisting of “a series of foils

describing MA, its business, and a demonstration of skiing-related

full motion video and images[.]” MSJ Opp at 4-5. Specifically, MA

presented its kiosk system, which “allowed users to walk up to the

kiosks and navigate through screens to view information on products

offered by various vendors, and to perform transactions on the

kiosk.” Travis Decl at ¶ 12. According to Emmett Burns, MA

“wanted to show [SIA] the quality of the video and stuff we had

and, hopefully, they would allow us in the [Mountain Visions]

store.” Emm Burns Depo at 134:8-10. 

MA’s demonstration was not interactive, and MA did not

offer to sell anything to SIA. Id at 136:11-137:17; 135:20-22. MA

did, however, agree to a “bargain” with SIA, whereby MA agreed: “If

you [SIA] let us [MA] in the show, we [MA] will get content and put

that into the system and have it in the Mountain Vision[s] store;

and if that occurs, we want to be able to talk about it in the

future.” Id at 152. MA also asked SIA to waive the sponsorship

fee that SIA normally charged to sponsors for the Mountain Visions

store. Levin Decl, Ex 11 (Travis Decl) at ¶ 8. 

On January 25, 1995, SIA sent a letter to Lorence at MA

confirming the terms of their agreement. Travis Decl at ¶ 9-10, Ex

B. In the agreement, MA agreed to (1) provide the software and

hardware needed to host its kiosk system at the March 1995 trade

show and (2) work to add content describing the other sponsors’

products and services into the kiosk system -- at no charge to the

other sponsors. Travis Decl at ¶ 10, Ex B. SIA agreed to (1)

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provide MA with one-third of the space in the “electronic

information center” in the Mountain Visions store and (2) waive the

$10,000 sponsorship fee for MA that SIA normally charged for

exhibitors at the Mountain Vision store. Travis Decl ¶ 8, 10, Ex

B. On or about January 26, 1995, MA signed an exhibit space

contract and paid SIA $2,430 for exhibiting fees. Burns Decl at ¶

5. 

Pursuant to the agreement, MA demonstrated its kiosk

system product, SkiPath, in the Mountain Visions store at SIA’s

March 3-7, 1995, trade show in Las Vegas. Id at ¶ 6. At the trade

show, MA set up, ran and dismantled its own kiosks. Id. MA never

gave the kiosks or software to SIA. Id. Burns stated that he

believed that this kiosk system displayed at SIA’s 1995 trade show

embodied all the claims of the ‘137, ‘040, and ‘418 patents. Burns

Depo at 81:19-82:1. 

B 

The present litigation is not the first time Datamize and

Plumtree have met on the patent battlefield. The roots of the

present action between Datamize and Plumtree stem back to May 17,

2002. On that date, Datamize filed suit against Plumtree in the

United States Court for the District of Montana in Missoula

alleging infringement of the ‘137 patent (the “Montana action”). 

Mot Dis at 3. Ever the friendly combatant, on this same date

Datamize sent a letter to Plumtree informing it that:

Datamize believes that Plumtree is infringing

the ‘137 Patent by, among other things,

providing software enabling the operation of

portals and kiosks employing customization and

personalization features. We also believe that

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Plumtree will infringe the claims in the

continuation patent application when it issues

as a patent [the later issued ‘040 patent]. 

From the prior communications, it does not

appear that Plumtree has appreciated the

implications of Datamize’s patent rights. 

Id at 1-2. 

Datamize’s letter further informed Plumtree of the

reasons behind the Montana action: “Because a direct assertion of

patent infringement could subject Datamize to a declaratory

judgment action by Plumtree in an inconvenient forum, [Datamize]

has proceeded to preserve its rights by filing the attached

Complaint in the United States District Court for the District of

Montana (Missoula Division) where Datamize is located.” Doc #1

(Compl) Ex C at 2. To demonstrate further that Plumtree would soon

be infringing the ‘040 patent, Datamize also enclosed the thirtyeight allowed claims later issued as the ‘040 patent on October 1,

2002. Id.

On November 23, 2002, Magistrate Judge Leif Erickson of

the district court in Missoula issued a report and recommendation

that the Montana action be dismissed for lack of personal

jurisdiction over Plumtree. Mot Dis at 3. In response to

Magistrate Judge Erickson’s report and recommendation, on December

4, 2002, Plumtree filed suit in this court seeking a declaratory

judgment for non-infringement of the ‘137 patent (“DJ1”). Doc #1

(Compl) (VRW 02-05693). DJ1 was assigned to the undersigned. 

Plumtree agreed to stay DJ1 pending a ruling by a Montana district

judge on the personal jurisdiction issue. Mot Dis at 3. On July

8, 2003, Judge Donald Molloy adopted Magistrate Judge Erickson’s

findings and dismissed the Montana action for lack of personal

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jurisdiction. Id. On August 7, 2003, Datamize filed a motion to

realign itself as plaintiff in DJ1. The court granted realignment

on October 6, 2003. Doc #32 (10/6/03 Order) at 8-9 (VRW 02-05693). 

On September 3, 2003, Datamize filed a patent

infringement claim against nine online security brokerage firms in

the Eastern District of Texas, Marshall Division based on the ‘040

patent (“TX action”). Id at 4. On April 15, 2004, Datamize moved

to add additional infringement claims in the TX action based on the

‘418 patent, which issued on December 2, 2003. Opp Dis at 3. The

judge in the TX action subsequently allowed Datamize to add these

additional claims. Id. Plumtree, however, is not a defendant in

the TX action. Mot Dis at 4. 

On March 31, 2004, Plumtree filed a motion for summary

judgment in DJ1 claiming that the ‘137 patent was indefinite. Id. 

On July 9, 2004, the court granted Plumtree’s motion. Id. On

August 5, 2005, the Federal Circuit affirmed the court’s grant of

summary judgment in favor of Plumtree. Doc #109 (VRW 02-05693).

On the same day that this court granted Plumtree’s motion for

summary judgment in DJ1, Plumtree filed a new complaint seeking a

declaratory judgment of non-infringement of Datamize’s ‘040 and

‘418 patents (“DJ2”). Doc #1 (Compl). DJ2 is the action currently

before this court. 

Datamize moves to dismiss DJ2 pursuant to FRCP 12(b)(1). 

Mot Dis at 1. Plumtree moves for summary judgement in DJ2 on the

ground that the ‘040 and ‘418 patents are invalid under the on-sale

bar, 35 USC § 102(b). MSJ at 1. 

// 

//

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II

The court must first address Datamize’s motion to dismiss

DJ2 for lack of subject matter jurisdiction. See Ruhrgas Ag v

Marathon Oil Co, 526 US 574, 578 (1999) (“Customarily, a federal

court first resolves doubt about its jurisdiction over the subject

matter * * *.”). 

The Constitution limits the exercise of judicial power to

“cases” and “controversies.” Aetna Life Insurance Co of Hartford,

Conn v Haworth, 300 US 227, 239 (1937). The Declaratory Judgment

Act of 1934 (“DJA”), 28 USC § 2201, provides in relevant part: 

In a case of actual controversy within its

jurisdiction * * * any court of the United

States, upon the filing of an appropriate

pleading, 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. Any such declaration

shall have the force and effect of a final

judgment or decree and shall be reviewable as

such. 

28 USC § 2201(a). 

“In the declaratory judgment context, the question in

each case is whether the facts alleged, under all of 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.” Sierra

Applied Sciences, Inc v Advanced Energy Industries, Inc, 363 F3d

1361, 1372 (Fed Cir 2004) (hereinafter “Sierra Applied”).

Federal Circuit law governs whether a case or controversy

exists for declaratory judgment actions based on patent law. Shell

Oil Co v Amoco Corp, 970 F2d 885, 888 n4 (Fed Cir 1992). The

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Federal Circuit has developed a two-part test to determine whether

a case or controversy exists under the DJA. For a district court

to have jurisdiction over a patent declaratory judgment matter,

“[t]here must be both (1) an explicit threat or other action by the

patentee, which creates a reasonable apprehension on the part of

the declaratory plaintiff that it will face an infringement suit,

and (2) present activity which could constitute infringement or

concrete steps taken with the intent to conduct such activity.” 

Sierra Applied Sciences, 363 F3d at 1373 (quoting BP Chemicals, Ltd

v Union Carbide Corp, 4 F3d 975, 978 (Fed Cir 1993)). 

When there is an express charge of infringement, an

actual controversy exists and the Federal Circuit has found the

first prong satisfied. See Arrowhead Industrial Water, Inc v

Ecolochem, Inc, 846 F2d 731, 736 (Fed Cir 1988). In the absence of

an express charge of infringement, courts make “[a]n examination of

the totality of the circumstances * * * to determine whether there

is a controversy.” Vanguard Research, Inc v PEAT, Inc, 304 F3d

1249, 1254-55 (Fed Cir 2002); Arrowhead, 846 F2d at 736 (“When the

defendant’s conduct, including its statements, falls short of an

express charge, one must consider the ‘totality of the

circumstances’ in determining whether that conduct meets the first

prong of the test.”).

“To constitute an actual controversy, the plaintiff has

the burden of establishing by a preponderance of the evidence * * *

that it has a reasonable apprehension that it will be sued. The

test is an objective one * * *.” Shell Oil Co, 970 F2d at 887-88. 

If the defendant, through a FRCP 12(b)(1) motion, “denies or

controverts [plaintiff’s] allegations of jurisdiction, * * * the

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movant is deemed to be challenging the factual basis for the

court’s subject matter jurisdiction.” Cedars-Sinai Medical Center

v Watkins, 11 F3d 1573, 1583 (Fed Cir 1993):

In such a case, the allegations in the

complaint are not controlling * * * and only

uncontroverted factual allegations are accepted

as true for purposes of the motion * * *. In

establishing the predicate jurisdictional

facts, a court is not restricted to the face of

the pleadings, but may review evidence

extrinsic to the pleadings, including

affidavits and deposition testimony. 

Id at 1583-84. 

Datamize only discusses the first prong in its motion to

dismiss, Doc #13, and thus it appears that the second prong of the

Sierra Applied test -- that Plumtree sells allegedly infringing

software -- is not in dispute. Accordingly, in determining whether

the jurisdiction requirements of the DJA are met, the court need

only address the first prong of the Sierra Applied test. 

III

The first prong of the Sierra Applied test requires “an

explicit threat or other action by the patentee, which creates a

reasonable apprehension on the part of the declaratory plaintiff

that it will face an infringement suit.” Sierra Applied, 363 F3d

at 1373 (emphasis added). Datamize presents two primary arguments

why this prong is not satisfied in DJ2. First, Datamize contends

that its May 17, 2002, letter to Plumtree and the separate TX

action do not constitute an explicit threat causing reasonable

apprehension of a future infringement suit involving either the

‘040 or ‘418 patent. Mot Dis at 6-8. Second, Datamize asserts

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that the passage of time between the filing of DJ1 and DJ2

demonstrates that Plumtree was not motivated by an “objectively

reasonable apprehension of suit.” Id at 6-7. In the alternative,

Datamize argues that even if the court were to find that subject

matter jurisdiction exists, the court should decline to exercise

jurisdiction because Plumtree is using the DJA “as a tool to gain

[an] * * * improper procedural advantage.” Id at 9. 

The court addresses each argument, and why it fails to

persuade, in turn.

1

Datamize asserts that the May 17, 2002, letter and the TX

action are insufficient to constitute an “explicit threat” of an

infringement suit on the ‘040 and ‘418 patents. The court

addresses each patent separately.

The ‘040 Patent

As to the ‘040 patent, Datamize admits that the May 17,

2002, letter “notifying Plumtree that Datamize had filed suit on

the ‘137 Patent also happened to mention, among other things,

potential infringement of the yet to be issued ‘040 Patent.” Id at

6. But, Damatize asserts, “that letter does not provide a basis

for this action [DJ2]” because it was not an “act [] threatening

suit.” Id. Datamize cites Shell Oil and Phillips Plastics Corp v

Kato Hatsujou Kabushiki Kaisha, 57 F3d 1051 (Fed Cir 1995), in

support of its argument. 

In Shell Oil, in anticipation of commercializing its

catalysts, Shell Oil (“Shell”) proposed an agreement, in which

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Amoco would agree not to assert its patent against Shell’s

catalysts and Shell would pay $100,000 for a paid-up license. 

Shell Oil, 970 F2d at 886. After failed counter-offers, Amoco

wrote to Shell: “It is our understanding from our previous

discussion that the catalyst falling within the Amoco patent would

be used in [Shell’s plants].” Id (emphasis added). When Shell

filed a declaratory judgment action, the court found no reasonable

apprehension: “[A] statement that Shell’s activities ‘fall within’

Amoco’s claims in the context of the parties’ licensing

negotiations can hardly be considered an express charge of

infringement.” Id at 888. 

In Phillips Plastics, Kato Hatsujou KK (“Kato”) contacted

Phillips Plastics (“Phillips”), stating that certain fasteners made

by Phillips were “covered by” Kato’s patent and inviting Phillips

to take a license under the patent. 57 F3d 1052. When Kato

reissued its patent five years later, it wrote again to Phillips

offering a license and enclosing a copy of the reissued patent. 

Id. Instead of responding to Kato’s request to put together a

licensing agreement, Phillips filed a declaratory judgment action. 

The court held no reasonable apprehension despite Kato’s offers of

a patent license and statements that Phillips’s fasteners “were

covered by” the claims of the patent. Id at 1053-54.

The threat of legal action in the present case is far

stronger than the threats in Shell Oil and Phillips Plastics. In

Shell Oil, patent holder Amoco only mentioned that Shell’s

activities might “fall within” Amoco’s patent claims when the two

companies began negotiating a license. 970 F2d at 889. The court

held: “It is possible that, even after the conversations reached an

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impasse, Amoco might never have sued, either because the validity

of its patent was doubtful or its infringement argument was too

weak. In fact, if Shell had never approached Amoco, Amoco might

never have considered any action against Shell.” Id. 

Similarly, in Phillips Plastics, patentee Kato merely

invited Phillips to take a license under its patent after informing

Phillips that certain products of theirs were “covered by” Kato’s

patent. 57 F3d at 1051. In neither of these cases did the

patentee accompany its statement of potential infringement with (1)

a suit of a parent patent or (2) a statement regarding a specific

forum for infringement litigation. 

Accordingly, the court concludes that Datamize’s May 17,

2002, letter represented an “explicit threat or other action” that

would cause reasonable apprehension of an infringement suit on the

‘040 patent. Datamize is correct in asserting that the letter only

expressly stated its “belief” that Plumtree would infringe its

soon-to-be-issued ‘040 patent. Compl, Ex C at 1 (“We also believe

that Plumtree will infringe the claims in the continuation patent

application when it issues as a patent [the later issued ‘040

patent]”). The remaining language of the letter, however,

demonstrates an explicit threat. Datamize wrote further: “From

the prior communications, it does not appear that Plumtree has

appreciated the implications of Datamize’s patent rights.” Id at

1-2. To clarify these “implications,” Datamize included a copy of

the thirty-eight additional claims issued later as the ‘040 patent. 

Id at 1. 

More importantly, Datamize made clear that it was willing

to file suit to settle alleged infringement: “Because a direct

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assertion of patent infringement could subject Datamize to a

declaratory judgment action by Plumtree in an inconvenient forum,

[Datamize] has proceeded to preserve its rights by filing the

attached Complaint [regarding the ‘137 patent] in the United States

District Court for the District of Montana (Missoula Division)

where Datamize is located.” Id at 2. This statement demonstrated

that Datamize’s decision to file suit was motivated not only by

Plumtree’s alleged infringement, but also by its intent to ensure

litigation in its preferred forum.

The ‘418 Patent

Regarding the ‘418 patent, Datamize argues that “Plumtree

cannot bootstrap the May 17, 2002, letter into subject matter

jurisdiction over the ‘418 Patent.” Id at 7. Datamize insists

that its statement that “[w]e also believe that Plumtree will

infringe the claims in the continuation patent application when it

issues as a patent” referenced only the yet-to-be-issued ‘040

patent, not the ‘418 patent. Id. Datamize states further: “In

fact, the patent application that eventually issued as the ‘418

patent had not even been filed at the time of the letter.” Id.

The court agrees with Datamize that the May 17, 2002,

letter had “absolutely nothing to do with the ‘418 patent.” Mot

Dis at 7. But this fact is of little moment, for even if a

defendant does not “expressly charge” the plaintiff with

infringement, “if the circumstances warrant, a reasonable

apprehension may be found in the absence of any communication from

defendant to plaintiff.” Arrowhead, 846 F2d at 736. In Goodyear

Tire & Rubber Co v Releasomers Inc, 824 F2d 953, 956 (Fed Cir

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1987), the Federal Circuit similarly stated that “we cannot read

the Declaratory Judgment Act so narrowly as to require that a party

actually be confronted with an express threat of litigation to meet

the requirements of an actual case or controversy.” 

Applying the totality of the circumstances approach

required by the Federal Circuit, the court concludes that Plumtree

had a “reasonable apprehension” that it was going to face an

infringement suit from Datamize regarding the ‘418 patent. First,

Datamize had already sued Plumtree on the ‘137 patent. As the

parent patent to ‘040 and ‘418, the ‘137 patent shares the

identical specification. Opp Dis at 9. In Goodyear, the Federal

Circuit held that a prior infringement suit between two parties was

relevant to determining reasonable apprehension under the DJA: “By

suing [] in state court for the same technology as is now covered

by the patents, [plaintiff, patentee] has engaged in a course of

conduct that shows a willingness to protect that technology.” 824

F2d at 956. 

Next, the TX action added to Plumtree’s “reasonable

apprehension.” Although this suit was initially based solely on

the ‘040 patent, Datamize successfully sought to have the ‘418

patent added four months after the ‘418 patent was issued. Doc #29

(Volk Decl), Ex A. In its motion to amend to add the ‘418 patent

in the TX action, Datamize stated that “it would be highly

surprising if Defendants’ counsel had not specifically considered

the possibility that Datamize would add the ‘418 Patent to this

case.” Id at 3 (emphasis in original). Hence, Plumtree recognized

the strong likelihood that a suit regarding the ‘040 patent would

later include the similar ‘418 patent. 

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Furthermore, Plumtree also learned that Datamize had

expressly identified Plumtree’s products as infringing the ‘040 and

the ‘418 patent in the TX action. Volk Decl ¶ 3, Ex B at 8-9. In

its response to Interrogatory No 5 in the TX action, Datamize

stated: “The following products incorporate or embody one or more

claimed inventions of the patents-in-suit: [] Plumtree Corporate

Portal [and] Plumtree Enterprise Web Suite[.]” Id. Datamize’s

response is a clear assertion that Plumtree’s products infringed

both the ‘040 and the ‘418 patent. 

In opposition to this evidence, Datamize argues that

previously filed lawsuits against “unrelated third parties” have

been held “insufficient to suggest a future lawsuit” in a district

court case. Mot Dis at 8 (citing Charles Machine Works, Inc v

Digital Control, Inc, 264 F Supp 2d 980, 981 (WD Ok 2003)). The

Federal Circuit, however, has held that such third party suits are

relevant: “related litigation may be evidence of a reasonable

apprehension.” Shell Oil, 970 F2d at 888. And it is Federal

Circuit law that controls this court’s decision. 

For the foregoing reasons, the court holds that the

amalgamation of (1) the May 17, 2002, letter, (2) the ‘137

infringement suit and (3) the TX action represents an “explicit

threat or other action” that would cause Plumtree to have a

“reasonable apprehension” of suit.

2

Datamize also contends that Plumtree was not motivated by

“reasonable apprehension” in filing DJ2. Specifically, Datamize

focuses on the passage of time before Plumtree filed DJ2. Mot Dis

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at 6. First, Datamize states that Plumtree knew about the ‘040

patent (issued on October 1, 2002) for almost two years and the

‘418 patent (issued on Dec 2, 2003) for approximately eight months

before filing DJ2 on July 9, 2004. Despite this knowledge,

Plumtree did not seek to add either of these patents to DJ1 (filed

on December 4, 2002 and decided on July 9, 2004). Id. 

Furthermore, Datamize argues that its threatening letter

“was sent on May 17, 2002, over two years before Plumtree ever

filed its emergency declaratory judgment action.” Id. Datamize

states that “if that letter had truly created an objectively

reasonable apprehension of suit on the ‘040, Plumtree would have

included the ‘040 Patent in Plumtree DJ1, as opposed to filing

[DJ2] approximately two years later.” Id at 7. Based on this

chronology, Datamize insists that in filing DJ2, Plumtree had at

most a “nervous state of mind of a possible infringer,” which under

Federal Circuit precedent is insufficient to meet the “reasonable

apprehension of suit test.” Id at 8 (citing Phillips Plastics

Corp, 57 F3d at 1053). The court finds this argument unpersuasive. 

 First, the Sierra Applied test is an objective one, not

subjective. See Shell Oil Co, 970 F2d at 887-88. Next, although

Datamize is correct that DJ2 (filed on July 9, 2004) could have

been filed earlier, Datamize offers no precedent requiring Plumtree

to do so. 

Indeed, one court has rejected the temporal argument put

forward by Datamize. In Hakuto Co v Emhart Industries, Inc, 1989

WL 24118, *3 (ND Ill 1989), the court concluded that letters

alleging infringement sent three years prior to a declaratory

judgment action were “sufficient to create a reasonable

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apprehension of [patentee’s] intent to bring suit to enforce its

patent.” Despite the patentee’s contention that the letters were

“old news,” the court found jurisdiction under the DJA because

“there [wa]s nothing to indicate that [patentee’s] intent ha[d]

changed between the date [alleged infringer] received the letters

and the date it filed the complaint.” Id. Similarly there is no

evidence in the present case indicating that Datamize’s intention

to pursue litigation over alleged infringements of its ‘040 and

‘418 has changed. For these reasons, the court holds that

Plumtree’s apprehension and its filing of DJ2 were reasonable.

 

3

Finally, Datamize argues that even if the court finds

subject matter jurisdiction over DJ2, the court should decline to

exercise its jurisdiction because Plumtree is “openly us[ing] the

resources of the judicial system as a tool to gain some improper

procedural advantage.” Mot Dis at 9. Specifically, Datamize

asserts that DJ2 is an attempt by Plumtree to gain a “strategic

advantage” through “forum shopping.” Id at 6. Datamize emphasizes

that Plumtree filed DJ2 in this court “just hours” after this court

granted summary judgment in DJ1 on July 9, 2004. Id. Datamize

states: “It would therefore seem that Plumtree took a calculated

risk in filing [] DJ2 in yet another attempt to procure what it

perceived as some kind of strategic advantage over Datamize.” Id. 

The court is unconvinced.

Datamize provides the court with no explanation regarding

what Plumtree’s purported “strategic advantage” is; it offers only

bald conclusions. Moreover, Datamize has no business accusing

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Plumtree of forum-shopping, as Datamize has twice stated its

intention to obtain its own preferred forum -- in Missoula, Montana

and Marshall, Texas, respectively. See May 17, 2002, letter (Doc

#1, Ex C) and August 12, 2004, letter (Volk Decl at ¶ 4, Ex C). 

Having established subject matter jurisdiction, the court

next addresses Plumtree’s motion for summary judgment.

IV

35 USC § 102(b) provides: “A person shall be entitled to

a patent unless * * * the invention was * * * in public use or on

sale in this country, more than one year prior to the date of the

application for patent in the United States * * *.” The date

exactly one year prior to the date of the patent application is

known as the “critical date.” Scaltech, Inc v Retec/Tetra, LLC,

269 F3d 1321, 1327 (Fed Cir 2001). The on-sale bar applies when

two conditions are satisfied prior to the critical date: (1) the

product was the subject of “a commercial offer for sale” and (2)

the invention was “ready for patenting” during this offer for sale. 

Pfaff v Wells Electronics, Inc, 525 US 55, 67 (1998). If the above

two conditions are met, the court must then determine whether the

product offered for sale embodies the claims of the patent. See

Scaltech, 269 F3d at 1329. 

Plumtree argues that the ‘040 and ‘418 patents are

invalid under the on-sale bar. MSJ at 8-12. First, Plumtree

asserts that Datamize’s claimed inventions of the ‘040 and ‘418

patents satisfy the second prong of the Pfaff test because the

inventions were ready for patenting prior to the critical date. 

MSJ at 8-9. Datamize does not dispute this contention, MSJ Opp at

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6; thus, the court need only address the first prong of the Pfaff

test. Regarding the first prong, Plumtree argues (1) that

Datamize’s participation in SIA’s trade show represented an offer

for sale of the claimed inventions of the ‘040 and ‘418 patents, 

Id at 10, and (2) that Datamize has “already admitted that the

subject matter of the agreement with SIA embodied all of the claims

of the ‘040 and ‘418 patents.” Id at 12.

Datamize opposes Plumtree’s arguments as to the first

prong of Pfaff. MSJ Opp at 6-13. Specifically, Datamize contends

that the purchase of space in SIA’s trade show did not constitute

“a commercial offer for sale.” Id at 7-12. Next, Datamize asserts

that Plumtree has not presented “clear and convincing evidence”

that the subject of the alleged offer for sale meets every

limitation of the claims of the ‘040 and ‘418 patents. Id at 6. 

Alternatively, Damatize asserts that Plumtree’s motion for summary

judgment is “premature” because Datamize’s motion to dismiss has

not yet been ruled on and “Plumtree filed its motion before any

discovery has occurred in this case.” Id at 13. The court

addresses these arguments in turn.

1

“Only an offer which rises to the level of a commercial

offer for sale, one which the other party could make into a binding

contract by simple acceptance (assuming consideration), constitutes

an offer for sale under § 102(b).” Scaltech, 269 F3d at 1328

(citation omitted). An offer for sale does not, however, have to

be accepted to implicate the on-sale bar. Id. “To determine if

the offer is sufficiently definite, one must examine the language

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of a proposal in accordance with the principles of general contract

law.” Id (citation omitted). The Uniform Commercial Code (“UCC”)

is an “important relevant source of general contract law * * *.” 

Id. 

In the instant case, the court concludes that Datamize’s

presentation at SIA’s trade show constituted a “commercial offer

for sale” under § 102(b). First, MA’s meeting with SIA on January

17, 1995 and subsequent agreement on January 25, 1995, both

occurred before the critical date: February 27, 1995. At the

January 17, 1995, meeting, “MA offered to provide its interactive

electronic kiosk system during the March 1995 trade show, and to

commit its development resources to include content from SIA

manufacturers and sponsors, and to present that content using MA’s

technology during the show.” Travis Decl at ¶ 8. 

Following the meeting, SIA accepted MA’s offer and in

return “provide[d] MA with a prime location in the Mountain Visions

store for it to present its kiosk system and to waiver the fee

normally charged to primary sponsors participating in Mountain

Visions.” Id at ¶ 8-9. This agreement constitutes an “offer for

sale,” which SIA “ma[de] into a binding contract with simple

acceptance.” See Scaltech, 269 F3d at 1328. In addition, Datamize

received consideration: MA was granted a “prime location” and its

fee was waived in exchange for the display of MA’s kiosk. 

But Datamize asserts that this agreement was not a

“commercial offer for sale” because there was “no transfer of title

to, lease or license of any software or other intellectual

property.” MSJ Opp at 7. Datamize states that “the activity which

Plumtree relies on is the mere negotiation between two parties for

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the right to floor space at a trade show.” Id. Datamize cites UCC

§ 2-106 (defining “sale” as “passing title from the seller to the

buyer for a price”) and UCC § 2A-103 (defining lease as “a transfer

of the right of possession and use of goods for term in return for

consideration”) as support for its argument. Id at 8. According

to Datamize, “MA never sold anything to SIA * * *. At no time did

MA ever grant SIA any title or right to control what was being

exhibited at the trade show.” Id at 7-8.

Datamize’s argument is flawed. In essence, Datamize

fails to recognize the distinction between “tangible item” (or

“apparatus”) claims and “process” (or “method”) claims. In In re

Kollar, the Federal Circuit held that “a tangible item is on sale

when * * * the transaction rises to the level of a commercial offer

for sale under the Uniform Commercial Code * * *. When money

changes hands as a result of a transfer of title to the tangible

item, a sale normally has occurred.” 286 F3d 1326, 1332 (Fed Cir

2002). In contrast, “a process * * * consists of acts, rather than

a tangible item. It consists of doing something, and therefore has

to be carried out or performed. A process is thus not sold in the

same sense as a tangible item.” Id.

Scaltech provides a vivid example of this distinction. 

Prior to the critical date, the patentee in Scaltech had contacted

two third parties and offered to perform its claimed process for

treating oil refinery waste. 269 F3d at 1326. The Federal Circuit

held: 

[W]e think the fact that the process itself was

not offered for sale but only offered to be

used by the patentee to process waste does not

take it outside the on sale bar rule. The on

sale bar rule applies to the sale of an

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“invention,” and in this case, the invention

was a process * * *. As a result, the process

involved in this case is subject to § 102(b). 

In this case, commercial exploitation was

involved. Accordingly, the on sale bar rule is

implicated. 

Id at 1328. 

Citing Scaltech, the Kollar court held that “[a]ctually

performing the process itself for consideration would similarly

trigger the application of § 102(b).” In re Kollar, 286 F3d at

1333. 

Applying these principles, it is clear the on-sale bar is

triggered by the facts of this case. Kevin Burns described the

interactive electronic kiosk system that MA presented at SIA’s

March 1995 trade show as “a method used to build interface screens

for a kiosk or computer system.” Burns Decl ¶ 3 (emphasis added). 

In its agreement with SIA, MA agreed to (1) provide the

software/hardware package necessary to produce the interactive

touch-screen information center; (2) provide multiple copies of

this software/hardware package; (3) work to put other product

sponsors on the interactive system at no charge to these companies;

(4) provide looped advertising/entertainment videos for the

overhead monitors; and (5) exhibit within the trade show. Travis

Decl at ¶ 10. These acts constitute an agreement to “perform” a

method claim. Accordingly, MA’s agreement with SIA to take part in

the March 1995 trade show constituted a “commercial offer for

sale.” 

//

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//

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2

Having found a “commercial offer for sale,” the court

addresses whether the subject matter of the agreement with SIA

embodied all of the claims of the ‘040 and ‘418 patents. This

inquiry will not detain the court long, for Kevin Burns has

testified repeatedly that the kiosk at the trade show embodied all

of the claims. In his June 2004 deposition, Burns testified that

the authoring tool he built in December 1994 “embodied all the

claims of all three of Datamize’s patents [‘137, ‘040 and ‘418].” 

Levin Decl, Ex 3 at 83: 11-15. Burns testified further that this

tool was used to create the SkiPath product that was demonstrated

in March 1995 at the SIA trade show. Id at 83: 16-19. At two

other points in his deposition Burns made clear that the system

that he demonstrated at the trade show embodied all of the claims

of the ‘040 and ‘418 patents. Id at 81:19-82:1; 84:15-18.

Seven months later, and facing Plumtree’s current motion

for summary judgment, Burns filed a declaration contradicting his

deposition testimony. Burns Decl at ¶ 8. Specifically, Burns now

states:

I have determined that the version of SkiPath

demonstrated at the trade show did not practice

every claim of those patents. * * * My careful

review of the patents and the Skipath product

demonstrated at the SIA trade show leads me to

the conclusions that SkiPath did not practice

[18 claims] of the ‘040 patent or [14 claims]

of the ’418 patent. 

Id. 

Burns offers no explanation for the change in his position.

This court has held that parties cannot use such

declarations to defeat summary judgment. See Martinez v Marin

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Sanitary Service, 349 F Supp 2d 1234, 1242 (ND Cal 2004) (Walker,

J) (“If a party who has been examined at length on deposition could

raise an issue of fact simply by submitting an affidavit

contradicting his own prior testimony, this would greatly diminish

the utility of summary judgment as a procedure for screening out

sham issues of fact.”). Accordingly, Datamize fails to raise a

genuine issue of fact as to whether MA’s agreement with SIA

embodied all of the claims of the ‘040 and ‘418 patents.

The court holds that because both conditions of the onsale bar test have been satisfied, Datamize’s ‘040 and ‘418 patents

are invalid under 35 USC § 102(b).

 

3

Lastly, the court addresses Datamize’s contention that

Plumtree’s motion for summary judgment is “premature.” MSJ Opp at

12-13. Datamize asserts that “Plumtree filed its motion before any

discovery has occurred in this case.” Id at 13. Datamize contends

that Plumtree relies on depositions, namely the deposition of Jim

Lorence, in which Datamize has not yet had the opportunity to ask

questions. In addition, Datamize accuses Plumtree of submitting

declarations from witnesses before discovery has begun. Id. The

court construes Datamize’s argument as a FRCP 56(f) application for

a continuance of summary judgment to permit deposition discovery to

be taken.

Under FRCP 56(a), Plumtree is permitted to file a motion

for summary judgment at any time “after the expiration of twenty

days from the commencement of the action.” Because Plumtree filed 

//

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its motion more than three months after commencing DJ2, its motion

is timely.

Whether to allow further discovery under Rule 56(f) is a

subject committed to the district court’s discretion. Nidds v

Schindler Elevator Corp, 113 F3d 912, 920 (9th Cir 1996). The

party seeking a Rule 56(f) continuance must demonstrate that: (1)

it has set forth in affidavit form the specific facts that it hopes

to elicit from further discovery; (2) the facts sought actually

exist; and (3) these sought-after facts are essential to resist the

summary judgment motion. California v Campbell, 138 F3d 772, 779

(9th Cir 1998).

Datamize has fulfilled none of the Campbell requirements. 

Although Datamize contends that the deposition of Jim Lorence “was

adjourned before Datamize even had the opportunity to ask any

questions,” Datamize does not (1) set forth any specific facts that

it hopes to discover by deposing Lorence or (2) why these facts are

essential to raise a genuine issue of material fact. MSJ Opp at

13. Accordingly, the court DENIES Datamize’s Rule 56(f) request to

postpone Plumtree’s motion for summary judgment. 

//

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IV

For the foregoing reasons, the court DENIES Datamize’s

motion to dismiss (Doc #13), DENIES Datamize’s FRCP 56(f)

application and GRANTS Plumtree’s motion for summary judgment (Doc

#8). The clerk is directed to ENTER JUDGMENT for Plumtree,

TERMINATE all motions and CLOSE the file.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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