Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-02519/USCOURTS-casd-3_11-cv-02519-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 Patent Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MYTEE PRODUCTS, INC., 

Plaintiff,

CASE NO. 11-cv-02519 BEN (DHB)

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS FOR LACK

OF SUBJECT MATTER

JURISDICTION

[Docket No. 5]

vs.

STUDEBAKER ENTERPRISES, INC.;

SKAGIT NORTHWEST HOLDINGS, INC.;

DRI-EAZ PRODUCTS, INC.

Defendants.

Presently before the Court is Defendants Studebaker Enterprises, Inc. (“Studebaker”), Skagit

Northwest Holdings, Inc. (“Skagit”), and Dri-Eaz Products, Inc. (“Dri-Eaz”) Motion to Dismiss for

Lack of Subject Matter Jurisdiction. (Docket No. 5.) Being fully briefed, the Court finds the Motion

suitable for determination on the papers without oral argument, pursuant to Civil Local Rule 7.1.d.1.

For the reasons stated below, the Motion is GRANTED.

BACKGROUND

Defendants Studebaker and Dri-Eaz were assigned ownership rights in U.S. Patent Nos.

7,007,403 (‘403 patent) and 7,971,369 (‘369 patent), both entitled “Shrouded Floor Drying Fan,”

issued on March 7, 2006 and July 5, 2011 respectively. (Decl. of Benjamin R. Seecof Objecting to

Evidence Submitted inReply by Defs. on Mot. to Dismissfor Lack of Subject MatterJurisdiction, Ex.

H.) (“Seecof Evidence Objection”). Skagit is in the business of manufacturing room drying fans such

as the Airpath Directed Flow Carpet Drier, believed to be covered by the ‘403 and ‘369 patents. 

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Plaintiff Mytee Products, Inc. (“Mytee”) manufactures, sells, and intends to continue manufacturing

and selling a fan with the name Tradewind. On September 16, 2011, counsel for Defendants

Studebaker and Skagit sent a letter to Mytee indicating that the Tradewind fan literally infringes the

‘403 and ‘369 patents. The letter also indicated that defendants intended to enforce the patents. 

On October 31, 2011, Mytee initiated the present action, seeking a declaration of noninfringement and invalidity concerning the ‘403 and ‘369 patents. (Docket No. 1.) Dri-Eaz and

Studebaker executed a covenant not to sue Mytee for any claim of patent infringement under the ‘403

and ‘369 patents, “as these patents currently read, with respect to any product currently advertised,

manufactured, marketed or sold by Mytee, or any product which was advertised, manufactured,

marketed or sold by Mytee” prior to November 18, 2011. (Def.’s Mot. to Dismiss for Lack of Subject

Matter Jurisdiction, Decl. of Nathaniel E. Durrance Ex. B) (“Covenant”). On January 10, 2012,

Defendants Studebaker, Skagit, and Dri-Eaz filed the instant Motion to Dismiss for Lack of Subject

Matter Jurisdiction. (Docket No. 5.) 

DISCUSSION

The Declaratory Judgment Act provides that “[i]n a case of actual controversy within its

jurisdiction ... any court of the United States ... 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.” 28

U.S.C. § 2201(a); 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1376 (Fed. Cir. 2012); Tech.

Licensing Corp. v. Technicolor USA, Inc., 800 F. Supp. 2d 1116, 1119-20 (E.D. Cal. 2011). “Whether

an actual case or controversy exists so that a district court may entertain an action for a declaratory

judgment of non-infringement and/or invalidity is governed by Federal Circuit law.” 3M Co., 673 F.3d

at 1377 (citing MedImmune, Inc. v. Centocor, Inc., 409 F.3d 1376, 1378 (Fed.Cir. 2005), overruled

on other grounds, MedImmune, Inc. v. Genetech, 549 U.S. 118, 130-131 (2007)). “A party seeking

to base jurisdiction on the Declaratory Judgement Act bears the burden of proving that the facts

alleged ‘under all circumstances, show that there is a substantial controversy between the parties

having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a

declaratory judgment.” Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1343 (Fed. Cir. 2007)

(citing MedImmune, Inc. v. Genetech, Inc., 549 U.S. at 126-27). Thus the party claiming subject

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matter jurisdiction bears the burden “to establish that such jurisdiction existed at the time the claim

for declaratory relief was filed and that it has continued since.” Id. at 1344. 

The Federal Circuit, however, has held that “a covenant not to sue for patent infringement

divests the trial court of subject matter jurisdiction over claims that the patent is invalid, because the

covenant eliminates any case or controversy between the parties.” Dow Jones & Co., Inc. v. Ablaise

Ltd., 606 F.3d 1338, 1346 (Fed. Cir. 2010) (emphasis added); see also Benitec, 495 F.3d at 1345-46. 

On November 18, 2011, Dri-Eaz and Studebaker executed a covenant-not-to-sue Mytee Products that

reads:

THIS COVENANT NOT TO SUE is made as of November 18, 2011 by

Studebaker Enterprises, Inc. and Dri-Eaz Products, Inc.

Studebaker Enterprises, Inc. and Dri-Eaz Products, Inc. covenant not to assert any

claim of patent infringement against Mytee Products, Inc. under U.S. Patent No.

7,007,403 and U.S. Patent No. 7,971,369, as these patents presently read, with respect

to any product currently advertised, manufactured, marketed or sold by Mytee, or any

product which was advertised, manufactured, marketed or sold by Mytee prior to the

date of this covenant. 

The covenant was signed by Roy Studebaker, President of Studebaker Enterprises, Inc. and Bill

Bruders, CEO of Dri-Eaz Products, Inc. (Covenant). Mytee argues that the Covenant is insufficient

because: (1) the covenant was only signed by two of the three defendants; and (2) the covenant does

not protect against future infringement. Neither objection is sufficient.

The Covenant was signed by the President of Studebaker and the CEO of Dri-Eaz. Mytee

argues that this covenant is insufficient because Skagit did not sign it. The inventor assigned

ownership rights to Studebaker and Dri-Eaz in a written document (Decl. of Kevin Zeck Ex. B.) that

was recorded with the Patent and Trademark Office (“PTO”). (Seecof Evidence Objection.) The

recording of an assignment with the PTO creates a presumption of validity and places the burden to

rebut such a showing on one challenging the assignment. SiRF Tech., Inc. v. Int’l Trade Comm’n,

601 F.3d 1319, 1328 (Fed. Cir. 2010) (applying 37 C.F.R. § 3.54). Mytee has not submitted any

specific evidence that rebuts the presumption of validity for the recorded patent assignment. Since

the inventor assigned the patents, Studebaker and Dri-Eaz are the past and present owners of the’403

and ‘369 patents. Because Skagit does not own the ‘403 and ‘369 patents, Skagit cannot assert them. 

Spine Solutions, Inc. v. Medtronic Sofamor Danek USA, Inc. 620 F.3d 1305, 1317-18 (Fed. Cir. 2010)

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(holding that parent company lacked standing to sue because subsidiary owned patents-in-suit). 

Therefore, Skagit was not required to sign the Covenant and no actual controversy exists between it

and Plaintiff. 

Mytee also argues that the Covenant is insufficient because it does not release Mytee from

future claims of patent infringement. The language in the Covenant is analogous to the language in

Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999). In fact, it is identical

to the language discussed in Amana. In Amana, the Federal Circuit held that the language of the

covenant removed any likelihood that the alleged infringer would face suit for past or current products

and thereby removed any actual controversy between the parties. Id. at 855. Further, the Federal

Circuit held that “an actual controversy cannot be based on a fear of litigation over future products”

and that the covenant “resolves the controversy.” Id. at 855-56 (citing Super Sack Mfg. Corp. v.

Chase Packaging Corp., 57 F.3d 1054, 1060 (Fed. Cir. 1995)).1

 The Covenant in this case has

removed any continuing case or controversy between these parties. 

In arguing that the Covenant in this case does not release Mytee from future claims of

infringement, Mytee relies on Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294 (Fed.

Cir. 2009). “Whether a covenant not to sue will divest the trial court of jurisdiction depends on what

is covered by the covenant.” Id. at 1297. The language in the Revolution covenant only applied to

products that had been sold prior to the dismissal of the action. It did not protect the alleged infringer

from those products once the case was dismissed. By not offering a covenant covering current

products, the Federal Circuit held that a controversy between the parties still existed. Id. at 1300. In

contrast, the present Covenant applies to “any product currently advertised, manufactured, marketed

or sold by Mytee.” Like the distinguishing cases listed in Revolution, the present Covenant will

protect Mytee from actions for infringement into the future. Id. at 1299-1300.

Other facts in Revolution Eyewear are also distinguishable from the present action. The patent

owner in Revolution Eyewear specifically indicated that it would breach the covenant-not-to-sue

1

While not expressly overruled, the Court notes that the “reasonable apprehension of

imminent suit” test under Amana has been disapproved in subsequent case law. See Benitec, 495

F.3d at 1346 (where the Federal Circuit relied on the framework of MedImmune in the analysis of

whether jurisdiction existed and indicated that the holding in Amana was not dependent on the

“reasonable apprehension of imminent suit” requirement). 

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should the alleged infringer once again market the infringing products. Id. at 1297. Here, the

Defendants have given no such indication and have repeatedly attempted to settle the controversy. 

In fact, the Defendants specifically stated that they “intend to put any alleged controversy to rest.” 

(Defs.’ Reply at 3 ¶ 22.); see also Dow Jones & Co., 606 F.3d at 1347.

Because the Covenant has resolved any actual case or controversy between the parties, and

Plaintiff has not alleged sufficient facts showing that the Covenant was not signed by the proper

parties, this Court lacks subject matter jurisdiction. Accordingly, Defendants’ Motion to Dismiss for

Lack of Subject Matter Jurisdiction is GRANTED.

CONCLUSION

For the reasons stated above, the Court GRANTS Defendants Studebaker, Skagit, and DriEaz’s Motion to Dismiss for Lack of Subject Matter Jurisdiction. 

IT IS SO ORDERED.

DATED: September 25, 2012

Hon. Roger T. Benitez

United States District Judge

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