Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01462/USCOURTS-casd-3_08-cv-01462-6/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:145 Patent Infringement

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

CARY A. JARDIN, 

 Plaintiff, 

vs. 

DATALLEGRO, INC. and STUART 

FROST, 

Defendants. 

CASE NO: 08-CV-1462-IEG (WVG) 

ORDER: 

(1) GRANTING PLAINTIFF’S 

MOTION TO DISMISS 

DEFENDANTS’ REMAINING 

COUNTERCLAIMS; 

(2) ENTERING JUDGMENT OF 

NON-INFRINGEMENT; AND 

(3) DENYING AS MOOT 

DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT OF 

INVALIDITY 

 [Doc. Nos. 201, 179] 

Presently before the Court is Plaintiff’s motion to dismiss Defendants’ counterclaims for 

declaratory judgment that Plaintiff’s ‘874 patent is invalid and unenforceable. [Doc. No. 201.] For the 

reasons stated below, the Court GRANTS Plaintiff’s motion and dismisses Defendants’ counterclaims 

WITHOUT PREJUDICE. Accordingly, the Court also enters judgment of non-infringement and 

DENIES AS MOOT Defendants’ pending motion for summary judgment of invalidity. [Doc. No. 

179.] 

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BACKGROUND

At the outset of this litigation, Plaintiff alleged versions 2.X and 3.X of products manufactured 

and sold by Defendant DATAllegro infringed U.S. Patent No. 7,177,874 (the “‘874 patent”). With 

their answer, Defendants filed counterclaims seeking declaratory judgment of non-infringement, 

invalidity, and unenforceability against Plaintiff. [Doc. No. 44.] 

On April 1, 2011, the Court granted Defendants’ motion for summary judgment of noninfringement. [Doc. No. 191.] Defendants’ counterclaims for declaratory judgment of invalidity and 

unenforceability remain before the Court. On March 16, 2011, Defendants moved for summary 

judgment on their invalidity claim. [Doc. No. 179.] Defendants indicated during oral argument that 

they intend to pursue at trial their unenforceability claim. [See also Defs.’ Opp’n to Pl.’s MTD, Doc. 

No. 208, at 2 (“Defendants intend to show at trial that Plaintiff’s patent is also unenforceable . . . .”).] 

The accused DATAllegro product was discontinued in 2008. [Pl.’s MTD, Ex. 4, Microsoft 

Corp.’s Opp’n to Pl.’s Mot. to Compel, 11cv87, Doc. No. 8 (“Microsoft Opp’n”), at 6:15-17.] Mr. 

Frost no longer works at DATAllegro or its parent company, Microsoft, and there are no pending 

allegations that either Defendant is currently infringing the ‘874 patent or producing any products that 

could infringe that patent. [Pl.’s MTD, Ex. 4, Frost Dep., at 12:12-13:17.] 

Plaintiff now moves to dismiss Defendants’ counterclaims, arguing alternatively that (1) the 

Court’s granting summary judgment of non-infringement eliminated any case or controversy between 

the parties, and thus divested the Court of subject-matter jurisdiction over Defendants’ claims, or 

(2) the Court should exercise its broad discretion under the Declaratory Judgment Act and dismiss 

Defendants’ counterclaims. 

LEGAL STANDARD

“A declaratory action is available when the facts as 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 declaratory judgment.’” Revolution Eyewear, Inc. v. 

Aspex Eyewear, Inc., 556 F.3d 1294, 1297 (Fed. Cir. 2009) (quoting MedImmune v. Genentech, Inc., 

549 U.S. 118, 127 (2007)). In assessing whether an actual controversy sufficient to establish 

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jurisdiction over a claim for declaratory judgment exists, the Court must evaluate the totality of the 

circumstances “on the particular facts and relationships involved.” Id. 

“[A] case or controversy adequate to support jurisdiction of a declaratory judgment 

counterclaim necessarily exists if a party has actually been charged with infringement of a patent.” 

Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1348 (Fed. Cir. 2005). “[T]he actual controversy 

must be extant at all stages of review, not merely at the time the complaint is filed.” Revolution 

Eyewear, 556 F.3d at 1297 (internal quotation marks and citations omitted). Counterclaims for 

invalidity and unenforceability “raise[] issues beyond the initial claim for infringement that are not 

disposed of by a decision of non-infringement.” Fort James, 412 F.3d at 1348. Thus, a finding of noninfringement, leaving no possibility of liability pending a patentee’s appeal, does not divest a district 

court of jurisdiction to hear those counterclaims. Id.

The Declaratory Judgment Act, however, “provides that a court ‘may declare the rights and 

other legal relations of any interested party,’ 28 U.S.C. § 2201(a) (emphasis added), not that it must do 

so.” MedImmune, 549 U.S. at 136 (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)). 

“This text has long been understood ‘to confer on federal courts unique and substantial discretion in 

deciding whether to declare the rights of litigants.’” Id. (quoting Wilton, 515 U.S. at 286); see also

Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1338 (Fed. Cir. 2007) (“[E]ven if 

there is an actual controversy, the district court is not required to exercise jurisdiction to address the 

merits of the action, as it retains discretion under the Act to decline declaratory judgment 

jurisdiction.”); Nystrom v. TREX Co., Inc., 339 F.3d 1347, 1350-51 (Fed. Cir. 2003) (“We have 

previously held that a district court has discretion to dismiss a counterclaim alleging that a patent is 

invalid as moot where it finds no infringement.”). 

DISCUSSION

 No one disputes that the Court had jurisdiction over Defendants’ counterclaims for declaratory 

judgment when they were first filed. See Fort James, 412 F.3d at 1348. Because they “raise[] issues 

beyond the initial claim for infringement that are not disposed of by a decision of non-infringement,” 

the Court retains subject-matter jurisdiction over Defendants’ counterclaims. Id. 

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 However, the Court has substantial discretion in deciding whether to assert jurisdiction over 

Defendants’ counterclaims for declaratory judgment. MedImmune, 549 U.S. at 136. Here, judicial 

economy is best served by dismissing Defendants’ remaining counterclaims. 

 If Plaintiff does not appeal the Court’s summary judgment of non-infringement, or if he appeals 

but loses, Defendants face no risk of future litigation related to Plaintiff’s ‘874 patent. The accused 

products were discontinued in 2008, and neither Defendant has expressed an intent to again produce a 

potentially infringing product. Defendants argue that if Microsoft someday develops and produces a 

derivative product of the accused technology, then Plaintiff might initiate an action related to the ‘874 

patent against Microsoft that would necessarily implicate them. But “‘an actual controversy cannot be 

based on a fear of litigation over future products.’” Revolution Eyewear, 556 F.3d at 1297 (quoting 

Amana Refigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999)). Thus, assuming the 

Court’s summary judgment of non-infringement stands, Defendants do not face a sufficiently concrete 

threat of litigation related to the ‘874 patent to warrant proceeding to hear their invalidity and 

unenforceability counterclaims. 

 On the other hand, if Plaintiff does appeal, and if the Federal Circuit were to vacate or modify 

the Court’s claim construction order, the parties would likely have to re-litigate Defendants’ invalidity 

and unenforceability counterclaims, and the issue of infringement, in light of the revised construction 

of Plaintiff’s ‘874 patent. See Akamai Techs. v. Cable & Wireless Internet Servs., 344 F.3d 1186, 

1192 (Fed. Cir. 2003) (“The first step in any invalidity analysis is claim construction, an issue of law 

this court reviews de novo.” (citing Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 

1998) (en banc)); see also Dolby Labs., Inc. v. Lucent Techs., Inc., No. C:01-20709, 2005 WL 

2171921, at *2 n.6 (N.D. Cal. Sept. 6, 2005) (“[A]ppellate review of the Court’s claim construction 

obviously will impact any invalidity determination.”); Schering Corp. v. Amgen, Inc., 35 F. Supp. 2d 

375, 378 (D. Del. 1999) (“A remand carries with it the potential for a trial which would necessarily 

encompass the revised claim construction, as well as the validity and enforceability of the [patent-insuit].”). Under these circumstances, proceeding with Defendants’ counterclaims would be time 

consuming and would needlessly expend the Court’s and the parties’ resources. 

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Thus, the Court DISMISSES WITHOUT PREJUDICE Defendants’ remaining 

counterclaims. Accordingly, Defendants’ currently-pending motion for summary judgment of 

invalidity is DENIED AS MOOT, and the July 11, 2011, hearing on that motion is vacated. [Doc. 

No. 179.] 

CONCLUSION

 The Court GRANTS Plaintiff’s motion to DISMISS WITHOUT PREJUDICE Defendants’ 

counterclaims for declaratory judgment of invalidity and unenforceability. [Doc. No. 201.] 

Defendants’ motion for summary judgment of invalidity is DENIED AS MOOT. [Doc. No. 179.] 

Based upon the Court’s April 1, 2011, order granting summary judgment [Doc. No. 191], the Clerk is 

directed to enter judgment against Plaintiff Jardin and in favor of Defendants Frost and DATAllegro 

on Plaintiff’s claims of infringement and Defendants’ counterclaim for declaratory judgment of noninfringement, terminating this case. 

IT IS SO ORDERED. 

DATED: _______________________________ 

 IRMA E. GONZALEZ, Chief Judge 

 United States District Court 

 

6/3/11

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