exist. There is no “transaction or occurrence” remaining from which Rockwell’s cross-claims can
“arise out of.” Further, any supplemental jurisdiction this court exercised over Rockwell’s cross-
claims, which this court previously found to be “so related to the infringement-case claims that they
form part of the same case or controversy,” is also distinguished since the “case or controversy” no
longer exists between Solaia and the infringement-case defendants.

The “case or controversy” requirement of Article [JJ of the United States Constitution
prohibits federal courts from deciding moot cases. U.S. Const. art. III, § 2; North Carolina v.. Rice,
404 U.S. 244, 246, 92 S.Ct. 402 (1971) (“[F]ederal courts are without power to decide questions that

cannot affect the rights of the litigants in the case before them.”); McKinney v. Indiana Michigan

Power Co., 113 F.3d 770, 772 (7th Cir.1997). In this case, no charge of patent infringement now
remains pending. Solaia’s claims have all been settled and dismissed with prejudice as part of the
three settlement agreements with the three named infringement-case defendants.’ Rockwell seeks
a declaration of the non-infringement, invalidity, and unenforceability of the ‘318 patent. However,
adeclaratory judgment may only be brought to resolve an “actual controversy,” 28 U.S.C. § 2201(a),
and the actual controversy “must be extant at all stages of review, not merely at the time the
complaint is filed.” Intellectual Property Development, Inc. v. TCI Cablevision of California, Inc.,
248 F.3d 1333, 1340-42 (Fed. Cir., 2001). The burden rests on Rockwell to establish “that
jurisdiction over its declaratory judgment action existed at, and has continued since, the time the

[cross-claim] was filed.” Id.

'This court notes that the partial dismissal with prejudice of all claims and defenses
between Smurfit and Solaia pursuant to their settlement agreement has not yet been entered, as it
is the subject matter of this opinion and order. Accordingly, the entry of the agreed order for
partial dismissal with prejudice shall be entered concurrently with the issuance of this opinion
and order.



CONCLUSION

For all the foregoing reasons, Smurfit and Solaia’s motion for entry of agreed order
in settlement of all claims between Smurfit and Solaia and to dismiss Rockwell’s cross-
claims against Solaia as being moot and lacking in subject matter jurisdiction is granted.
Pursuant to Federal Rule of Civil Procedure 41(a) and Solaia’s and Smurfit’s agreed order
of partial dismissal, each and every claim of Solaia made against Smurfit and each and every
defense made by Smurfit against Solaia is hereby dismissed with prejudice, Solaia and
Jefferson Smurfit to bear their own costs and attorneys’ fees. Rockwell’s cross-claims
against Solaia are also dismissed without prejudice as moot and for lack of subject matter
jurisdiction. As to the remaining parties and claims, all previously set dates remain. This

court urges the remaining parties to discuss settlement.

ENTER:

2. Medeor

JAMES F. HOLDERMAN
United States District Judge

DATE: September 6, 2002



manufacturer’s obligation to indemnify customers threatened with suit is a sufficient basis for
jurisdiction over the manufacturer’s declaratory judgment action. This argument also fails because
Rockwell’s customers in this case, the infringement-case defendants, are not threatened with suit
anymore, as the claims against them have been settled. Moreover, Rockwell has not established it
has an obligation to indemnify its customers. In fact, Rockwell denies an obligation to indemnify
Smurfit, stating that “not a single installation of Rockwell equipment in any Smurfit plant properly
could be considered the source of any claim of any infringement by Solaia.” (Solaia’s Mem. in
Supp. Of Mot. to Dismiss, Ex. L).

Rockwell raises the additional argument that Solaia has recently sued sixteen additional
Rockwell customers for infringement in separate litigation pending in this district before Judge
Guzman, contending that Rockwell will “undoubtedly be sued by one or more defendants in [that]
case and will, thereafter, undoubtedly file the same declaratory judgment claim against Solaia in that
case.” (Rockwell’s Opposition to Solaia’s Mot. to Dismiss at 11.) However, the mere possibility
of indemnity in a different case does not provide a jurisdictional basis over Rockwell’s present

declaratory judgment claim against Solaia. In Intellectual Property Development, Inc. v. TCI

Cablevision of California, Inc., the Federal Circuit recently reasoned:

TCI-California also contends that it could be required to indemnify an entity that potentially
could be held liable in a different case for infringing the ‘202 patent. If TCI-California’s
interests are affected by a different suit regarding the ‘202 patent, then TCI-California should
join that action as a party, for example, pursuant to Federal Rule of Civil Procedure
19(a)(2)(i). Further, part one of the declaratory justiciability test for the patent rights requires
action by the patent owner that creates “reasonable apprehension” on the part of the
declaratory plaintiff that it will face an infringement suit. A suit filed against a different
party, even if TCI-California could potentially be required to indemnify that party, is not a
suit that TCI-California itself faces. Therefore, the district court correctly determined that
it lacked jurisdiction despite TCI-California’s indemnity concerns.



A two-part test applies for determining justiciability ofa suit for declarations of patent rights
and relationships: there 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. Super-Sack Manuf. Corp. v. Chase Packaging Corp.,

57 F.3d 1054, 1058 (Fed. Cir. 1995). Here, Rockwell cannot now show an objectively “reasonable
apprehension on the part of [Rockwell] that it will face an infringement suit,” Shell Oil. v. Amoco
Corp., 970 F.2d 885, 887-88 (Fed. Cir. 1992), given the fact that the infringement-case defendants
no longer face liability for infringement. Therefore, Rockwell no longer faces the legal risk that a
finding of infringement will be made against the infringement-case defendants in favor of Solaia.
See Super Sack, 57 F.3d at 1059 (affirming dismissal of declaratory counterclaim as nonjusticiable
because defendant “thas no cause for concern that it can be held liable for any infringing acts
involving products it made, sold, or used on or before . . . the day [plaintiff] filed its motion to
dismiss for lack of an actual controversy”).

Rockwell argues that it continues to have a reasonable apprehension of suit because it has
actually been sued in this case, referring to Smurfit’s and Clorox’s state law indemnification cross-
claims against Rockwell which remain pending.’ These indemnification claims, however, are based
on state law contract rights Smurfit and Clorox may have against Rockwell, and cannot provide a
basis for Rockwell to obtain a declaratory judgment against Solaia on infringement, validity, and

enforceability when the infringement claims have been resolved. Rockwell further contends that a

*While Clorox’s cross-claim remains pending, Clorox and Rockwell have agreed to
submit Clorox’s cross-claim to arbitration in an attempt to resolve the dispute. The arbitration
has not yet occurred, but Clorox represents that it is expected to take place in the near future.

5



States Constitution.
II. Unfair Competition

Lastly, count III of Rockwell’s cross-claims against Solaia allege an Illinois law
“unfair competition” claim. Specifically, Rockwell alleges that Solaia’s assertion of the 318
patent against customers of Rockwell Automation constitutes an unfair method of
competition. Solaia no longer asserts the ‘318 patent against any of the infringement-case
defendants and therefore, Rockwell’s claim is moot. Also, as discussed above, no Article
Ill case or controversy exists between Rockwell and Solaia, and this court lacks subject

matter jurisdiction over Rockwell’s remaining state law claim against Solaia.


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge
or Magistrate Judge

James F. Holderman

Sitting Judge if Other
than Assigned Judge

CASE NUMBER 01 C 6641 DATE 9/6/2002
CASE SOLAIA TECHNOLOGY vs. JEFFERSON SMURFIT et al
TITLE
[In the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state brief}

MOTION: of the motion being presented.)

DOCKET ENTRY:

qd) Q Filed motion of [ use listing in “Motion” box above.]

(2) Q Brief in support of motion due

@G) Oo Answer brief to motion due. . Reply to answer brief due.

(4) o Ruling/Hearing on set for at

(5) ia} Status hearing[held/continued to] [set for/re-set for] on set for at

(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for at

(7) Oo Trial[set for/re-set for] on at

(8) a [Bench/Jury trial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OOFRCP4(m) OLocal Rule 41.1 COFRCP41(a)(1) [2 FRCP4i(a)(2).

ao) «olf [Other docket entry] Pursuant to Memorandum Opinion and Order entered this day, det
Smurfit and plaintiff's motion for entry of an agreed order in settlement of all claims between Smu
Solaia and to dismiss Rockwell’s cross-claims against Solaia as being moot and lacking in subject
jurisdiction is granted. Rockwell’s cross-claims against Solai are also dismissed without preju
moot and for lack of subject matter jurisdiction. As to the remaining parties and claims, all pre
set dates shall stand.

dt oa [For further detail see order (on reverse side offattached to) the original minute order.]

vw | Nonotices required, advised in open court.

No notices required.

Notices mailed by judge’s staff.

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form,

Copy to judge/magistrate judge.

deputy’s
initials

JS6 a

courtroom

14nd 131
Dy

umber of notices

SEP 09.2909

Lsia "sn

sere

=
“Date/time received in
central Clerk’s Office

rauiling deputy initials



248 F.3d 1333, 1341-42 (Fed. Cir. 2001).

Even if this court were to conclude that Rockwell had satisfied the first part of the
declaratory justiciability test, the second part of the test of declaratory justiciability respecting
patent rights requires that the putative infringer’s “present activity” place it at risk of
infringement liability. Intellectual Property, 248 F.3d at 1341. Here, the infringement-case
defendants’ present activities do not place Rockwell at risk of any liability to Solaia for
infringement since Solaia’s infringement claims against the infringement-case defendants
have all been settled and dismissed with prejudice. See, e.g., Super Sack, 57 F.3d at 1059-
60 (The Federal Circuit finds that the patentee’s promise not to assert its patents against
alleged infringer estopped patentee from suing from past acts of infringement and rendered
alleged infringer’s declaratory judgment counterclaim seeking declaration of
noninfringement and invalidity, nonjusticiable under 28 U.S.C. § 2201(a).).

Finally, Rockwell contends that Smurfit’s indemnity cross-claim against Rockwell
actually arises under federal patent law because it is necessary to evaluate Solaia’s patent
infringement claims to determine whether Rockwell has any liability for infringement. This
argument, however, does not bolster Rockwell’s contention that there is an actual
controversy between Rockwell and Solaia. The issue of whether Smurfit’s cross-claim arises
under federal law is relevant only to the question of whether this court has jurisdiction over
Smurfit’s cross-claim against Rockwell, not Rockwell’s cross-claim against Solaia.
Accordingly, this court finds that this court lacks subject matter jurisdiction over Rockwell’s
declaratory cross-claim against Solaia. Rockwell has not established an actual case or

controversy exists between Rockwell and Solaia, as required by Article III of the United



declaratory judgment of non-infringement, invalidity and unenforceability of the ‘318 patent, and
alleging an Illinois state law claim of unfair competition. Thereafter, Solaia moved to dismiss
Rockwell’s cross-claims and this court denied Solaia’s motion, finding that Rockwell’s cross-claims
fell within the province of Federal Rule of Civil Procedure 14(a) as defenses which the infringement-
case defendants could assert against Solaia. This court also found that Rockwell’s cross-claims fell
within the supplemental jurisdiction of this court under 28 U.S.C. § 1367 because the cross-claims
were so related to the claims asserted in the infringement-case as to form part of the same case or
controversy. When Clorox and BMW settled with Solaia on June 12, 2002 and August 20, 2002,
respectively, Smurfit remained the only infringement-case defendant.

On August 21, 2002, Solaia and Smurfit filed a joint motion for entry of an agreed order
seeking dismissal of all claims and defenses between Solaia and Smurfit with prejudice pursuant to
the settlement reached between Solaia and Smurfit. In addition, Solaia has moved to dismiss
Rockwell’s cross-claims against Solaia as being moot and for lack of subject matter jurisdiction. It
is these motions that are presently before this court.

ANALYSIS

I. Declaratory Judgment as to the ‘318 Patent

Prior to the settlements by Solaia with each of the three infringement-case defendants, this
court found that Rockwell, as third-party defendant, had a right under Rule 14(a) to assert its cross-
claims against Solaia as “any defenses which the third-party plaintiff has to the plaintiffs claim” or
“any claim against the plaintiff arising out of the transaction or occurrence that is the subject matter
of plaintiff's claim against the third-party plaintiff.” However, given the settlement of all Solaia’s

infringement claims, “plaintiff’s claim[s] against the third-party plaintiff[s]” in this case no longer



5, 2002, Clorox and Smurfit, respectively, as third-party plaintiffs, sued Rockwell Software, Inc. and
Allen-Bradley Company, LLC (collectively, “Rockwell”) seeking indemnity. Thereafter, on March
21, 2002, Rockwell filed a cross-claim seeking declaratory judgment against Solaia. Clorox and
BMW have since settled the case with Solaia, and Smurfit and Solaia have also recently settled the
claims between them. The only claims that remain pending in this case are Clorox and Smurfit’s
cross-claims against Rockwell, and Rockwell’s cross-claims against Solaia. On August 21, 2002,
Solaia and Smurfit filed a joint motion for entry of an agreed order in settlement of all claims
between Solaia and Smurfit, and to dismiss Rockwell’s cross-claims against Solaia as being moot
and Jacking in subject matter jurisdiction. For the following reasons, Solaia and Smurfit’s motion
for entry of the agreed order and for dismissal of Rockwell’s cross-claims is granted.
PROCEDURAL HISTORY

As mentioned earlier in this opinion, this litigation began on August 27, 2001 as a patent
infringement lawsuit (“infringement case”) filed by Solaia against defendants Smurfit, Clorox, and
BMW (collectively, “infringement-case defendants”), alleging infringement of United States Patent
No. 5,038,318 (“318 patent”), On December 18, 2001, Rockwell filed a declaratory judgmentaction
against Solaia seeking a declaration that, among other things, ‘318 patent is invalid, unenforceable,
and not infringed upon by Rockwell. This court dismissed Rockwell’s declaratory judgment claim
against Solaia on February 14, 2002, finding that there was “no actual case or controversy” as
required by 28 U.S.C. § 2201 (a) and Article III of the United States Constitution.

On January 30, 2002 and February 5, 2002, Clorox and Smurfit, respectively, sued Rockwell
as a third-party defendant in the infringement case, seeking indemnity. After Rockwell was brought

into the litigation as a third-party defendant, Rockwell filed cross-claims against Solaia seeking



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

SOLAIA TECHNOLOGY LLC
Plaintiff,

v. No. 01 C 6641
JEFFERSON SMURFIT CORPORATION, THE
CLOROX COMPANY, INC. AND BMW
MANUFACTURING CORPORATION

Defendants.

THE CLOROX COMPANY, INC. AND
JEFFERSON SMURFIT CORPORATION,

Third-Party Plaintiffs,
v.

ROCKWELL SOFTWARE, INC. AND
ALLEN-BRADLEY COMPANY, LLC,

NO SS SS SS ee

Third-Party Defendants.

MEMORANDUM OPINION AND ORDER

JAMES F. HOLDERMAN, District Judge:
On August 27, 2001, plaintiff Solaia Technology LLC (“Solaia”) filed a patent infringement
suit against defendants Jefferson Smurfit Corporation (“Smurfit”), The Clorox Company, Inc.

(“Clorox”), and BMW Manufacturing Corporation (“BMW”). On January 30, 2002 and February