Auburn University v. International Business Machines, Corp.
MEMORANDUM OPINION AND ORDER denying 323 Auburn's MOTION to Amend Its Pleadings to Add a Claim for Declaratory Judgment that the Accused Sony Methods Will Infringe. Signed by Honorable Judge Mark E. Fuller on 4/23/2012. (wcl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
CASE NO. 3:09-cv-694-MEF
(WO – PUBLISH)
MEMORANDUM OPINION AND ORDER
This cause is before the Court on Auburn’s opposed Motion to Amend/Correct its
Pleadings to Add a Claim for Declaratory Judgment. (Doc. #323.) Both parties have
briefed this motion thoroughly, and the Court is fully apprised of the issues. For the
reasons set out below, Auburn’s motion is due to be DENIED.
On December 20, 2011, this Court ordered (Doc. #305) that IBM turn over to
Auburn certain documents detailing the relationship between IBM and Sony regarding
IBM software that, if used by Sony, would allegedly infringe Auburn’s U.S. Patent No.
7,409,306 (“the ‘306 patent”). IBM subsequently provided these documents to Auburn.
In a status conference on January13, 2012, Auburn informed the Court that, in light of the
information revealed by these recently provided documents, Auburn would seek to
amend its pleadings to add a claim for declaratory judgment that if Sony were to use the
software provided by IBM, such use would infringe the ‘306 patent. The Court granted
Auburn leave to file this motion, and ordered a briefing schedule (Doc. #318.) Auburn’s
Motion to Amend is now fully briefed and pending before the Court.
The facts relevant to the disposition of this motion are largely undisputed. In light
of the discovery provided to Auburn by IBM in response to this Court’s December 20,
2011 order, Auburn now acknowledges that IBM never implemented any “Neighborhood
Ruleset” or other “nearest neighbor” software (together, “the accused methods”) with
regard to the Sony Cell 11S or Cell 12S products. (Auburn’s Motion, Doc. #323, at 5)
(IBM management . . . ultimately put implementation on hold . . . .”).)1 The ‘306 patent
is not currently being infringed by the use of Neighborhood Rulesets or other nearest
neighbor software on the Sony Cell products, either directly or indirectly, by either IBM
or Sony. Nevertheless, Auburn now seeks to add to its complaint a claim for declaratory
judgment that, were IBM or Sony to use the accused methods on the Sony Cell products
in the future, that implementation would infringe the ‘306 patent.2
The parties disagree as to why Sony never “turned on” the potentially infringing software.
Auburn argues that the software was never utilized because of a looming infringement suit (Auburn’s
Motion, Doc. #323 at 5), while IBM argues that the threat of litigation was but one of a number of
considerations, including the development of more cost-effective, less risky methods for testing the Sony
products (IBM’s Response, Doc. #327, at 5). The resolution of this disagreement is not relevant to the
grounds on which the Court will decide this motion, and the Court makes no determination as to the
reason IBM may have chosen not to “turn on” the Sony Software.
There is no dispute that the “Neighborhood Ruleset” and “nearest neighbor” methods and
software, as applied to the Sony Cell 11S and 12S products, constitute the full universe of the dispute at
issue with regard to Auburn’s Motion to Amend. No other methods, software, or products are relevant to
the Court’s consideration of this motion. See Auburn’s [Proposed] Stipulation Regarding the Sony
Methods (Doc. #337-3) (proposing a representation regarding the “Neighborhood Ruleset” and “nearest
neighbor” methods and software, as applied to the Sony Cell 11S and 12S products, which Auburn
acknowledges would eliminate a justiciable dispute between the parties); see also Auburn’s Reply (Doc.
#336 at 4.)
A) Legal standard
A district court may deny a motion to amend the pleadings if that motion would be
futile. Hall v. United Ins. Co. of Am., 367 F.3d 1255, 1262-63 (11th Cir. 2004). An
amendment is futile where the claim a party seeks to add to its pleadings would be
subject to dismissal as a matter of law. Id. at 1263. Claims over which this Court has no
jurisdiction would be dismissed as a matter of law.
Auburn seeks jurisdiction for its proposed declaratory judgment claim under the
Declaratory Judgment Act (Auburn’s Motion, Doc. #323, at 6.) “A party seeking to base
jurisdiction on the Declaratory Judgment Act bears the burden of proving that the facts
alleged, ‘under all the circumstances, show that there is a substantial controversy . . .
between the parties.” Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1343 (Fed.
Cir. 2007) (quoting MedImmune, Inc. v. Genentech, Inc., 549 US 118, 771 (2007)). “The
burden is on the party claiming declaratory judgment jurisdiction 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.
1) Representations by a non-holder may eliminate justiciable controversy
The parties agree that, under the relevant case law, “binding, affirmative
representations from IBM, which are both comprehensive and practical, would eliminate
a justiciable dispute between the parties,” (Auburn’s Reply, Doc. #336, at 4). In other
words, sufficient representations from IBM would eliminate this Court’s jurisdiction over
Auburn’s proposed declaratory judgment claim, thereby making the proposed amendment
Most case law on the issue of what constitutes a sufficient representation to
eliminate a justiciable dispute in the patent context involves a situation wherein the party
that does not hold the patent at issue (the “non-holder”) seeks a declaratory judgment
against a patentee that the non-holder’s conduct does not constitute infringement. See,
e.g., Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054 (Fed. Cir. 1995)
abrogated on other grounds by MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118
(2007); Arris Grp., Inc. v. British Telecomm. PLC, 639 F.3d 1368 (Fed. Cir. 2011).
Cases where the non-holder is the declaratory judgment plaintiff may be resolved through
the patentee’s issuance of a comprehensive covenant not to sue. See, e.g., Super Sack, 57
F.3d at 1056, 1059-60 (affirming dismissal of declaratory judgment suit where patentee
represented that it would “unconditionally agree not to sue [non-holder] for infringement
as to any claim of the patents-in-suit based upon the products currently manufactured and
sold by [non-holder]”).
However, a patentee may also pursue a declaratory judgment against a non-holder.
In cases where the patentee is the declaratory judgment plaintiff, the non-holder may
eliminate a justiciable controversy by representing to the Court that the non-holder has
abandoned all potentially infringing conduct and that it has no plans to resume these
activities in the future. See Interdigital Technology Corp. v. OKI Am. Inc., 845 F. Supp.
276, 287 (E.D.Pa. 1994). Resolving this latter type of dispute is more difficult, as it is far
easier for a Court to discern whether a covenant not to sue is sufficient to eliminate a
justiciable dispute than it is for a Court to determine exactly how far a non-holder must
go in swearing off current and future pursuits so that the patentee can be assured that the
non-holder will not infringe at some point in the future.
2) Parties have made competing representations in an attempt to resolve this
In the course of the briefing of this motion IBM, through its counsel,3 stated the
IBM affirmatively represents that it will not use, or cause any other persons
to use, any, “nearest neighbor” methods to test the Sony Cell 11S or
Cell12S products, nor will IBM use, or cause any other persons to use, any
“Neighborhood Ruleset” or other “nearest neighbor” software in connection
with the Sony Cell 11S or Cell 12S products.
(IBM’s Surreply, Doc. #348, at 4.)
By comparison, Auburn sought the following representation from IBM, which
IBM refused to provide:
1. IBM will not use any nearest neighbor methods to test the Sony Cell
processor products, nor will IBM use any “Neighborhood Ruleset” or other
nearest neighbor software in connection with the Sony Cell processor
2. IBM will not instruct, encourage, or otherwise induce other persons to
use, or have other persons use on its behalf, any nearest neighbor methods
or software in connection with the Sony Cell processor products. IBM will
advise Auburn in writing, within 14 days, if it learns other persons are
using nearest neighbor methods or software in connection with the Sony
Cell processor products; and
3. Within 30 days of the Court’s Order, IBM will, after a reasonable
search, delete all copies of any nearest neighbor software that was
The Federal Circuit has held that representations made through counsel are binding on the
parties represented. Super Sack, 57 F.3d at 1059.
developed in connection with the Sony Cell processor products. IBM will
certify the deletion to the Court in writing within 7 days thereof.
(Auburn’s Reply, Doc. #366, at 4-5.)
Therefore, the issue is whether IBM’s representation, absent provisions that IBM
will delete “all copies of any nearest neighbor software” and “advise Auburn . . . if it
learns other persons are using nearest neighbor methods or software in connection with
the Sony Cell products,” is sufficiently comprehensive to eliminate a justiciable dispute
between the parties.
B) Elimination of controversy depends on content of representation and whether
representation eliminates reasonable apprehension of future infringement
Here, Auburn is the patentee and the declaratory judgment plaintiff, and IBM is
the non-holder. Resolving this issue therefore requires determining whether IBM’s
representation, supra, is sufficient to eliminate the case or controversy that would be the
subject of Auburn’s proposed declaratory judgment claim.
To resolve this issue, the Court looks to precedent involving covenants not to sue
by patentees in declaratory judgment suits brought by non-holders, as well as to
Interdigital, where the non-holder’s representation of its abandonment of potentially
infringing activity was sufficient for the district court in that case to dismiss the
patentee’s declaratory judgment action for lack of jurisdiction. Interdigital, 845 F.Supp.
In Revolution Eyewear v. Aspex Eyewear, a covenant-not-to-sue case, the Federal
Circuit held that “[w]hether a covenant not to sue will divest the trial court of jurisdiction
depends on what is covered by the covenant.” 556 F.3d 1294, 1297 (Fed. Cir. 2009).
While not all of the Federal Circuit’s language in Revolution can be applied to cases
where the patentee is also the declaratory judgment plaintiff, this guiding principle is
applicable, and, therefore, the sufficiency of IBM’s representation will be judged based
on its content.
The Revolution Court also noted that in two previous decisions, declaratory
judgment jurisdiction was absent because there was not a “reasonable apprehension of
suit.” Revolution, 556 F.3d at 1298 (citing Benitec, 495 F.3d at 1346 (holding no
reasonable apprehension of suit because of statutory exemption) and Super Sack, 57 F.3d
at 1057 (holding no reasonable apprehension of suit because of comprehensive covenant
not to sue for future production and sale of products that were the subject of the
infringement suit)). From these cases, this Court draws the principle that if IBM’s
representation eliminates any reasonable apprehension of future infringement by IBM as
to the ‘306 patent and the Sony products, then this Court does not have jurisdiction to
entertain a claim for declaratory judgment, and Auburn’s motion to amend should be
denied as futile. See also Interdigital, 845 F.Supp at 287 (“Because [non-holder] is not
currently engaging in any activity directed toward possible infringement and no harm
appears immediately to be threatened [non-holder’s] motion to dismiss . . . will be
C) IBM’s representations are sufficient to eliminate any reasonable apprehension of
future infringement, and thus eliminate jurisdiction in this Court
IBM has represented that it has no plans to “turn on” the accused methods for use
on the Sony Products. IBM has refused, however, to agree to represent that it will delete
the software in question or notify Auburn if IBM becomes aware of any third-party use of
the allegedly infringing software on the accused products. The Court finds that IBM’s
representations are sufficient, even absent the additional representations sought by
Auburn, to eliminate any reasonable apprehension of future infringement.
In Super Sack, a covenant-not-to-sue case, the Federal Circuit noted that
“declaratory justiciability respecting patent rights requires that the putative infringer’s
‘present activity’ place it at risk of infringement liability.” 57 F.3d at 1059 (emphasis in
original). Here neither IBM’s past nor present activity place Auburn at risk that the
accused methods will be used on the Sony products, as those methods are not now, nor
have they ever been, used on the Sony products. (Kevin O’ Buckley Dep. 13:20-15:1
Additionally, as in Interdigital, IBM has made binding representations that its
future activity with relation to the Sony products will not infringe the ‘306 patent. In
Interdigital, the non-holder, OKI America,
advised the court that OKI has recently abandoned all efforts to develop a
TDMA Cellular telephone compliant with IS-54-B. OKI has also submitted
a supporting declaration by John J. Farrell, Jr., stating that OKI America
will undertake no further development or testing on any TDMA product
designed to be compliant with IS-54-B. . . . OKI may at some future time
decide to purchase from OKI Electric telephones compliant with the
proposed new standard, IS-54+, or other relevant TDMA standard.
However, OKI has no current plans to develop, test or manufacture any
TDMA cellular telephones until at least one year from now.
Interdigital, 845 F.Supp. at 287.
The district court went on dismiss the relevant portion of Interdigital’s declaratory
judgment action against OKI “[b]ecause OKI is not currently engaging any activity
directed toward possible infringement and no harm appears immediately threatened[.]”
Id. (emphasis added).
Auburn and IBM both acknowledge that IBM is not currently infringing the ‘306
patent by using the accused methods on Sony Cell products. Furthermore, this Court
finds that IBM’s representation is sufficient to eliminate the possibility of immediate
harm to Auburn. IBM has represented that it will not use, or cause any other persons to
use, any, “nearest neighbor” methods, “Neighborhood Ruleset,” or other “nearest
neighbor” software in connection with the Sony Cell products. (IBM Surreply, Doc.
#348, at 1.) Additionally, as discussed above, IBM never used the accused methods on
the Sony products, and has not even contemplated doing so in at least two years (Kevin
O’ Buckley Dep. 13:20-15:1 (Doc. #327-1).) Whatever the reason IBM never
implemented these methods with Sony, the fact remains that IBM never implemented
these methods with Sony.
This is a nearly identical situation to that at issue in Interdigital, and, while that
court’s holding is not binding, this Court finds that decision persuasive. This Court finds
that IBM should not be required to delete its software or police the actions of others who
may use it in order to eliminate jurisdiction over Auburn’s proposed declaratory
judgment claim. While IBM or Sony could turn the software on at any point, IBM has
made a binding representation to this Court that it will not use the software itself, nor
induce anyone else to do so. This representation is as comprehensive as that at issue in
Interdigital. Interdigital, 845 F.Supp at 287. Additionally, this Court finds IBM’s
representation to be equivalent to a comprehensive covenant not to sue, in that IBM’s
representation makes the possibility of a future infringement suit based on IBM’s future
acts too speculative to form a basis for jurisdiction over Auburn’s proposed declaratory
judgment claim. Cf. Super-Sack, 57 F.3d at 1059-60.
Furthermore, requiring IBM to police the actions of others with regard to this
software would impose a burden beyond what IBM should be required to do in a situation
where there is not currently and never has been infringement of the ‘306 patent through
the use of the accused methods on the Sony Cell products. See Super-Sack, 57 F.3d at
1059 (“[A]s our cases have made clear . . . declaratory justiciability respecting patent
rights requires that the putative infringer’s ‘present activity’ place it at risk of
IBM has made sufficient representations to eliminate any reasonable
apprehension of infringement. Additionally, there is no current infringement, and no
harm appears immediately threatened. Therefore, IBM’s representations are sufficient to
eliminate the jurisdiction of this Court. Therefore, Auburn’s proposed declaratory
judgment claim would be futile.
D) Arris Group, Inc. v. British Telecommunications, PLC, is distinguishable from
In its arguments for jurisdiction, Auburn relies on Arris Group, Inc. v. British
Telecommunications PLC, 639 F.3d 1368 (Fed. Cir. 2011). Auburn argues that Arris
stands for the proposition that “IBM cannot extinguish the parties’ ongoing dispute in its
entirety simply by promising not to engage in some of the activities at issue (Auburn
Reply, Doc. #336, at 2) (emphasis in original).
In Arris, a covenant-not-to-sue case, the non-holder declaratory judgment plaintiff
(Arris) sought a declaratory judgment of non-infringement and invalidity against British
Telecommunications (“BT”), the patentee. BT had previously accused one of Arris’s
customers, Cable One, of infringing the patents-in-suit by using equipment purchased
from Arris. Id. at 1371. The Federal Circuit held that there was jurisdiction over Arris’s
declaratory judgment claims against BT, largely because BT did not grant Arris a
sufficient covenant not to sue and because it appeared that BT’s limited representation
was specifically intended to preserve the possibility of suit against Arris, as an indirect
infringer, at a later date. Id. at 1381.
At oral argument in front of the Federal Circuit, “BT represented that it ‘does not
assert that [Arris’ products] directly infringe . . . [or] that [Arris] contributorily
infringe[s]’ the patents-in-suit by selling its products to Cable one.” Id. (alterations in
original). When asked why BT did not simply grant Arris a covenant not to sue, BT
responded, “Why should BT give them a covenant not to sue, when for all BT knows
maybe they are out there inducing infringement unbeknownst to BT? . . . BT doesn’t need
to forfeit a potential future right . . . to dispel [a suit for declaratory judgment].” Id.
(alterations in original). The Federal Circuit held that, under the facts of the case,4 and in
combination with this refusal to grant a covenant not to sue, BT’s representation was
insufficient to eliminate a justiciable controversy between Arris and BT. Id.
The Federal Circuit found that, because Arris was so intimately involved with BT’s accusations
against Cable One, there was “an actual controversy between Arris and BT concerning Arris’ liability for,
at least, contributory infringement.” Arris, 639 F.3d at 1375.
Arris is distinguishable from the instant case in two material ways. First, IBM’s
representations, discussed above, are far more comprehensive than the representation
made by BT in Arris. Given BT’s limited representation about Arris’s potential liability,
the Federal Circuit held that “BT’s refusal to grant Arris a covenant not to sue provides a
level of additional support for our finding that an actual controversy exists between Arris
and BT regarding contributory infringement.” Id. IBM’s representations, on the other
hand, are far more comprehensive and serve to eliminate any reasonable apprehension of
Second, as IBM points out, in “Arris the patentee had accused the alleged indirect
infringer’s customers of infringement, specifically linking those claims back to the
alleged infringer’s current products. . . . Thus, the declaratory judgment plaintiff [Arris]
could identify both a third party direct infringer and a product that was accused of
currently infringing the product. Auburn has failed on both counts here.” (IBM’s
Surreply, Doc. #348, at 3.) Auburn’s conclusion that Arris stands for the proposition that
IBM cannot extinguish a dispute by merely promising not to engage in some of the
activities at issue, while perhaps accurate, cannot apply where there are no activities to
speak of. Here, there is no current infringer, nor any currently infringing product. Rather
than promising not to engage in “some of the activities at issue,” IBM has promised to
continue not to engage in all relevant activities in the future.
In sum, the apprehension of a future infringement suit was far more reasonable in
Arris than the apprehension of future infringement by IBM is here. In Arris there was
both current infringement by a third party, using a product manufactured by the non12
holder declaratory judgment plaintiff, as well as a representation that fell short of the
comprehensiveness standard established in Super-Sack and Revolution Eyewear.
For the reasons discussed above, this Court finds that Auburn’s proposed claim for
a declaratory judgment against IBM regarding the use of the accused methods would be
futile, because IBM’s representations have eliminated any actual case or controversy
between the parties on this issue. See Super Sack, 57 F.3d at 1059-60.
Therefore, Auburn’s Motion to Amend Its Pleadings to Add a Claim for
Declaratory Judgment That the Accused Sony Methods Will Infringe (Doc. #323) is
DONE this the 23rd day of April, 2012.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE
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