eBay Inc. et al v. PartsRiver, Inc.

Filing 61

ORDER by Judge Claudia Wilken granting (17) Motion to Dismiss in case 4:10-cv-04947-CW; granting (22) Motion to Dismiss in case 4:10-cv-05106-CW; granting (19) Motion to Dismiss in case 4:10-cv-05108-CW (ndr, COURT STAFF) (Filed on 4/21/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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EBAY INC. and MICROSOFT CORPORATION,

No. C 10-4947 CW

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Plaintiffs,
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v.
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PARTSRIVER, INC., and KELORA SYSTEMS,
LLC,

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ORDER GRANTING IN
PART AND DENYING IN
PART PARTSRIVER, INC.
AND KELORA SYSTEMS
LLC’S MOTION TO
DISMISS
(Docket No. 17)

Defendants.
/

United States District Court
For the Northern District of California

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No. C 10-5106 CW

EBAY INC.,

ORDER GRANTING
PARTSRIVER, INC.’S
MOTION TO DISMISS
(Docket No. 22)

Plaintiff,
v.
PARTSRIVER, INC., and KELORA SYSTEMS,
LLC,

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Defendants.
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/
MICROSOFT CORPORATION,

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No. C 10-5108 CW
ORDER GRANTING
PARTSRIVER, INC.’S
MOTION TO DISMISS
(Docket No. 19)

Plaintiff,
v.
PARTSRIVER, INC., and KELORA SYSTEMS,
LLC,

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Defendants.
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/

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In these related cases, Plaintiffs eBay Inc. and Microsoft
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Corporation seek declaratory judgments of non-infringement and
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invalidity of U.S. Patent No. 6,275,821 (’821 patent).

Defendants

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PartsRiver, Inc., and Kelora Systems, LLC, move to dismiss Case No.
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C 10-4947 CW (4947 action) in its entirety for lack of subject

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matter jurisdiction.

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claims against it in Case Nos. C 10-5106 CW (5106 action) and 10-

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5108 CW (5108 action).

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motions were heard on March 17, 2011.

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argument and the papers submitted by the parties, the Court GRANTS

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in part and DENIES in part PartsRiver and Kelora’s motion to

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dismiss the 4947 action and GRANTS PartsRiver’s motions to dismiss

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the claims brought against it in the 5106 and 5108 actions.

United States District Court
For the Northern District of California

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PartsRiver, on its own, moves to dismiss the

eBay and Microsoft oppose the motions.

The

Having considered oral

BACKGROUND
The three above-captioned cases and Shopzilla, Inc. v. Kelora

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Systems, LLC, Case No. C 11-0502 CW (0502 action), are related to

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PartsRiver, Inc. v. Shopzilla, Inc., Case No. C 09-0811 CW.

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However, PartsRiver is not named as a defendant in the 0502 action.

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In PartsRiver, eBay, Microsoft and Shopzilla, Inc.,

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counterclaimed for declarations of non-infringement and invalidity

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with regard to claims 1 and 2 of the ’821 patent.

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that the claims were invalid based on the on-sale bar, 35 U.S.C.

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§ 102(b).

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judgment, PartsRiver proposed amendments to claims 1 and 2 in ex

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parte re-examination proceedings in the U.S. Patent and Trademark

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Office (PTO).

The Court held

During the pendency of its appeal of the Court’s

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On November 2, 2010, the day before the Federal Circuit was to

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hold oral argument on PartsRiver’s appeal, the PTO re-published the

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’821 patent, reflecting PartsRiver’s amendments to claims 1 and 2.

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PartsRiver then moved to dismiss its appeal, asserting that the

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appeal was moot because the claims this Court held to be invalid no

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2

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longer existed.

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November 8, 2010, but left it to this Court to determine whether

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vacatur was appropriate.

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The Federal Circuit granted PartsRiver’s motion on

eBay and Microsoft filed the 4947 action on November 2, 2010,

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seeking declarations that they do not infringe amended claims 1 and

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2 of the ’821 patent and that these claims are invalid.

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Microsoft also seek a declaration that amended claims 1 and 2 are

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not legally identical to the scope of any of the original claims of

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the ’821 patent.

Originally, PartsRiver was the only named

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United States District Court
For the Northern District of California

eBay and

Defendant.

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complaint to add Kelora Systems, LLC, as a Defendant.

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On December 21, 2010, Plaintiffs filed an amended

On November 10, 2010, eBay filed the 5106 action, which

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involves the same claims brought in the 4947 action.

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the time it filed the 5106 action, eBay asserted its claims against

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PartsRiver and Kelora.

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action, which also involves the same claims brought in the 4947

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action.

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complaint in the 5108 action.

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has answered eBay’s and Microsoft’s respective complaints and has

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counterclaimed for infringement of the ’821 patent.

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However, at

The same day, Microsoft filed the 5108

Microsoft named PartsRiver and Kelora as Defendants in its
In the 5106 and 5108 actions, Kelora

PartsRiver disavows any ownership or rights to the ’821

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patent.

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2010, which transferred ownership of the ’821 patent, among others,

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from PartsRiver to Kelora.

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It points to a patent assignment, effective October 11,

The assignment states,

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[PartsRiver] hereby irrevocably assigns, transfers and
sells, and confirms the assignment, transfer and sale, to
[Kelora] all of [PartsRiver’s] rights, title and interest
in and to the Patents, including without limitation all
inventions claimed or disclosed therein, any patents that

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3

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1
2
3
4
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may issue from such patent applications, any foreign
counterparts, patents, or patent applications to which
any of the Patents claims priority, divisionals,
continuations in whole or in part, substitutes,
reexaminations, reissues or extensions, the right to
claim priority to any of the preceding, all claims for
damages or equitable remedies by reason of past
infringements of any of the Patents, and the right to sue
for and collect damages and seek all other remedies as
may be available.

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Hansen Decl., Ex. A, at 0635.

The patents were transferred

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pursuant to the patent assignment and a “Contribution Agreement”
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and “for and in consideration of the sum of One Dollar ($1.00) and
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other good and valuable consideration.”

Id.

United States District Court
For the Northern District of California

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LEGAL STANDARD
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Subject matter jurisdiction is a threshold issue which goes to
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the power of the court to hear the case.

Federal subject matter

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jurisdiction must exist at the time the action is commenced.

GAF

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Building Materials Corp. v. Elk Corp. of Dallas, 90 F.3d 479, 483
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(Fed. Cir. 1996).

To sustain subject matter jurisdiction in the

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declaratory judgment context, an “actual controversy” must exist.
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Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1359
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(Fed. Cir. 2008).

When such a controversy is lacking, dismissal is

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appropriate under Rule 12(b)(1) because the district court lacks
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subject matter jurisdiction over the claim.

Fed. R. Civ. P.

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12(b)(1).
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DISCUSSION
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The Declaratory Judgment Act permits a federal court to
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“declare the rights and other legal relations” of parties to “a
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case of actual controversy.”

28 U.S.C. § 2201.

The “actual

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controversy” requirement of the Act is the same as the “case or
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controversy” requirement of Article III of the United States

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Constitution.

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F.3d 1330, 1337 (Fed. Cir. 2007).

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jurisdiction is discretionary.

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528 F.3d 871, 883 (Fed. Cir. 2008).

Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482
Exercise of declaratory judgment

Cat Tech LLC v. TubeMaster, Inc.,

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Once jurisdiction is challenged, the “burden is on the party

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claiming declaratory judgment jurisdiction to establish that such

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jurisdiction existed at the time the claim for declaratory relief

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was filed and that it has continued since.”

Benitec Australia,

United States District Court
For the Northern District of California

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Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed. Cir. 2007).

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cases implicating federal question jurisdiction, when “a plaintiff

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files a complaint in federal court and then voluntarily amends the

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complaint, courts look to the amended complaint to determine

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jurisdiction.”

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457, 473 (2007); see also Connectu LLC v. Zuckerberg, 522 F.3d 82,

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91 (1st Cir. 2008).

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jurisdiction where none existed at the time of filing, the proper

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focus in determining jurisdiction are the facts existing at the

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time the complaint under consideration was filed.”

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Medicis Pharm. Corp., 537 F.3d 1329, 1337 (Fed. Cir. 2008)

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(citation and quotation and editing marks omitted; emphasis in

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original).

Rockwell Int’l Corp. v. United States, 549 U.S.

Although “later events may not create

Prasco, LLC v.

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PartsRiver’s motions to dismiss for lack of subject matter

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jurisdiction are both based on the same argument: because it no

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longer has any rights to the ’821 patent, it lacks standing to

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bring an infringement suit against eBay and Microsoft and,

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therefore, eBay and Microsoft cannot maintain their declaratory

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In

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judgment actions regarding the ’821 patent against it.

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proffers the October 11, 2010 patent assignment, which transfers

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all rights to the ’821 patent to Kelora.

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PartsRiver

eBay and Microsoft do not have an actual controversy with

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PartsRiver.

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notwithstanding the assignment, bring a patent infringement action

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based on the ’821 patent.

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justified their request for jurisdictional discovery into the

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relationship between PartsRiver and Kelora.

They offer no evidence suggesting that PartsRiver may,

Further, eBay and Microsoft have not

Even if the two

United States District Court
For the Northern District of California

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entities were connected, such a link would not enable PartsRiver to

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sue for infringement of the ’821 patent.

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repudiated, through its representations before the PTO and this

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Court, any rights to the ’821 patent, including the right to bring

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an infringement lawsuit.

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PartsRiver’s motions to dismiss the claims against it in the 5106

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and 5108 actions.

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dismiss in the 4947 action must be granted, to the extent it seeks

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dismissal of the claims against PartsRiver in that case.

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PartsRiver has

Accordingly, the Court grants

In addition, PartsRiver and Kelora’s motion to

PartsRiver and Kelora’s motion, however, also seeks dismissal

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of the 4947 action in its entirety.

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PartsRiver was the only Defendant named in the original complaint,

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the Court lacked subject matter jurisdiction over that action at

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the time it was filed.

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complaint to name Kelora as a Defendant, with which they had an

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actual controversy at the time they initiated the 4947 action.

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Subject matter jurisdiction “‘depends on the state of things at the

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time of the action brought.’”

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They assert that, because

However, eBay and Microsoft amended their

Rockwell, 549 U.S. at 473 (quoting
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Mullan v. Torrance, 9 Wheat. 537, 539 (1824)).

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Court noted, “The state of things and the originally alleged state

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of things are not synonymous.”

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PartsRiver nor Kelora dispute that eBay and Microsoft had an actual

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controversy with Kelora at the time the 4947 action was filed.

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Thus, that eBay and Microsoft named Kelora in their Amended

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Complaint and not in their original pleading does not require

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dismissal of the 4947 action for lack of subject matter

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jurisdiction.

549 U.S. at 473.

As the Rockwell

Neither

See id. 549 U.S. at 473.

United States District Court
For the Northern District of California

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PartsRiver and Kelora cite Schreiber Foods, Inc. v. Beatrice

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Cheese, Inc., 402 F.3d 1198 (Fed. Cir. 2005), and Enzo APA & Son,

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Inc. v. Geapag A.G., 134 F.3d 1090 (Fed. Cir. 1998), neither of

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which addressed the issue here.

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brought by the patentee, not a declaratory judgment action.

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F.3d at 1200-01.

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patentee had a right to sue for infringement at the time the

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lawsuit was filed.

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determined that the declaratory judgment defendant lacked standing

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to sue for patent infringement at the time the action was filed.

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134 F.3d at 1094.

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the court concluded that the court lacked jurisdiction over the

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declaratory judgment action.

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without standing for failing to join the patentee, it follows that

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the court lacks jurisdiction over Enzo’s declaratory judgment

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claims under Fed. R. Civ. P. 19 for nonjoinder.”).

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Microsoft had an actual controversy concerning the ’821 patent at

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the time they filed the 4947 action and they have named Kelora, the

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Schreiber was a coercive action
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Thus, the inquiry there was whether the plaintiff

Id. at 1203.

In Enzo, the Federal Circuit

Because the actual patentee was never joined,

(“Having found Geapag to be

Id.

Here, eBay and

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current holder of the ’821 patent, as a Defendant.
Accordingly, PartsRiver and Kelora’s motion is denied, to the

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extent that they seek dismissal of the 4947 action in its entirety.

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CONCLUSION

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For the foregoing reasons, the Court GRANTS in part and DENIES

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in part PartsRiver and Kelora’s motion to dismiss the 4947 action

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(Case No. C 10-4947 CW, Docket No. 17).

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claims against PartsRiver in the 4947 action are dismissed for lack

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of subject matter jurisdiction.

eBay and Microsoft’s

However, the 4947 action is not

United States District Court
For the Northern District of California

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dismissed in its entirety; the claims against Kelora remain.

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Court GRANTS PartsRiver’s motions to dismiss the claims against it

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in the 5106 (Case No. C 10-5106 CW, Docket No. 22) and 5108 actions

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(Case No. C 10-5108 CW, Docket No. 19).

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claims against PartsRiver in the 5106 and 5108 actions are

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dismissed for lack of subject matter jurisdiction.

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The

eBay’s and Microsoft’s

Within fourteen days of the date of this Order, Kelora shall
answer eBay and Microsoft’s complaint in the 4947 action.
IT IS SO ORDERED.

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Dated: 4/21/2011
CLAUDIA WILKEN
United States District Judge

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