Microsoft Corporation v. SynKloud Technologies, LLC
MEMORANDUM OPINION. Signed by Judge Richard G. Andrews on 9/8/2020. (nms)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
Civil Action No. 20-0007-RGA
SYNKLOUD TECHNOLOGIES, LLC,
Kelly E. Farnan, Travis S. Hunter, RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE;
Richard A. Cederoth, SIDLEY AUSTIN LLP, Chicago, IL; Ching-Lee Fukuda, Ketan V. Patel,
SIDLEY AUSTIN LLP, New York, NY, Attorneys for Plaintiff.
David S. Eagle, Sean M. Brennecke, KLEHR HARRISON HARVEY BRANZBURG LLP,
Wilmington, DE; Deepali Brahmbhatt, ONE LLP, Newport Beach, CA; John Lord, ONE LLP,
Beverly Hills, CA, Attorneys for Defendant.
September 8, 2020
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/s/ Richard G. Andrews
ANDREWS, UNITED STATES DISTRICT JUDGE:
Before me is Defendant Synkloud’s motion to dismiss “[p]ursuant to Federal Rules of
Civil Procedure 12(b)(1), 12(h)(3), Lack of Standing and 12(b)(6).” (D.I. 8). I have reviewed the
parties’ briefing. (D.I. 9, 24, 28). For the reasons that follow, I will grant-in-part and deny-in-part
Plaintiff Microsoft filed its Complaint on January 3, 2020, seeking declaratory judgment
of non-infringement of eleven patents: U.S. Patent Nos. 9,098,526 (“the ’526 patent”),
10,015,254 (“the ’254 patent”), 8,606,880 (“the ’6880 patent”), 8,856,195 (“the ’195 patent”),
8,868,690 (“the ’690 patent”), 9,219,780 (“the ’780 patent”), 9,239,686 (“the ’686 patent”),
7,870,225 (“the ’225 patent”), 7,792,923 (“the ’923 patent”), 7,849,153 (“the ’153 patent”), and
7,457,880 (“the ’7880 patent”) 1 (collectively, the Asserted Patents). (D.I. 1).
SynKloud moves to dismiss the Complaint for lack of subject matter jurisdiction and
standing, 2 and for failure to state a claim. (D.I. 8).
II. LEGAL STANDARDS
A. Subject Matter Jurisdiction
Federal Rule of Civil Procedure 12(b)(1) allows for dismissal where the court lacks
subject matter jurisdiction over an action. “A motion to dismiss for want of standing is 
properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter.”
Microsoft concedes that after jurisdictional discovery (see D.I. 22, 23), it has no basis to
continue with the ’7880 patent. (D.I. 24 at 18).
A party has standing to bring an action under the Declaratory Judgment Act if an “actual
controversy” exists, which is the same as an Article III case or controversy. MedImmune, 549
U.S. at 127. Thus, a separate “standing” inquiry has no independent effect on the analysis under
the facts of this case.
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Ballentine v. U.S., 486 F.3d 806, 810 (3d Cir. 2007). Motions brought under Rule 12(b)(1) may
raise either a facial or factual challenge to the court’s jurisdiction. “In reviewing a facial attack,
the court must only consider the allegations of the complaint and documents referenced therein
and attached thereto, in the light most favorable to the plaintiff.” Gould Elecs. Inc. v. United
States, 220 F.3d 169, 176 (3d Cir. 2000). Factual attacks allow the court to delve beyond the
pleadings to determine if the evidence supports the court’s subject matter jurisdiction. Mortenson
v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1997). The party asserting subject
matter jurisdiction bears “the burden of proof that jurisdiction does in fact exist.” Id. Pursuant to
Fed. R. Civ. P. 12(h)(3), a court must dismiss a complaint if “it determines that it lacks subject
The Supreme Court has held that a “case or controversy” exists when “the facts alleged,
under all the 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.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). “The
dispute must be ‘definite and concrete, touching the legal relations of parties having adverse
legal interests . . . .’” Arris Grp., Inc. v. British Telecomm. PLC, 639 F.3d 1368, 1373 (Fed. Cir.
2011). A “subjective or speculative fear of future harm” does not suffice. Prasco, LLC v. Medicis
Pharm. Corp., 537 F.3d 1329, 1335 (Fed. Cir. 2008).
B. Failure to State a Claim
Rule 12(b)(6) permits a party to seek dismissal of a complaint for failure to state a claim
upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A complaint must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief, in order to give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp.
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v. Twombly, 550 U.S. 544, 545 (2007). When considering a Rule 12(b)(6) motion to dismiss, the
court must accept as true all factual allegations in the complaint and view them in the light most
favorable to the plaintiff. Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008). Dismissal
under Rule 12(b)(6) is only appropriate if the complaint does not contain “sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp, 550 U.S. at 570); see also Fowler v. UPMC
Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
A. Subject Matter Jurisdiction
SynKloud argues that this Court lacks subject matter jurisdiction over this case because
Microsoft has not alleged any affirmative acts against it by SynKloud, Microsoft has not alleged
any indemnity obligation to its customer – HP – that Synkloud has sued, Microsoft’s references
to Adobe and Dropbox litigations unrelated to Microsoft’s products should be disregarded, and
Microsoft has not alleged a dispute based on any infringement liability since it has asserted
patents here not asserted by SynKloud against HP, Adobe, or Dropbox. (D.I. 9 at 6-10).
In declaratory judgment actions, the plaintiff must show that “a case of actual
controversy” exists to establish subject matter jurisdiction sufficient to maintain an action in
federal court. 28 U.S.C. § 2201(a). “[T]he question in each case is whether the facts alleged,
under all the circumstances show that there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.” MedImmune, 549 U.S. at 127. In an action for a declaratory judgment of
non-infringement or invalidity of a patent, the plaintiff must show “(1) an affirmative act by the
patentee related to the enforcement of his patent rights and (2) meaningful preparation to conduct
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potentially infringing activity.” Ass’n for Molecular Pathology v. U.S. Patent & Trademark
Office, 689 F.3d 1303, 1318 (Fed. Cir. 2012). The patentee’s affirmative acts must be directed at
the “specific plaintiffs” seeking a declaratory judgment. Id. at 1323.
The “immediacy and reality” inquiry can be viewed through the lens of standing. Prasco,
537 F.3d at 1338. To establish standing, the plaintiff must allege (1) an injury-in-fact, i.e., a harm
that is “concrete and actual or imminent, not conjectural or hypothetical,” (2) that is “fairly
traceable” to the defendant’s conduct, and (3) redressable by a favorable decision. Caraco
Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1291 (Fed. Cir. 2008). Absent an
injury-in-fact fairly traceable to the patentee, there can be no immediate and real controversy.
Prasco, 537 F.3d at 1338.
Jurisdiction will not arise merely on the basis that a party perceives that a patent poses a
risk of infringement. Id. (“The mere existence of a potentially adverse patent does not cause an
injury nor create an imminent risk of an injury; absent action by the patentee, ‘a potential
competitor . . . is legally free to market its product in the face of adversely-held patent.’”).
Rather, when deciding jurisdiction and standing questions in such actions, the Federal Circuit
looks at a variety of factors, including the presence of any accusations of infringement or threats
of suit, see, e.g., id. at 1340 (“the defendants have not accused Prasco of infringement . . . [t]he
lack of any evidence that defendants believe or plan to assert that plaintiff’s product infringes
their patents creates a high barrier to proving that Prasco faces an imminent risk of injury”),
demands for royalty payments or a licensing agreement, see, e.g., MedImmune, 549 U.S. at 128,
the existence of a covenant not to sue, see, e.g., Dow Jones & Co. v. Ablaise Ltd., 606 F.3d 1338,
1346 (Fed. Cir. 2010), or actual economic injury. See, e.g., Arris Grp., 639 F.3d at 1368 (noting
that a potential economic injury alone is insufficient to confer standing).
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The Supreme Court has emphasized that a fear of future harm that is only subjective is
not an injury or threat of injury caused by the defendant that can be the basis of an Article III
case or controversy. City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983). Rather, “it is the
reality of the threat of . . . injury that is relevant to the standing inquiry.” Id. at 107 n.8 (emphasis
in original). Although MedImmune clarified that an injury-in-fact sufficient to create an actual
controversy can exist even when there is no apprehension of suit, it did not change the bedrock
rule that a case or controversy must be based on a real and immediate injury or threat of future
injury that is caused by the defendants – an objective standard that cannot be met by a purely
subjective or speculative fear of future harm.
Where a patent holder accuses customers of direct infringement based on the sale or use
of a supplier’s equipment, the supplier has standing to commence a declaratory judgment action
if (a) the supplier is obligated to indemnify its customers from infringement liability, or (b) there
is a controversy between the patentee and the supplier as to the supplier’s liability for induced or
contributory infringement based on the alleged acts of direct infringement by its customers. Arris
Grp., 639 F.3d at 1375.
1. Whether an Indemnity Obligation Exists Between Microsoft and HP
Where a patent owner accuses a supplier’s customer (here, an original equipment
manufacturer or OEM) of infringement based on the sale and use of the supplier’s software and
the supplier acknowledges and accepts a duty to defend the customer accused of infringement,
the supplier has standing to commence a declaratory judgment action on those asserted patents.
Microsoft argues that it has accepted an obligation to defend HP. (D.I. 24 at 9).
As the Court noted during the April 1, 2020 discovery teleconference and based
on the current allegations, Plaintiff has accepted an obligation to defend, and is
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currently defending HP against Defendant’s infringement allegations. Although
SynKloud has threatened to sue each OEM, it has not yet sued any others. On this
basis alone, there is sufficient record evidence to support an actual controversy as
to Microsoft’s alleged liability for HP’s infringement of the ’526, ’254, and ’225
(Id.). SynKloud argues that while Microsoft pleads that HP is its OEM, it fails to allege the
contextual detail of any request for indemnification or that Microsoft has agreed to or is
obligated to indemnify HP or any other OEM. (D.I. 9 at 2). SynKloud argues that it is not enough
for Microsoft to rely on SynKloud’s prior suit against HP to support subject matter jurisdiction.
(Id. at 8).
Absent a “clear, direct allegation” that a declaratory judgment plaintiff is obligated to
indemnify its customers, a case or controversy does not exist based on an indemnity theory.
Microsoft Corp. v. DataTern, 755 F.3d 899, 904 (Fed. Cir. 2014). A customer request to
indemnify against patent infringement does not create subject matter jurisdiction. Id. at 903-04;
see also Cisco Sys, Inc. v. Alberta Telecomms. Research Ctr., 538 F. App’x 894, 898 (Fed. Cir.
2013) (while Cisco had filed suit to protect its customers, it had “never asserted that it had
indemnity obligations for any liability its customers might incur”).
In Microsoft v. DataTern, DataTern had sued Microsoft’s and SAP’s customers, accusing
them of using the suppliers’ software packages to infringe the asserted method claims, but there
were no arguments that there was a case or controversy between DataTern and the suppliers as to
direct infringement. 755 F.3d at 904. If the suppliers had an obligation to indemnify their
customers, they would then have standing to bring suit. Id. In that instance, the suppliers would
stand in the shoes of the customers and would be representing the customers’ interests because of
their legal obligation to indemnify. Id. But there was no evidence of such an obligation.
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As an initial matter, the transcript from the referenced teleconference reveals no
acknowledgment to the Court that Microsoft had accepted an obligation to indemnify HP. (See
D.I. 23). In its Complaint, Microsoft alleges only that HP is an OEM. (D.I. 1 at ¶ 3). Microsoft
does not allege that it will indemnify HP. Microsoft does not identify what conditions, if any,
require it to indemnify its OEMs, including HP, and does not point to any such agreement or
Microsoft argues in its briefing that it has “accepted an obligation to defend, and is
currently defending HP against SynKloud’s infringement allegations.” (D.I. 24 at 9). The
complaint, however, is silent as to any indemnity obligations that Microsoft might have. Thus,
unlike in Arris, Microsoft has not asserted that it has indemnity obligations for any liability its
customers might incur. See 639 F.3d at 1375. While Microsoft counsel stated at a discovery
conference that Microsoft has “accepted an obligation to defend,” there is no evidence in the
record of any such agreement, promise, or obligation. Without alleging that it has accepted an
obligation to indemnify, there is no case or controversy between the parties on the basis of
indemnification. See id.
2. Whether There is a Controversy Between Microsoft and SynKloud Based on
Alleged Acts of Direct Infringement by Third Parties
a. Controversy Based on SynKloud’s “Litigation Campaign”
Microsoft notes that SynKloud has “launched a litigation campaign based on the Patentsin-Suit,” including filing against several Microsoft competitors accusing cloud storage
technology similar to that accused in the HP action as infringing patents with substantially
similar claims as those patents asserted against HP. (D.I. 1 at ¶¶ 3, 27, 28). Microsoft alleges that
SynKloud’s claims directed to the cloud storage industry generally, and Microsoft’s OneDrive
product specifically, have placed a “cloud of uncertainty” over Microsoft and its products,
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creating a concrete and immediate justiciable controversy between Microsoft and SynKloud. (Id.
at ¶¶ 4, 29). SynKloud has alleged that HP “infringes the ’225, ’526, and ’254 patents in part
because of HP’s inclusion of Microsoft’s OneDrive cloud storage software . . . in the accused HP
products.” (Id. at ¶ 3).
SynKloud contends that it did not communicate with or threaten Microsoft pre-suit at all.
(D.I. 9 at 7). This argument to defeat jurisdiction is, by itself, a non-starter. Direct
communication between a patentee and a declaratory plaintiff is not necessary to confer standing.
Arrowhead Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988) (“[I]f
the circumstances warrant,” an actual controversy “may be found in the absence of any
communication from the defendant to the plaintiff.”).
A patentee’s aggressive enforcement strategy, even in the absence of direct threats
against the declaratory judgment plaintiff, may support jurisdiction, however. DataTern, 755
F.3d at 906. Prior litigious conduct is one circumstance to be considered in assessing whether the
totality of circumstances creates an actual controversy. Prasco, 537 F.3d at 1341.
In Prasco v. Medicis, Prasco argued that a case or controversy had been created because
Medicis had caused Prasco to suffer actual harm—namely, “paralyzing uncertainty” from fear
that Medicis would bring an infringement suit against it, given Medicis’ history of enforcing
patent rights to protect its “core products.” Id. at 1338. Prasco had not alleged that defendants
had restrained its right to freely market its product; rather, it was the threat of future injury that
formed the basis for its complaint. Id. at 1339. The Court held that Prasco did not meet its
threshold burden of proving an immediate and real controversy. Id. The defendants had not
accused Prasco of infringement or asserted any rights against the relevant product, nor had they
taken actions that implied such claims. Id. at 1340.
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The Court in Prasco also held that one prior suit concerning different products covered
by unrelated patents was not the type of pattern of prior conduct that made reasonable an
assumption that Medicis would also take action against Prasco regarding its new product. Id.
Accordingly, Medicis’ prior suit premised on other patents could not by itself create a real and
immediate controversy, and it was entitled to minimal weight in analyzing whether such a
controversy had been created. Id.
In DataTern, software suppliers filed noninfringement and invalidity declaratory
judgment actions against a patentee. 755 F.3d at 902. The patentee argued that the court lacked
jurisdiction because the patentee never approached the suppliers regarding a license, never
accused them of infringement, and indicated that it did not intend to sue the suppliers. Id. at 903.
The software suppliers responded that jurisdiction existed because the patentee’s infringement
claims against the suppliers’ customers were “based on” the customers’ use of their products and
thus impliedly asserted indirect infringement against the suppliers. Id. The suppliers also
contended that the indemnification demands that they received from their customers, and the
patentee’s aggressive litigation strategy (it had sued more than 100 entities for infringement of
the patents in question) supported the existence of a substantial controversy. Id.
To the extent that the suppliers argued that the patentee’s suits against its customers
automatically gave rise to a case or controversy regarding induced infringement, the Court in
DataTern did not agree. Id. at 902. The Court was “sympathetic” to the suppliers’ arguments that
the patentee’s litigiousness supported the existence of a controversy between the parties in the
case. Id. at 906. The Court noted, however, that the patentee’s litigation strategy appeared to
involve suing software users, not software suppliers. Id. at 907. And there was no record
evidence that the suppliers encouraged the acts that amounted to alleged direct infringement by
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its customers in the other actions. Id. This cut against the suppliers’ arguments that they might be
next or that litigiousness against direct infringers alone created a substantial controversy
regarding inducement. Id.
In determining whether there is a case or controversy of sufficient immediacy to establish
declaratory judgment jurisdiction, the Court looks to the elements of the potential cause of
action. See Arris Grp., 639 F.3d at 1376-78. It is not the case that definitive proof must exist that
would establish each element. DataTern, 755 F.3d at 905. But, to establish a substantial
controversy, there must be allegations by the patentee or other record evidence that establish at
least a reasonable potential that such a claim could be brought. Id.
Microsoft has asserted eleven patents in this declaratory judgment action. SynKloud
asserted three of them – the ’254, ’526, and ’225 patents – in the HP action. (D.I. 1 at ¶ 1).
Microsoft has included eight other patents that are not in the HP action. (Id.). In support of
Microsoft’s argument that there is a case or controversy between Microsoft and SynKloud as to
the additional eight patents, Microsoft alleges that SynKloud has initiated a “litigation
campaign” against Microsoft competitors Adobe and Acrobat, accusing cloud storage technology
“similar to that accused in the HP action as infringing patents with substantially similar claims as
those patents asserted against HP,” referring to three cases filed in the Western District of Texas.
(Id. at ¶ 27).
Microsoft argues that SynKloud’s licensing demands to Samsung, ASUS, and Dell have
created legal adversity between SynKloud and Microsoft due to SynKloud’s implied assertions
of indirect infringement against Microsoft as to the ’254, ’526, ’225, and ’780 patents. (D.I. 24 at
10). The claim charts provided to Samsung, ASUS, and Dell include references to Microsoft
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OneDrive as well as other cloud storage products, such as Samsung Cloud and Google Drive.
(D.I. 25-2, Exs. B-D).
When the holder of a patent with method claims accuses the supplier’s customers of
direct infringement based on their use of the supplier’s product in the performance of a claimed
method, an implicit assertion of indirect infringement may arise. See Arris, 639 F.3d at 1375-76.
In Arris, plaintiff Arris was a developer, manufacturer, and supplier of cable telephony and data
products for cable system operators for use in voice over Internet protocol (VoIP) systems.
Defendant BT was a telecommunications company owning relevant patents. BT had sued Arris’
customer for patent infringement. BT’s infringement accusations against Arris’ customer
“explicitly and repeatedly singled out” Arris’ products, carrying the implied assertion that Arris
was contributorily infringing, and BT repeatedly communicated that implicit accusation directly
to Arris during the course of a “protracted negotiation process.” Id. at 1377, 1381.
Arris sought a declaratory judgment that it did not infringe any of BT’s patents. Id. at
1373. The Court of Appeals held that a case or controversy existed between Arris and BT
regarding Arris’ potential liability for contributory infringement. Id. at 1375. Although BT did
not expressly accuse Arris itself of direct or indirect infringement, the Court deemed such an
accusation to be unnecessary. Id. at 1379. The Court found it relevant that Arris was “directly
and substantially involved” in BT’s infringement and licensing negotiations. Id. at 1378. For
example, Arris and BT conferred over conference calls during which Arris presented its noninfringement arguments and BT responded. Id. at 1379. An Article III case or controversy
existed between the parties regarding Arris’ potential liability for contributory infringement, as
required for declaratory judgment jurisdiction for determination of non-infringement and
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In Hewlett-Packard Co. v. Acceleron LLC, the Federal Circuit held that an actual
controversy as to infringement existed where the patent owner sent the declaratory judgment
plaintiff two letters seeking “to discuss” the patent. 587 F.3d 1358, 1363 (Fed. Cir. 2009). The
Court, however, cautioned: “A communication from a patent owner to another party, merely
identifying its patent and the other party’s product line, without more, cannot establish adverse
legal interests between the parties, let alone the existence of a ‘definite and concrete’ dispute.”
Id. at 1362.
Here, while they also incorporate other parties’ products, SynKloud’s claim charts show
that Samsung, ASUS, and Dell’s use of Microsoft OneDrive are central to SynKloud’s
infringement contentions. For example,
The claim chart provided to Samsung for the ’780 patent refers to “remote storage
space provided by a storage service from Samsung Cloud Drive, Google Drive, or
Microsoft OneDrive” (D.I. 25-2, Ex. B at 6), and “A storage server of OneDrive
allocates e.g. 5GB free storage space” (Id. at 18).
The claim chart provided to ASUS for the ’526 patent uses OneDrive as the
exemplary storage space software (D.I. 25-4, Ex. D at 15-17).
The claim chart provided to Dell for the ’254 patent refers to “storage space provided
by the Microsoft OneDrive” and “The Dell Laptop couples with the storage server of
the Microsoft OneDrive” (D.I. 25-6, Ex. F at 9-10).
SynKloud’s letters to Samsung, ASUS, and Dell each state that SynKloud believes that the
products offered by Samsung, ASUS, and Dell practice SynKloud’s patented methods and invite
the companies to engage in licensing negotiations. (See, e.g., D.I. 25-3, Ex. C).
As in Arris, where the Court of Appeals found the existence of an “actual controversy,”
SynKloud has “explicitly and repeatedly singled out” Microsoft products used in Samsung,
ASUS, and Dell’s products to support its infringement contentions. See 639 F.3d at 1377. Unlike
Arris, however, there is no evidence of Microsoft having been “directly and substantially
involved” in the alleged infringement and licensing communications between SynKloud and
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Samsung, ASUS, and Dell. See id. at 1378. SynKloud has not initiated litigation against
Samsung, ASUS, and Dell, as it has with HP. See DataTern, 755 F.3d at 903. SynKloud’s letters
invite Samsung, ASUS, and Dell to engage in licensing negotiations, but do not include an
accusation of infringement. (See D.I. 25-1, Ex. A; D.I. 25-3, Ex. C; D.I. 25-5, Ex. E). And while
SynKloud has acted by sending letters to third parties Samsung, ASUS, and Dell, it is Microsoft
that is the declaratory judgment plaintiff in this case. See Hewlett-Packard Co., 587 F.3d at 1364.
Overall, these circumstances do not indicate that there is a dispute between Microsoft and
SynKloud concerning Microsoft’s liability for infringement based on the assertions against
Samsung, ASUS, and Dell that is sufficient to constitute an Article III case or controversy.
Microsoft also argues that SynKloud’s pursuit of litigation against Microsoft competitors
Adobe and Dropbox, including on different—but related—patents, is enough to establish a case
or controversy between SynKloud and Microsoft in this case. (D.I. 24 at 14). Each case that
Microsoft cites in support of its position is distinguishable. In Arkema Inc. v. Honeywell
International, Inc., the defendant patentee had already asserted claims against the same plaintiff
in the declaratory judgment suit for infringement of other patents covering similar technology as
the asserted patents. 706 F.3d 1351, 1358 (Fed. Cir. 2013). In Dror v. Kenu, Inc., the Court noted
that a patentee’s accusing a party in litigation of infringing its patents can give rise to jurisdiction
for the accused party to bring declaratory judgment claims for related patents of the patentee.
2019 WL 5684520, at *9 (N.D. Cal. Nov. 1, 2019). Microsoft, however, is not the accused party
in the Adobe and Dropbox litigations. See id.; see also Miotox LLC v. Allergan, Inc., 2015 WL
2084493, at *2 (C.D. Cal. May 5, 2015).
Microsoft’s argument that related patents should be considered together where those
patents were asserted against different entities is not persuasive under the Supreme Court’s
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MedImmune test, which demands “sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.” See 549 U.S. at 127. SynKloud’s pursuit of litigation against Microsoft’s
competitors Adobe and Dropbox is insufficient to create jurisdiction in this case between
Microsoft and SynKloud. 3 See Prasco, 537 F.3d at 1339.
b. Controversy Based on Infringement
For the ’254, ’526, and ’225 patents which are asserted by SynKloud against HP,
Microsoft’s OEM, I will assess whether claims of infringement liability by SynKloud against HP
create an actual case or controversy between Microsoft and SynKloud.
Direct infringement occurs when a person without authorization makes, uses, offers to
sell or sells any patented invention within the United States or imports into the United States a
patented invention. See 35 U.S.C. § 271(a). “[A] party that sells or offers to sell software
containing instructions to perform a patented method does not infringe the patent under §
271(a).” Ricoh Co., Ltd. v. Quanta Comput. Inc., 550 F.3d 1325, 1335 (Fed. Cir. 2008).
Actively inducing direct infringement of a patent by another constitutes infringement. 35
U.S.C. § 271(b). To prove induced infringement, the patentee must show that the accused
inducer took an affirmative act to encourage infringement with the knowledge that the induced
acts constitute patent infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766
The ’923 and ’154 patents are not specifically referred to in the claim charts submitted in
connection with the Adobe or Dropbox litigations, nor do they show up in the claim charts
appended to the licensing communications. I assume, therefore, that Microsoft is asserting the
’923 and ’154 patents in this action on the theory that they are related to the other cloud storage
technology patents and SynKloud might thus be inclined to assert them at some point. Thus, they
are particularly dubious candidates for a declaratory judgment. For the same reasons discussed
above, I decline to find that there is a case or controversy between Microsoft and SynKloud as to
these two patents.
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(2011). Absent the knowledge and affirmative act of encouragement, no party can be liable for
An act of contributory infringement may include either the sale of a “component of a
patented machine, manufacture, combination or composition,” or the sale of a “material or
apparatus for use in practicing a patented process.” 35 U.S.C. § 271(c). The statute covers
contributory infringement of, among other things, system claims and method claims. Arris Grp.,
639 F.3d at 1375. To hold a supplier liable for contributory infringement, a patent holder must
show, among other things, that (1) the supplier’s product was used in the system or method to
commit acts of direct infringement; (2) the product’s use constituted a material part of the
patented system or method; (3) the supplier knew its product was “especially made or especially
adapted for use in an infringement” of the patent; and (4) the product is “not a staple article or
commodity of commerce suitable for substantial noninfringing use.” 35 U.S.C. § 271(c).
In DataTern, plaintiffs were software suppliers Microsoft and SAP. Defendant DataTern
owned certain patents. DataTern sued several Microsoft and SAP customers for patent
infringement. The claim charts provided to SAP’s customers alleged direct infringement of two
patents based on customers’ use of SAP’s BusinessObjects product. 755 F.3d at 905. The claim
charts also variously cited to Microsoft, SAP, and third party-provided user guides and
documentation for each claim element. Id. Microsoft and SAP sought a declaratory judgment
that they did not infringe any of DataTern’s patents. The Federal Circuit held that the district
court had jurisdiction where the patentee’s claim charts showed that the plaintiff-suppliers
provided their customers with the necessary components to infringe the patents-in-suit as well as
the instruction manuals for using the components in an infringing manner. Id. The claim charts
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could be read to allege that Microsoft was encouraging the exact use which the patentee asserted
amounted to direct infringement. Id.
As for claim charts that cited exclusively to third-party documentation for several key
claim limitations, the Court found that a controversy did not exist between the parties. Those
claim charts alleged customers’ direct infringement based on the use of a Microsoft product—
but did not imply that Microsoft induced the infringement. Id. at 906. Microsoft’s sale of a
product capable of being used in an infringing manner was not sufficient to create a substantial
controversy regarding inducement. Id. The claim charts did not imply that Microsoft committed
contributory infringement because they did not suggest that Microsoft’s product was not “a
staple article or commodity of commerce suitable for substantial non-infringing use.” Id. There
was no evidence that Microsoft knew that its product was “especially made or adapted for use in
an infringement” of DataTern’s patents. Id.
Microsoft argues that this Court has jurisdiction because SynKloud’s allegations in the
other cases accuse Microsoft’s customers of direct infringement “solely due to the use or sale” of
Microsoft’s software, thereby effectively accusing Microsoft of direct infringement based on its
own making and sale of those products. (D.I. 24 at 3, citing Intel Corp. v. Future Link Sys., LLC,
2015 WL 649294, at *7 n.10 (D. Del. Feb. 12, 2015)). To the extent that this argument involves
third parties other than HP, this argument is unavailing for reasons already discussed.
For SynKloud’s accusations against HP to give rise to a declaratory judgment claim
regarding direct non-infringement of the Asserted Patents, the facts alleged in the Complaint and
the documents referenced therein must imply that Microsoft itself may be liable for direct
infringement. Although Microsoft sells the OneDrive product, there is no allegation that it
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practices any of the methods disclosed in the method claims, and it cannot, therefore, be held
liable for direct infringement. See Ricoh Co., 550 F.3d at 1333. Accordingly, Microsoft has
failed to allege an actual controversy with respect to direct infringement of the ’254, ’526, and
’225 patents. See MedImmune, 549 U.S. at 127.
“[T]o establish a substantial controversy regarding inducement, there must be allegations
by the patentee or other record evidence that establish at least a reasonable potential that such a
claim could be brought.” DataTern, 755 F.3d at 905. The allegations must imply Microsoft’s
liability by suggesting that Microsoft took “an affirmative act to encourage infringement with the
knowledge that the induced acts constitute patent infringement.” Id. at 904. An accusation would
suggest such encouragement if, for example (as in DataTern), the indirect infringer was asserted
to have provided the direct infringer with “instruction manuals for using the [indirect infringer’s]
components in an infringing manner.” Id. at 905.
In DataTern, the Federal Circuit held that claim charts provided to customers of the
declaratory judgment plaintiff were sufficient to establish an implied assertion of indirect
infringement. Id. The claim charts showed that the declaratory judgment plaintiff provided its
customers with the necessary components to infringe and cited to guides and documentation
provided by the declaratory judgment plaintiff. Id. The Court held that jurisdiction did not exist
for one of the two patents there asserted because the claim charts cited exclusively to third-partyprovided documentation for several key claim limitations, not documentation or instructions
provided by the declaratory judgment plaintiff. Id. at 904. Simply selling products to customers
who may be using the products in an infringing way did not, in and of itself, amount to induced
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Here, the claim charts demonstrate that Microsoft provides HP the necessary
components to infringe. (D.I. 1-1, Exs. L-N). For the ’526 and ’254 patents, SynKloud’s claim
charts contain screenshots of Microsoft OneDrive’s functionality but do not provide any
instructions from Microsoft on how to use the product. (See D.I. 1-1, Exs. L, M). Thus, while
Microsoft provides the necessary components to HP to allegedly infringe, it is not alleged to
provide guides or documentation. See DataTern, 755 F.3d at 904. For the ’225 patent, however,
SynKloud’s claim charts incorporate Microsoft-provided instructions on how to use OneDrive,
the allegedly infringing component. (Id., Ex. N). Accordingly, I do not find that there is an actual
controversy between Microsoft and SynKloud as to induced infringement of the ’254 and ’526
patents. See DataTern, 755 F.3d at 904. I do, however, find that there is an actual controversy
between Microsoft and SynKloud as to induced infringement of the ’225 patent. See id.
The sale of a component without a substantial non-infringing use, even when included in
a product that, as a whole, does have a substantial non-infringing use, may still constitute
contributory infringement. Ricoh Co., 550 F.3d at 1336–40.
Here, the claim charts for the ’526 and ’254 patents describe a “remote storage space
provided by storage service providers such as pre-installed Microsoft OneDrive.” (D.I. 1-1, Exs.
“The HP Laptop establishes a wireless link, e.g., WiFi, for the wireless device to access
the storage space provided by the OneDrive via Microsoft Edge web browser . . . The
OneDrive server allocates a 5 GB free storage space exclusively to a user.” See, e.g., id.
“The HP Laptop couples with the OneDrive server wirelessly to carry out a requested
operation for remotely accessing the assigned storage space.” (Id.).
“The storing of a data object includes downloading a file from a remote server . . . into
the user’s assigned storage space of the OneDrive.” (Id.).
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The claim chart for the ’225 patent describes:
“The network-attached device (NAD) having a storage (e.g., a free 5GB of storage space
allocated to each of the users by the server of MS OneDrive) to store data . . . couples to
the network for receiving device level access commands (e.g., associated with request for
signing into OneDrive or request for uploading files) from the host in data link frames.”
(D.I. 1-1, Ex. N).
“The installed or activated device driver (e.g. OneDriveSetup.exe, Microsoft-WindowsOneDrive-Setup-Package) running on the host (i.e., HP Laptop) enumerates the NAD
(e.g., the remote storage space of OneDrive) . . .” (Id.).
“The virtual host bus adapter controlling the NAD (e.g., the remote storage space of
OneDrive) in a way indistinguishable from the way as a physical host bus adapter device
controls device, i.e., the user can access to the remote storage space of OneDrive and
open the folder and file within the storage space through file explorer, so that the host
recognizes the OneDrive space as if it is a local device.” (Id.).
SynKloud accused the customers of Microsoft’s OEM HP of direct infringement of
claims of the ’526, ’254, and ’225 patents. SynKloud repeatedly singled out Microsoft’s
OneDrive product used by HP to support its infringement contentions. See Arris Grp., 639 F.3d
at 1376-77. The claim charts make it clear that HP’s use of OneDrive is central to SynKloud’s
infringement contentions. Thus, the charts allege that Microsoft’s product was used to commit
acts of alleged direct infringement. See 35 U.S.C. § 271(c).
Assuming direct infringement is found, Microsoft would be liable under § 271(c) if it
sold a bare component (for example, a program containing steps to execute the patented
methods) that had no other use than practicing the methods of the Asserted Patents. At a
minimum, SynKloud identified Microsoft’s OneDrive as satisfying at least one essential element
or step for every asserted claim analyzed in the claim charts. See Arris Grp., 639 F.3d at 1378.
SynKloud’s claim charts refer to Microsoft OneDrive repeatedly for the infringement
contentions for each patent. SynKloud’s extensive focus on Microsoft’s OneDrive product in its
infringement contentions implies that Microsoft’s product is being used as a “material part” of
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the allegedly infringed invention – one of the required elements of contributory infringement. HP
is one of Microsoft’s OEMs, and according to SynKloud’s claim charts, Microsoft OneDrive is
pre-installed on HP’s laptops. See DataTern, 755 F.3d at 906. Such a component, especially
adapted for use in the patented process and with no substantial non-infringing use, would be
“good for nothing else” but infringement of the patented process. Metro-Goldwyn-Mayer Studios
Inc. v. Grokster, Ltd., 545 U.S. 913, 932 (2005); Ricoh Co., 550 F.3d at 1337. Thus, I find that
Microsoft has established declaratory judgment jurisdiction as to contributory infringement of
the ’254, ’526, and ’225 patents.
“[A] specific threat of infringement litigation by the patentee is not required to establish
jurisdiction, and a ‘declaratory judgment action cannot be defeated simply by the stratagem of a
correspondence that avoids magic words such as ‘litigation’ or ‘infringement’.” ABB Inc. v.
Cooper Indus., LLC, 635 F.3d 1345, 1347-48 (Fed. Cir. 2011). Here, even in the absence of an
express accusation against Microsoft, the circumstances indicate that there is a dispute between
Microsoft and SynKloud concerning Microsoft’s liability for induced and contributory
infringement of the ‘225 patent and for contributory infringement of the ‘526 and ‘254 patents
that is sufficient to constitute an Article III case or controversy and establish jurisdiction between
B. Failure to State a Claim
SynKloud argues that Microsoft “merely parrot[s] a claim limitation per patent written
verbatim as non-infringing,” and that it uses these conclusory assertions to seek a declaration
regarding all of its products, services, and technology (at most), or all of its cloud storage
technology (at least). (D.I. 9 at 3, 12). SynKloud notes that Microsoft’s references to its cloud
storage product, OneDrive, are prefaced with the phrase “for example,” and contends that
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Microsoft’s vague allegations do not provide sufficient notice of its non-infringement positions
when it does not include any references, citations, or explanations on how Microsoft’s products
function or operate in a non-infringing manner. (Id. at 3, 12). SynKloud also argues that
Microsoft’s claims relating to direct and indirect infringement are vague and overbroad. (Id. at
Microsoft argues that it has identified two specific products, its Outlook and OneDrive
software, and has sought a declaration that those products do not infringe the Asserted Patents.
(D.I. 24 at 18). Microsoft asserts that it has properly pleaded that it does not contribute to or
induce infringement by others because it pleads that there is no direct infringement; it also
requests leave to amend to address any pleading deficiencies found by the Court. (Id. at 19).
In its Complaint, Microsoft puts all of “its products, services or technology” at issue.
(D.I. 1 at ¶¶ 2, 26, 29). Microsoft also specifically puts its OneDrive cloud storage software at
issue. (Id. at ¶¶ 3, 26, 29). There is no reference to “Outlook” in the Complaint.
The cases that Synkloud cites in support of its argument that a plaintiff cannot state a
claim for declaratory judgment of non-infringement without specifying the particular products
for which the plaintiff seeks such a declaration are distinguishable. (See D.I. 9 at 13). In Xilinx,
Inc. v. Invention Investment Fund I LP, the deficient invalidity counts claimed only that the
patents failed “to comply with one or more of the requirements of the patent laws of the United
States, including, without limitation, 35 U.S.C. §§ 101, 102, 103, and/or 112.” 2011 WL
3206686, at *6 (N.D. Cal. July 27, 2011). In Winstron Corporation v. Phillip M. Adams &
Associates, LLC, the declaratory judgment complaint “fail[ed] to identify any specific products.”
2011 WL 1654466, at *12 (N.D. Cal. April 28, 2011). In PPS Data LLC v. Allscripts Healthcare
Solutions Inc., the rejected declaratory judgment complaint consisted of two paragraphs
Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 23 of 24 PageID #: 839
containing “bald assertions, devoid of fact.” 2012 WL 243346, at *4 (M.D. Fla. Jan. 25, 2012).
In Eidos Communications, LLC v. Skype Technologies SA, the Court rejected infringement
claims that only identified “examples of large technology areas” in describing the accused
products. 686 F. Supp. 2d 465, 468 (D. Del. 2010). There, the plaintiffs did not identify a type of
product or software offered by the defendants which it alleged infringed its patents, but only a
“vague description.” Id. at 469.
Here, Microsoft has identified its cloud storage technology, and more specifically
OneDrive, as the product that is alleged to infringe the Asserted Patents. The threat of
infringement that Microsoft perceives is due to SynKloud’s litigation against HP, for which the
claim charts that specifically refer to Microsoft’s OneDrive product are attached in this action.
This stands in contrast to the vague and conclusory allegations found by the Court in Xilinx,
Winstron, PPS Data, and Eidos. Only cloud storage technology appears to be relevant to the
’254, ’526, and ’225 patents, in the context of the claim charts. See id. at 468.
Even if Microsoft is seeking a declaration regarding its “cloud storage technology” more
broadly, this would also be sufficient to state a claim where it has identified an exemplary
accused product. In Philips v. ASUSTeK Computers Inc., for example, the Court denied a motion
to dismiss where the plaintiff identified one exemplary accused product but did not plead an
exhaustive list of accused products. 2016 WL 6246763, at *3 (D. Del. Oct. 25, 2016). The claim
charts attached to Microsoft’s Complaint identify its non-exhaustive portfolio of cloud storage
technology products in a manner sufficient to put SynKloud on notice of the products at issue in
this case. See Bell Atl. Corp., 550 U.S. at 545; T-Jat Sys. 2006 Ltd. v. Expedia, Inc., 2019 WL
4041586, at *3 (D. Del. Aug. 27, 2019).
Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 24 of 24 PageID #: 840
Microsoft argues that because it has properly pleaded its allegations relating to not
directly infringing, it necessarily has pleaded the allegations for indirect infringement. (D.I. 24 at
19). In the alternative, Microsoft seeks leave to amend its complaint to address any insufficiency.
(Id. at 20). Since I accept that Microsoft has adequately pled “no direct infringement,” I think
that it has also adequately pled “no indirect infringement.”
For the foregoing reasons, SynKloud’s motion to dismiss is granted-in-part and denied-
in-part. An accompanying order will be entered.
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