FairWarning IP, LLC v. CynergisTek, Inc.

Filing 47

ORDER granting in part 42 --motion for judgment on the pleadings; dismissing as moot CynergisTek's counterclaims for a declaratory judgment; directing the Clerk to ENTER JUDGMENT for CynergisTek and against FairWarning on Fair Warning's claims, to TERMINATE any pending motion, and to CLOSE the case. Signed by Judge Steven D. Merryday on 9/14/2015. (BK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

FAIRWARNING IP, LLC,
Plaintiff,
v.

CASE NO. 8:15-cv-100-T-23AEP

CYNERGISTEK, INC.,
Defendant.
____________________________________/

ORDER
FairWarning IP, LLC, sues (Doc. 1) CynergisTek, Inc., for infringing United
States Patent No. 8,578,500. CynergisTek counterclaims (Doc. 33) for a judgment
declaring that the ’500 patent is invalid and that CynergisTek did not infringe the
’500 patent. CynergisTek moves (Doc. 42) for a judgment on the pleadings.
A. FairWarning’s claims for infringement*
Citing FairWarning IP, LLC v. Iatric Systems, Inc., 2015 WL 3883958 (M.D. Fla.
June 24, 2015), CynergisTek argues that “[t]he doctrine of collateral estoppel now
precludes FairWarning from asserting the validity of the ’500 Patent in this case.”
(Doc. 42 at 2) Iatric Systems dismisses FairWarning’s infringement claims against

*

Specifically, FairWarning sues CynergisTek for infringement, for contributory
infringement, and for active inducement of infringement.

Iatric Systems because the ’500 patent is invalid under 35 U.S.C. § 101. As Pleming v.
Universal-Rundle Corp., 142 F.3d 1354, 1359 (11th Cir. 1998), explains:
To claim the benefit of collateral estoppel in the Eleventh Circuit, the
party relying upon the doctrine must show that: (1) the issue at stake is
identical to the one involved in the prior proceeding; (2) the issue was
actually litigated in the prior proceeding; (3) the determination of the
issue in the prior litigation must have been “a critical and necessary
part” of the judgment in the first action; and (4) the party against
whom collateral estoppel is asserted must have had a full and fair
opportunity to litigate the issue in the prior proceeding.

Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971),
holds that, if a previous action invalidated a patent after the patent-holder had a full
and fair opportunity to litigate, collateral estoppel prevents the patent-holder from
enforcing the patent against an unrelated party in another action. Accord Mendenhall
v. Barber-Greene Co., 26 F.3d 1573, 1577 (Fed. Cir. 1994) (“[O]nce the claims of a
patent are held invalid in a suit involving one alleged infringer, an unrelated party
who is sued for infringement of those claims may reap the benefit of the invalidity
decision under the principles of collateral estoppel.”).
FairWarning argues that “FairWarning lacked a full and fair opportunity to
pursue its claims in the original action.” (Doc. 45 at 5) In support, FairWarning
attempts to re-litigate the validity of the ’500 patent and to demonstrate that “the
prior case was one of those relatively rare instances where the courts wholly failed to
grasp the technical subject matter and issues in suit.” (Doc. 45 at 5 (quoting BlounderTongue, 402 U.S. at 330)). Specifically, FairWarning challenges the legal conclusions
reached in Iatric Systems. However, Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170

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F.3d 1373, 1380 (Fed. Cir. 1999), states, “[I]t is clear from the case law that has
developed since Blonder-Tongue that an inappropriate inquiry is whether the prior
finding of [patent] invalidity was correct; instead, the court is only to decide whether
the patentee had a full and fair opportunity to litigate the validity of his patent . . . .”
A review of Iatric System confirms (1) that FairWarning responded (without
requesting a hearing) to Iatric Systems’s motion to dismiss, which challenged the
’500 patent’s validity, and (2) that the order dismissing the action both considered
and rejected FairWarning’s arguments.
Regardless of collateral estoppel, for the same reasons explained in Iatric
Systems, FairWarning fails to state a claim for infringement of the ’500 patent, which
is “directed to” nothing more than a patent-ineligible abstract idea. FairWarning
asserts neither a fact nor an argument that warrants a different conclusion in this
action.
2. CynergisTek’s counterclaims for a declaratory judgment
Also, CynergisTek counterclaims (Doc. 33) for a judgment declaring that the
’500 patent is invalid and that CynergisTek did not infringe the ’500 patent. The
Declaratory Judgment Act, 28 U.S.C. § 2201(a), grants “any court of the United
States” the authority to “declare the rights and other legal relations of any interested
party seeking such declaration.” As Pub. Affairs Assocs., Inc. v. Rickover, 369 U.S. 111,
112 (1962), explains, “The Declaratory Judgment Act was an authorization, not a
command.” See also Knights Armament Co. v. Optical Sys. Tech., 568 F. Supp. 2d 1369,

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1374 (M.D. Fla. 2008) (Conway, J.) (“Under the federal Declaratory Judgment Act,
a court maintains broad discretion over whether or not to exercise jurisdiction over
claims.”). “If a district court determines that a complaint requesting a declaratory
judgment will not serve a useful purpose, the court cannot be required to proceed to
the merits before dismissing the complaint.” Medmarc Cas. Ins. v. Pineiro & Byrd
PLLC, 783 F. Supp. 2d 1214, 1216 (S.D. Fla. 2011) (Marra, J.).
Because the counterclaims duplicate CynergisTek’s fourth and fifth affirmative
defenses, the “request[s for] a declaratory judgment will not serve a useful purpose.”
Medmarc, 783 F. Supp. 2d at 1217 (“A number of courts have dismissed
counterclaims that contain repetitious issues already before the court by way of the
complaint or affirmative defenses.”); see also Dantzler, Inc. v. Hubert Moore Lumber Co.,
2013 WL 5406440, at *2 (M.D. Ga. Sept. 25, 2013) (Lawson, J.) (“[C]ourts have
typically declined to consider counterclaims for declaratory relief that are duplicative
of affirmative defenses.”).
Accordingly, CynergisTek’s motion (Doc. 42) for judgment on the pleadings is
GRANTED IN PART. CynergisTek’s counterclaims for a declaratory judgment are
DISMISSED AS MOOT. Based on the pleadings and based on FairWarning IP, LLC
v. Iatric Systems, Inc., 2015 WL 3883958 (M.D. Fla. June 24, 2015), which invalidates
United States Patent No. 8,578,500 under 35 U.S.C. § 101, the clerk is directed (1) to

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enter a judgment in favor of CynergisTek and against FairWarning on FairWarning’s
claims, (2) to terminate any pending motion, and (3) to close the case.
ORDERED in Tampa, Florida, on September 14, 2015.

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