Allied Mineral Products, Inc. v. OSMI, Inc. et al

Filing 30

ORDER AND OPINION granting 13 Motion to Dismiss for Lack of Jurisdiction. This case is CLOSED. Signed by Judge Kenneth A. Marra on 8/24/2016. (ir)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 15-81753-CIV-MARRA
ALLIED MINERAL PRODUCTS,
INC., an Ohio corporation,
Plaintiff,
vs.
OSMI, INC., STELLAR
MATERIALS, INC., and
STELLAR MATERIALS, LLC,
Defendants.
__________________________/
ORDER AND OPINION GRANTING MOTION TO DISMISS
THIS CAUSE is before the Court upon Defendants’ Motion to Dismiss [DE 13].
The motion is fully briefed and ripe for review. The Court has carefully considered all
relevant filings, heard oral argument of counsel, and is otherwise fully advised in the
premises.
Plaintiff, Allied Mineral Products, Inc. (“Allied”), brings this action seeking a
Declaratory Judgment of (i) patent non-infringement, (ii) patent invalidity, and (iii)
patent unenforceability, relating to Stellar’s U.S. Patent No. 7,503,974 (the “‘974
Patent”),1 as well as for tortious interference by Defendants, OSMI, Inc., Stellar
Materials, Inc. and Stellar Materials, LLC (collectively “Stellar”) with the business
1

Allied and Stellar are competitors in markets for a variety of refractory
products used in industrial furnaces. The ‘974 Patent purports to claim a two-part
cementitious material formulation of fused magnesium oxide and an aqueous acid
phosphate solution having utility as a phosphate cement binder for aggregate and
refractory cementitious material. Compl. ¶ 3.

relationships between Allied and its Mexican distributors. Complaint (“Compl.”) ¶ 1.
Specifically, Allied seeks “a judicial determination that the manufacture, use, sale,
offering for sale, importing, or exporting of the Quick-Fire 88 and PyroFast 235
products do not infringe, directly or indirectly, any valid and enforceable claim of the
‘974 Patent.” Compl. ¶ 30. Defendants move to dismiss Allied’s Complaint pursuant
to Federal Rules of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction,
and 12(b)(6) for failure to state a claim upon which relief can be granted.
The Declaratory Judgment Act provides that a court
“may declare the rights and other legal relations of any
interested party,”•28 U.S.C. § 2201(a) (emphasis in
original), not that it must do so. This text has long been
understood “to confer on federal courts unique and
substantial discretion in deciding whether to declare the
rights of litigants.”• Wilton v. Seven Falls Co., 515 U.S.
277, 286 (1995); see also Cardinal Chemical Co. v. Morton
Int'l, Inc., 508 U.S. 83, 95, n.17 (1993); Brillhart v. Excess
Ins. Co. of America, 316 U.S. 491, 494-496 (1942). We have
found it “more consistent with the statute,”•however, “to
vest district courts with discretion in the first instance,
because facts bearing on the usefulness of the declaratory
judgment remedy, and the fitness of the case for
resolution, are peculiarly within their grasp.”• Wilton,
supra, at 289.
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 136 (2007) (“MedImmune”)
(emphasis in original).

Page 2 of 20

STANDARD OF REVIEW
A.

Subject Matter Jurisdiction
A claim must be dismissed pursuant to Fed. R. Civ. P. 12(b)(1) if a federal

court lacks subject matter jurisdiction to hear the claim. See Arbaugh v. Y & H
Corp., 546 U.S. 500, 514 (2006). The plaintiff bears the burden of proving by a
preponderance of the evidence that subject matter jurisdiction exists, which includes
demonstrating an actual controversy at the time the complaint was filed. See New
Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 327 (5th Cir. 2008);
Breckenridge Pharm., Inc. v. Everett Lab., Inc., No. 09-80015-CIV, 2009 WL 654214, *4
(S.D. Fla. Mar. 11, 2009) (“Breckenridge”), citing Toxgon Corp. v. BNFL, Inc., 312 F.3d
1379, 1383 (Fed. Cir. 2002). When evaluating a facial attack on a complaint for lack
of subject matter jurisdiction, which we have here, the Court takes the allegations
contained in the plaintiff's complaint as true and then resolves the question of
whether subject matter jurisdiction exists as a matter of law. See Lawrence v.
Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990). The standard for reviewing a facial
attack is similar to a 12(b)(6) motion, except that in addition to the pleadings, a
court may also consider materials incorporated into the pleadings by reference.
Jackson v. Sleek Audio, LLC, 13- 80725-CIV, 2014 WL 1018031, at *2 (S.D. Fla. Mar.
17, 2014). To that end, the Court may consider the letters sent by Stellar’s Mexican
counsel to Ferro Alloys de Mexico S.A. de C.V. (“Ferro”), and to Pyrotek Mexico S. De
R.L de C.V. (“Pryrotek”), and Allied’s letter to Stellar’s Mexican counsel - all of which
Page 3 of 20

were referenced in the Complaint.
B.

Case or Controversy Requirement
In order for a federal court to have subject matter jurisdiction to hear an

action, there must be an actual case or controversy. U.S. Const. Art. III, § 2, cl. 1. In
actions pursuant to the Declaratory Judgment Act, the Supreme Court has held that
the dispute before the court must be “definite and concrete, touching the legal
relations of parties having adverse legal interests; and that it be ‘real and
substantial’ and ‘admi[t] of specific relief through a decree of a conclusive character,
as distinguished from an opinion advising what the law would be upon a hypothetical
state of facts.’”• MedImmune, 549 U.S. at 127 (quoting Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 240-41 (1937)). The analysis focuses on whether “the factual
and legal dimensions of the dispute are well defined,”•and not on the risk or
imminent threat of suit. See id. at 128. If 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,” then a case or
controversy exists for the purposes of the Declaratory Judgment Act. See id. at 127
(quoting Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)). A
complaint must allege an objectively reasonable basis for believing a current dispute
exists in order to bring suit. See Breckenridge, 2009 WL 654214, *4 (finding no
controversy when complaint did not allege any conduct by defendant indicating an
intent to enforce its patent rights).
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While the Supreme Court in MedImmune supplanted the previous “apprehension of suit”2•test for declaratory judgment jurisdiction, threats of suit and other
communications between the parties do still play a key role in determining whether
their interests are sufficiently adverse to permit declaratory relief. See Surefoot LC
v. Sure Foot Corp., 531 F.3d 1236, 1244 (10th Cir. 2008) (history of trademark
opposition filings, combined with declaratory defendant's express suggestions of prior
infringement, were sufficient to confer jurisdiction). Some affirmative act on the
part of the declaratory judgment defendant is generally necessary in order to define
the bounds of the conflict. See Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S.
270, 273 (1941) (emphasis added). The controversy cannot be “nebulous or
contingent but must have taken on fixed and final shape so that a court can see what
legal issues it is deciding, what effect its decision will have on the adversaries, and
some useful purpose to be achieved in deciding them.” Pub. Serv. Comm'n of Utah v.
Wycoff Co., Inc., 344 U.S. 237, 244 (1952).

2

Because the parties have relied heavily on many pre-MedImmune district
court cases, this opinion will discuss and quote from those cases where the former
“reasonable apprehension of suit” standard is mentioned. This frequent mention of
the former standard in no way suggests that this Court is applying that standard
herein.
Page 5 of 20

DISCUSSION
Stellar moves to dismiss Counts I, II and III of the Complaint for lack of subject
matter jurisdiction asserting that Allied has not alleged sufficient facts to create a
case of actual controversy between the parties related to Stellar’s U.S. Patent ‘974.
Stellar also urges the Court to dismiss Count IV for several reasons, including that the
Court should decline to exercise supplemental jurisdiction after dismissing the
federal claims.
In the Complaint, Allied asserts there is an actual controversy between it and
Stellar as to the infringement, validity and enforceability of the ‘974 Patent. Allied
alleges an actual controversy results from threats to, and patent infringement
actions initiated against, Allied’s distributors in Mexico relating to products
manufactured by Allied in the United States, which products also are sold throughout
the United States. Compl. ¶ 12 (emphasis added). Allied does not allege any other
action by Stellar, and there is no suggestion that the Mexican distributors are related
or sister companies of Allied. The products accused of infringement are sold in
Mexico by Ferro and Pyrotek. The products sold by Ferro are marketed under the
trademark Quick-Fire 88, and the products sold by Pyrotek are marketed under the
trademark PyroFast 235. Compl. ¶ 13.
On June 24, 2015, legal counsel for Stellar sent letters, in Spanish, to Ferro and
Pyrotek accusing them of infringing Mexican Patent No. 279757 by reason of their
sales of their respective Quick-Fire 88 and PyroFast 235 products. Compl. ¶¶ 13-14
Page 6 of 20

(emphasis added). Allied obtained a copy of the letter and translated it. Mexican
Patent No. 279757 is Stellar’s Mexican equivalent to the ‘974 Patent, and is based on
the specification of the ‘974 Patent. Compl. ¶ 15. On October 27, 2015, Stellar filed
patent infringement lawsuits in Mexico against both Ferro and Pyrotek on Mexican
Patent No. 279757, alleging the Quick-Fire 88 and PyroFast 235 products infringed
claim 16 of Mexican Patent No. 279757. Compl. ¶¶ 17-18. Claim 16 of Mexican
Patent No. 279757 corresponds directly to claim 16 of the ‘974 Patent, and is merely
a Spanish translation of claim 16 in the ‘974 Patent. Compl. ¶ 18. Allied asserts that
given that
(1)

the Quick-Fire 888 and PyroFast 235 products are manufactured in the United
States by Allied and shipped to Mexico from the United States, and

(2)

claim 16, the claim asserted by Stellar in Mexico against the products made by
Allied in the United States, is merely a Spanish translation of claim 16 in the
‘974 Patent,

the claims of infringement against Allied’s distributors in Mexico are tantamount to
an assertion that Allied’s activities of manufacturing and selling the accused products
in the United States, is a claim of infringement of claim 16 of the ‘974 Patent in the
United States. Compl. ¶ 19. Allied maintains that Stellar’s actions in Mexico against
products manufactured and sold by Allied in the United States, when coupled with
the existence of Stellar’s ownership of an equivalent patent in the United States,
creates a case or controversy over the ‘974 Patent in the United States.
Page 7 of 20

Stellar responds that Allied has not alleged any affirmative conduct by it (1)
directed toward Allied, (2) regarding the ‘974 Patent, or (3) in the United States.
Thus, argues Stellar, Allied has not alleged any “definite” or “concrete” facts that
would demonstrate a “real and substantial” controversy sufficient to confer subject
matter jurisdiction under the Constitution or the Declaratory Judgment Act. “[T]here
is no allegation that the products are distributed in the U.S. or that Allied’s liberty to
distribute the products in the U.S. has been threatened. Further there is also no
allegation that anyone has been barred from distributing the products in Mexico . . .
although Stellar [has] file[d] a patent infringement suit against Ferro and Pyrotek in
Mexico for infringement of Stellar’s Mexican Patent 279757.” DE 13 at 3 (emphasis in
original).
Allied has not alleged that Stellar threatened Allied with infringement of its
Mexican patent or named Allied as a defendant in the Mexican lawsuit. Rather,
Allied’s Complaint concludes that relevant portions of Stellar’s U.S. Patent ‘947
“correspond directly” to relevant portions of the Mexican Patent and that Stellar’s
claim of infringement of the Mexican Patent is “tantamount to a claim these same
products infringe . . . the ‘974 Patent.” Compl. ¶¶ 18, 19 (emphasis provided).
Stellar responds that Allied merely claims that it fears being sued, without a single
allegation that it was ever even threatened with suit, much less sued on the ‘974
Patent. Stellar points out that the Complaint contains no allegation that Stellar took
any affirmative action directed toward Allied, or anyone else, with regard to the U.S.
Page 8 of 20

Patent ‘947 for which Allied is seeking a declaration.
So the task at hand is to determine whether the facts alleged, under all the
circumstances and as a matter of law, show that there is a real and substantial,
definite and concrete 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; Breckenridge, 2009 WL 654214, *2, citing Brown v.
Toscano, 254 F.R.D. 690 (S.D. Fla. 2008).
The Court is mindful of the extensive cautionary language of the United States
Supreme Court when reviewing the allegations before it. As mentioned above, the
declaratory judgment statute “confers a discretion on the courts rather than an
absolute right upon the litigant.” Green v. Mansour, 474 U.S. 64, 72 (1985) (quoting
Pub. Serv. Comm’n of Utah v. Wycoff, 344 U.S. 237, 241 (1952)). In exercising its
discretion, a federal court must only pass upon real disputes, not uncertain or
hypothetical ones. See Golden v. Zwickler, 394 U.S. 103, 108 (1969). Moreover, the
controversy cannot be “nebulous or contingent but must have taken on fixed and final
shape so that a court can see what legal issues it is deciding, what effect its decision
will have on the adversaries, and some useful purpose to be achieved in deciding
them.” Pub. Serv. Comm’n, 344 U.S. at 244. For a declaratory judgment to issue,
“there must be a dispute which calls, not for an advisory opinion upon a hypothetical
basis, but for an adjudication of present right upon established facts.” Ashcroft v.
Mattis, 431 U.S. 171, 172 (1977) (internal quotation omitted). While the Mexican
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litigation is a factor to consider, so is the fact that Allied is not being sued in that
litigation, and that Allied has not alleged any acts on the part of Stellar that threaten
suit.
In support of its argument that there is no actual controversy between the
parties, Stellar points to a July 2, 2015 letter from Allied’s U.S. based counsel to
Stellar’s Mexican counsel. In that letter, Allied responds to a letter sent by Stellar to
Ferro and Pyrotek requesting that they cease and desist selling the Quick-Fire 88 and
PyroFast 235 products. Allied’s letter closes with the following statement: “In the
event that you continue to do so, be assured that Allied Mineral Products will
consider all actions allowed under Mexican law to prevent such baseless activities.”
See DE 13-2. Allied does not allege any further communication with Stellar after the
July letter was sent. The conduct alleged in this case is limited to litigation in Mexico
over a Mexican patent, and a letter Allied wrote to Stellar, not the other way around.
Conspicuously absent from the Complaint are any allegations that Stellar has had any
contact with Allied with regard to the ‘947 Patent. Stellar asserts that Allied cannot
base an actual controversy involving a U.S. Patent on Stellar’s enforcement of a
Mexican patent against different defendants.
Generally, a plaintiff cannot rely on a defendant’s enforcement of a patent
against different parties to create an actual controversy when there is no threat to
enforce the patent against the plaintiff. See e.g., Avon Products, Inc. v.
Moroccanoil, Inc., No. 12 CIV. 4507 GBD, 2013 WL 795652, at *5 (S.D.N.Y. Mar. 4,
Page 10 of 20

2013) (rejecting plaintiff's argument that a controversy existed based on related
trademark litigation in Canada because it failed to demonstrate that the defendant
“intends to take action to enforce its U.S. trademarks against Plaintiff”). In this
instance, Allied has alleged only that Stellar is enforcing its Mexican patent in an
infringement action in Mexico against two separate entities that act as distributors
for Allied in Mexico. These facts are insufficient to establish “real and substantial”
“adverse legal interests” between Allied and Stellar in the United States on Stellar’s
U.S. Patent.
Allied has also alleged that there is an actual controversy based on Stellar’s
lawsuit against Ferro and Pyrotek in Mexico for infringement of Stellar’s Mexican
patent.
In 1989, the Northern District Court of Illinois wrote:
The courts are divided on whether suit or threat of suit on a
corresponding foreign patent is sufficient to satisfy the reasonable
apprehension requirement. For example, in Dr. Beck & Co. G. M. B. H.
v. Gen. Elec. Co., 210 F.Supp. 86, 92 (S.D.N.Y. 1962), the court held
that the threat of suit for infringement of a United States patent cannot
be implied from the actual fact of suit on a corresponding foreign
patent. The court reasoned that, because a “patent is co-extensive
with the borders of sovereignty which granted it ... infringement
thereof cannot be predicated on acts consummated in a foreign
country.” Id. See also Gates Energy Products v. Yuasa Battery Co., 599
F.Supp. 368, 374 (D.Colo. 1983) (same). But see Electro Medical
Systems S.A. v. Cooper Lasersonics, Inc., 617 F.Supp. 1036, 1038 (N.D.
Ill. 1985) (the existence of prior infringement suits in foreign forums
based on corresponding foreign patents and against plaintiff's allegedly
infringing products is sufficient to create a reasonable apprehension of
identical suits in the United States); Ethicon, Inc. v. American Cyanamid
Co., 369 F.Supp. 934, 937 (D.N.J. 1973) (suit on foreign counterpart
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patent sufficient threat). The better view is that, while Emhart's threat
of an infringement suit on its Japanese counterpart patent may not be
dispositive of its intention to bring suit in the United States, it is
evidence of Emhart's willingness to employ litigation against Hakuto to
protect its patent rights.
Hakuto Co., Ltd. v. Emhart Indus., Inc., No. 88 C 3659, 1989 WL 24118, *3 (N.D. Ill.
Mar. 13, 1989) (“Hakuto”).3 See, also, Schutte Bagclosures, Inc. v. Kwik Lok Corp., 48
F. Supp. 3d 675, 691 (S.D.N.Y. 2014) (holding that a suit in the Netherlands asserting
only European trademark rights as to other products could not form the basis of an
actual controversy as to United States trademark rights).
Allied is not a party to the Mexican litigation. The Mexican litigation does not
address the ‘974 Patent. All the actions taken by Steller or its counsel alleged in the
Complaint occurred in Mexico. The Complaint contains no allegation that
infringement of the ‘974 Patent has ever been asserted against Allied. And Allied
itself had previously asserted that its response to any Mexican lawsuit would be to “.
. . consider all actions allowed under Mexican law to prevent such baseless
activities.”
In applying the MedImmune standard in prior cases, this Court has held that
“some affirmative act on the part of the declaratory judgment defendant is generally

3

In Hakuto, Hakuto premised its reasonable apprehension of suit upon two
letters sent to it by Emhart threatening suit in Japan. The district court decided that
Emhart’s “patent-enforcement-by-letter tactics” was a thinly-veiled threat of suit
that provided adequate proof of an actual controversy between the parties. As
discussed infra, facts such as these are critically absent from the facts in this case.
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necessary in order to define the bounds of the conflict.” See Geltech Sols., Inc. v.
Marteal, Ltd., 09-CV-81027, 2010 WL 1791423, at *3 (S.D. Fla. May 5, 2010);
Breckenridge Pharm., Inc. v. Everett Lab., Inc., No. 09-80015-CIV, 2009 WL 654214, *3
(S.D. Fla. Mar. 11, 2009). Stellar’s decision to enforce its Mexican patent under
Mexican law against separate entities cannot, without further affirmative action by
Stellar, create an actual controversy with Allied with regard to its U.S. Patent. The
present Complaint is likewise devoid of any allegations that Stellar has done anything
to give Allied a reasonable belief that Stellar intends to enforce its ‘974 Patent in the
United States. The only facts alleged in Allied’s Complaint to support Allied’s
concern are that: (1) Stellar, through its Mexican counsel, sent a cease and desist
letter (in Spanish) to two of Allied distributors in Mexico; (2) Stellar filed a patent
infringement lawsuit in Mexico against these distributors to enforce Stellar’s Mexican
patent; and (3) Stellar’s Mexican suit is against the very same product Allied
manufactures and distributes in the United States. But Allied has not alleged that
Stellar made any contact with it regarding the U.S. Patent or even the Mexican
patent. In fact, there is no allegation in the Complaint of any affirmative act by
Stellar toward Allied that could define the bounds of an alleged conflict. In short,
there is no allegation of any affirmative act by Stellar toward anyone with regard to
the ‘974 Patent.
Important to the totality of the circumstances analysis in the instant case is
that which has not occurred. Generally, the Supreme Court has affirmed declaratory
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judgment jurisdiction when the parties take adverse positions with respect to their
existing obligations, each side presenting a concrete claim of a specific right. Aetna
Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240-41 (1937); see also
MedImmune, 549 U.S. at 128 (concluding that declaratory judgment jurisdiction was
proper in the context of a patent licensing agreement when the patentee claimed a
right to royalties under the licensing agreement, and the licensee asserted that no
royalties were owing because the patent was invalid and not infringed); Cardinal
Chem. Co. v. Morton Int'l, 508 U.S. 83, 96 (1993) (“If ... a party has actually been
charged with infringement of the patent, there is, necessarily, a case or controversy
adequate to support jurisdiction of a complaint....”) (emphasis in original). In
contrast, here Stellar has not accused Allied of infringement. Stellar’s lack of any
“concrete claim of a specific right”•is an important factor weighing against a finding
of an actual controversy, particularly given that there has been no alleged actual
injury. Moreover, not only has Stellar not taken a concrete position adverse to
Allied's, but it also has taken no affirmative actions at all related to Allied’s product
in the United States.
Allied asserts that “[i]t is well-settled that allegations of infringement can be
inferred from threats to and actions against distributors and customers.” DE 19 at 8
of 25. Allied relies primarily on Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d 1249,
1255 (Fed. Cir. 2002) (“Vanguard”) for this proposition where the Federal Circuit
concluded that the district court erred in finding no actual controversy between the
Page 14 of 20

parties. However, in that case, Vanguard specifically alleged that PEAT: (1) sought to
enjoin Vanguard from production of the Mobile System by filing suit against Vanguard
on other grounds, (2) wrote Vanguard a letter indicating that it “no longer ha[d] the
right to market PEAT's TDR technology under any name, or to use PEAT ['s]
Intellectual Property for the development of future contracts relating to TDR or PEPS
technology,” and (3) repeatedly contacted the U.S. Army and Congress implying to
them that Vanguard was using PEAT's technology without PEAT's permission. Id.
The Federal Circuit found that the district court’s reliance on “PEAT's repeated
statement that it does not intend to sue Vanguard for patent infringement and its
ongoing failure to bring such a suit” was misplaced. “The appropriate inquiry asks
whether Vanguard had a reasonable apprehension that PEAT would sue it for patent
infringement in the future. By filing the earlier lawsuit and informing Vanguard's
clients that Vanguard is using the PEAT technology without a license, PEAT has shown
a willingness to protect that technology. Filing a lawsuit for patent infringement
would be just another logical step in its quest to protect its technology.” Vanguard,
304 F.3d at 1255 (internal quotations omitted).
Vanguard is factually inopposite to the instant case where there are no
allegations of an act on Stellar’s part against Allied, only threats to, and patent
infringement actions initiated against Allied’s distributors in Mexico regarding a
Mexican patent (albeit a literal translation of Allied’s U.S. patent). While this shows
Stellar’s willingness to protect its technology, Stellar has not made any allegations
Page 15 of 20

against Allied, in stark contrast to the acts taken in Vanguard, that would cause
Allied a reasonable apprehension that it will be sued in the United States for patent
infringement.
Allied also argues that “[w]hen coupled with other threatening indications,
filing foreign lawsuits is deemed to be an implied accusation of infringement in the
U.S.” DE 19 at 13 of 25 (emphasis supplied). For this proposition, Allied relies on
Morphosys AG v. Cambridge Antibody Ltd., 62 F. Supp. 2d 100 (D.D.C. 1999)
(“Morphosys”), a case with facts similar to the facts of this case. In Morphosys, the
defendant had previously filed suit against the plaintiff in Germany for infringement
of its European patents. The patent that was asserted in the foreign litigation was
the foreign counterpart of the U.S. patent, just as in this case. The foreign lawsuit
was based on a product manufactured by the declaratory judgment plaintiff in the
United States, just as in this case. And the declaratory judgment plaintiff was
actively selling the same product accused of infringement in the foreign lawsuit in
the United States, just as in this case. In Morphosys, however, there was evidence
that the defendant directly and indirectly threatened the plaintiff and its licensees
regarding the impact of its U.S. patent, including communication to one of the
plaintiff’s licensees stating that the defendant’s patent “will affect all parties that
are using phage display methods to isolate human antibodies.” In view of those
additional facts, the court concluded it was not unreasonable for the plaintiff to
consider it had received veiled threats. Id. at 101-102. The facts in Morphosys are,
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therefore, distinguishable from this case where there is no allegation that Stellar has
made any communication with Allied or Allied’s distributors in the United States.
Allied also relies on the 1985 Illinois district court decision of Electro Medical
Systems S.A. v. Cooper Lasersonics, Inc., 617 F.Supp. 1036 (N.D. Ill. 1985) (“Cooper”).
Cooper involved foreign litigation over corresponding foreign patents, similar to the
present case. Id. at 1038. But Cooper involved two important facts not present in
this case: (1) direct threats of infringement of the U.S. patent by Cooper’s exclusive
distributor (“exclusive” means it “has the express authority to bring a suit for
infringement”), and (2) direct threats of infringement against potential U.S.
distributors of Electro Medical Systems’s products. Id. Cooper, therefore, is also
clearly distinguishable from the present action.
Allied also discussed Ethicon, Inc. v. American Cyanamid Comp., 369 F.Supp.
934 (D.N.J. 1973), in which the New Jersey district court found that initiation of
patent litigation against plaintiff’s sister company in Great Britain was sufficient, on
its own, to create an actual controversy in the United States. But Ethicon involved
foreign litigation with a related sister company of the declaratory judgment plaintiff,
while the present case involves companies that are entirely independent of the
patentee. Ethicon, 369 F.Supp. at 938.
Allied also argues that because it has alleged that it manufactures and
distributes its product in the United States, Ethicon holds that it “may already have
violated the United States patent.” Ethicon, 369 F. Supp. at 938. This assertion is
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rejected for two reasons. First, nowhere does Allied allege that its liberty to
distribute its products in the United States has ever been threatened, or even
questioned by Stellar. Second, the Federal Circuit has held that “absent action by
the patentee, ‘a potential competitor. . . is legally free to market its product in the
face of an adversely-held patent.’” Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d
1329, 1338 (Fed. Cir. 2008) (“Prasco”) quoting Teva Pharm. USA, Inc. v. Novartis
Pharm. Corp., 482 F.3d 1330, 1345 (Fed. Cir. 2007) (holding that foreign litigation is
not dispositive of the jurisdiction analysis, but is one factor to be considered). The
Federal Circuit again confirmed that jurisdiction will not arise from a plaintiff’s
perception of possible infringement “without some affirmative act by the patentee.”
Prasco, 537 F.3d at 1338, citing SanDisk Corp. v. STMicro-electronics, Inc., 480 F.3d
1372, 1380-81 (Fed. Cir. 2007).
The authorities upon which Allied relies do not support the existence of a
justiciable controversy. Taking all the facts into account, Allied has not met the
threshold burden of proving by a preponderance of the evidence an immediate and
real conflict. Having determined that the claims serving as the basis for original
federal court jurisdiction do not state an actual case in controversy sufficient to
establish subject matter jurisdiction as required by Article III of the Constitution and
the Supreme Court, Counts I, II and III of Allied’s Complaint must be dismissed.
Because Allied no longer has any live federal claims against Stellar, the
remaining potential common law claim will be dismissed because the Court declines
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to exercise its supplemental jurisdiction over this claims. This Court derives its
authority to decide Allied's federal claims from 28 U.S.C. § 1331, which provides that
district courts have original jurisdiction over civil actions “arising under the
Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Federal
courts are given the additional power to exercise supplemental jurisdiction over state
law claims which “form part of the same case or controversy under Article III of the
United States Constitution.” 28 U.S.C. § 1367(a). However, § 1367(c)(3) states that
“[t]he district courts may decline to exercise supplemental jurisdiction over a claim
under subsection (a) if ... the district court has dismissed all claims over which it has
original jurisdiction ....“ Id. § 1367(c)(3).
The Eleventh Circuit has explicitly advised that a district court is well within
its discretion to dismiss state or common law claims once the basis for original
federal court jurisdiction no longer exists. Nolin v. Isbell, 207 F.3d 1253, 1258 (11th
Cir. 2000); see also Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d
935, 951 n.26 (11th Cir. 1997) (“After dismissing Panama's federal claims against the
... defendants, the district court correctly dismissed its remaining state law claims
against these defendants”); Rice v. Branigar Org., Inc., 922 F.2d 788, 792 (11th Cir.
1991) (recognizing that trial court's decision to exercise pendant jurisdiction over
state law claims is discretionary). Accordingly, the Court concludes that Count IV,
“Tortious Interference With Business Relationships,” should be dismissed without

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prejudice so that Allied may, if it chooses, pursue this claim in state court.4
Therefore, in accordance with the conclusions reached herein, it is hereby
ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss [DE 13] is
granted. Counts I, II and III are dismissed with prejudice. Count IV, “Tortious
Interference With Business Relationships,” is dismissed without prejudice. Any
pending motions are denied as moot. This case is closed. In accordance with Fed. R.
Civ. P. 58, final judgment will be entered by separate order.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 24th day of August, 2016.
_________________________
KENNETH A. MARRA
United States District Judge

4

The Court notes that Allied did not attempt to allege diversity jurisdiction
pursuant to 28 U.S.C. § 1332. Compl. ¶ 8.
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