Z-Man Fishing Products Inc et al v. Renosky et al

Filing 14

ORDER denying as moot 6 Motion to Dismiss; and denying 11 Motion to Dismiss. Signed by Honorable David C Norton on 12/14/2012.(gcle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Z-MAN FISHING PRODUCTS, INC.,
et al.,
Plaintiffs,
vs.
JOSEPH F. RENOSKY, et al.,
Defendants.

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No. 2:12-cv-2906-DCN

ORDER

This matter is before the court on a motion to dismiss the amended complaint
brought by defendants Joseph Renosky and Renosky Lure, Inc. (collectively, “Renosky”).
For the reasons set forth below, the motion to dismiss is denied.
On October 10, 2012, plaintiffs Z-Man Fishing Products, Inc. and Holding One,
Inc. (collectively, “Z-Man”) filed a complaint for declaratory relief against Renosky.
Renosky moved to dismiss the complaint and, in response, Z-Man amended its complaint
on November 5, 2012. In the amended complaint, Z-Man seeks a declaration that its
FlashBack® fishing lure has not infringed and does not infringe Renosky’s bendable
fishers lure patent, U.S. Patent No. 7,104,004 (the ’004 Patent). Z-Man also seeks a
declaration the claims of the ’004 patent are invalid.
Renosky moved to dismiss the amended complaint on the basis that this court
cannot exercise either personal or subject matter jurisdiction over it. The court held a
hearing on Renosky’s motion on December 13, 2012. Renosky conceded at the hearing
that this court has personal jurisdiction over it. For this reason, this order only addresses
the question of subject matter jurisdiction.

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Renosky contends that the amended complaint should be dismissed because it
does not plead facts that establish subject matter jurisdiction under the Declaratory
Judgment Act.
The Declaratory Judgment Act provides:
In a case of actual controversy within its jurisdiction, . . . any court of the
United States, upon the filing of an appropriate pleading, may declare the
rights and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought.
28 U.S.C. § 2201. Courts determining whether a declaratory judgment action satisfies
the “actual controversy” requirement must employ a totality of the circumstances test that
analyzes “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,
Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (internal citations omitted) (emphasis
added). The Federal Circuit has held that:
In the context of conduct prior to the existence of a license, declaratory
judgment jurisdiction generally will not arise merely on the basis that a
party learns of the existence of a patent owned by another or even
perceives such a patent to pose a risk of infringement, without some
affirmative act by the patentee. But Article III jurisdiction may be met
where the patentee takes a position that puts the declaratory judgment
plaintiff in the position of either pursuing arguably illegal behavior or
abandoning that which he claims a right to do.
SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1380-81 (Fed. Cir. 2007).
The amended complaint alleges that Renosky expressly charged Z-Man with
infringement of the ’004 patent, specifically, that Renosky’s attorney told Z-Man’s
attorney “that it is [Renosky’s] position that [Z-Man has] infringed and [is] infringing the
’004 patent by selling in the United States certain fishing lures, including Z-Man’s
FlashBack® lure.” Am. Compl. ¶ 8.a. During the same conversation, Renosky’s
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attorney allegedly “offered a license to the ’004 patent” to Z-Man. Id. Renosky disputes
the characterizations in the amended complaint. Renosky instead suggests that its
attorney merely offered a royalty-free license for the ’004 patent “to avoid any
uncertainties” because Renosky was unsure whether the FlashBack® lure was infringing.
Def.’s Mem. in Support of Mot. for Summ. J. 3. At the hearing, attorneys for both parties
admitted that the statement in question took place in the context of settlement
negotiations relating to a patent infringement lawsuit currently pending before another
judge in this district.1
Construing the facts in the light most favorable to Z-Man, as the court must do on
this motion to dismiss, the amended complaint sufficiently alleges a substantial
controversy between parties having adverse legal interests, of sufficient immediacy and
reality. The amended complaint states that Renosky accused Z-Man of patent
infringement and that Z-Man disputes such a claim. The parties dispute the content of
Renosky’s licensing offer to Z-Man, and Renosky’s version of the facts may very well
end up being most accurate. However, at this stage in the litigation, the allegations
contained in the amended complaint are enough to establish the court’s jurisdiction.
For the foregoing reasons, Renosky’s motion to dismiss the amended complaint,
ECF No. 11, is DENIED. Renosky’s motion to dismiss the initial complaint, ECF No. 6,
is DENIED AS MOOT.
AND IT IS SO ORDERED.

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The propriety of bringing a lawsuit on the basis of a statement made during confidential
settlement negotiations is not squarely before the court and is, therefore, a matter for another day.

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________________________________
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE

December 14, 2012
Charleston, South Carolina

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