Free Declaration - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ABLAISE LTD. and General INVENTORS INSTITUTE A, INC., Plaintiffs, v. BANK OF AMERICA CORPORATION, Defendant. DECLARATION OF WILLIAM J. MARSDEN, JR. IN SUPPORT OF DEFENDANT BANK OF AMERICA CORPORATION'S MOTION TO STAY FISH & RICHARDSON P.C. William J. Marsden, Jr. (#2247) 919 N. Market Street, Suite 1100 P.O. Box 1114 Wilmington, DE 19899-1114 Telephone: (302) 652-5070 Facsimile: (302) 652-0607 Nagendra Setty Douglas Bridges Fish & Richardson P.C. 1180 Peachtree St., NE, 21st. Fl. Atlanta, GA 30309 Telephone: (404) 892-5005 Facsimile: (404) 892-5002 David M. Barkan Craig R. Compton Jonathan J. Lamberson 500 Arguello Street, Suite 500 Redwood City, CA 94063 Telephone: (650) 839-5070 Facsimile: (650) 839-5071 Attorneys for Defendant BANK OF AMERICA CORPORATION Dated: December 22, 2006 C.A. No. 06-530-SLR

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ABLAISE LTD. and General INVENTORS INSTITUTE A, INC., Plaintiffs, v. BANK OF AMERICA CORPORATION, Defendants. DECLARATION OF WILLIAM J. MARSDEN, JR. IN SUPPORT OF DEFENDANT BANK OF AMERICA CORPORATION'S MOTION TO STAY I, William J. Marsden, Jr., declare as follows: 1. I am an attorney at Fish & Richardson P.C., counsel of record in this C.A. No. 06-530-SLR

action for Defendant Bank of America Corporation ("Bank of America"). I am a member of the Bar of the State of Delaware and of this Court. I have personal knowledge of the matters stated in this declaration and would testify truthfully to them if called upon to do so. 2. Attached hereto as Exhibit A is a true and correct copy of the Complaint

for Declaratory Judgment of Non-Infringement filed on April 6, 2006, in Northern District of California Financial Fusion, Inc. and Sybase, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter. 3. Attached hereto as Exhibit B is a true and correct copy of the Motion for

Leave to file A Second Amended Complaint filed on November 2, 2006, in the Northern District of California in the Financial Fusion, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter. 4. Attached hereto as Exhibit C is a true and correct copy of the Complaint

for Declaratory Judgment of Non-Infringement, Invalidity and Unenforceability filed on November 21, 2006, in the Northern District of California in the Yodlee, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter.

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5.

Attached hereto as Exhibit D is a true and correct copy of a February 6,

2006 letter to Bank of America from counsel for Ablaise Ltd. re US Patent No. 6,961,737. 6. Attached hereto as Exhibit E is a true and correct copy of LexisNexis

CourtLink national docket search results for Ablaise litigations. 7. Attached hereto as Exhibit F is a true and correct copy of Defendants'

Memorandum In Support Of Motion To Dismiss filed on July 26, 2006, in the Northern District of California in the Financial Fusion, Inc. and Sybase, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter. 8. Attached hereto as Exhibit G is a true and correct copy of the

Memorandum In Support Of Plaintiffs' Opposition To Defendants' Motion To Dismiss filed on August 22, 2006, in the Northern District of California in the Financial Fusion, Inc. and Sybase, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter. 9. Attached hereto as Exhibit H is a true and correct copy of the Order

Denying Motion To Dismiss; Tentatively Granting Motion To Dismiss Sybase As An Improper Party; And Referring Case For Early Judicial Settlement Conference filed on September 28, 2006, in the Northern District of California in the Financial Fusion, Inc. and Sybase, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter. 10. Attached hereto as Exhibit I is a true and correct copy a July 26, 2006

letter to Bank of America from counsel for Ablaise Ltd. re technology covered by the '737 Patent. 11. Attached hereto as Exhibit J is a true and correct copy of a April 10, 2006

letter to Compass Bancshares, Inc. from counsel for Ablaise Ltd. re US Patent No. 6,961,737. 12. Attached hereto as Exhibit K is a true and correct copy of the Order

Granting Leave to File a Second Amended Complaint; And Relating the Financial Fusion, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. and Yodlee, Inc. v.

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Ablaise Ltd. and General Inventors Institute A, Inc. matters, filed on December 15, 2006, in the Northern District of California in the Financial Fusion, Inc. v. Ablaise Ltd. and General Inventors Institute A, Inc. matter. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed this 22nd day of December, 2006, at Wilmington, Delaware.

/s/ William J. Marsden, Jr. William J. Marsden, Jr.

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CERTIFICATE OF SERVICE I hereby certify that on this 22nd day of December 2006, I electronically filed with the Clerk of Court DECLARATION OF WILLIAM J. MARSDEN, JR. IN SUPPORT OF DEFENDANT BANK OF AMERICA CORPORATION'S MOTION TO STAY using CM/ECF which will send electronic notification of such filing(s) to the following Delaware counsel. In addition, the filing will also be sent via hand delivery: Thomas C. Grimm MORRIS, NICHOLS, ARSHT & TUNNELL 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 I hereby certify that on this 22nd day of December 2006, I have mailed by United States Postal Service, the document(s) to the following non-registered participants: Thomas G. Scavone Matthew G. McAndrews NIRO, SCAVONE, HALLER & NIRO 181 W. Madison Street, Suite 4600 Chicago, IL 60602

80039746 (2).doc

/s/ William J. Marsden, Jr. William J. Marsden, Jr. (#2247)

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Exhibit A

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Linda J. Thayer (SBN 195,115) Lily Lim (SBN 214,536) Jeffrey E. Danley (SBN 238,316) FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P. Stanford Research Park 3300 Hillview Avenue Palo Alto, California 94304-1203 Telephone: (650) 849-6600 Facsimile: (650) 849-6666 Email: [email protected] Email: [email protected] Email: [email protected] Attorneys for Plaintiff FINANCIAL FUSION, INC. UNITED STATES DISTRICT COURT

10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN JOSE DIVISION 12 13 14 15 16 17 Defendants. 18 19 20 21 22 23 24 25 26 27 28
MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT C06-02451 PVT

FINANCIAL FUSION, INC. Plaintiff, v. ABLAISE LTD., and GENERAL INVENTIONS INSTITUTE A, INC.

CASE NO. C06-02451 PVT MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT Date: December 12, 2006 Time: 10:00 a.m. Judge: Honorable Patricia V. Trumbull

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PLEASE TAKE NOTICE that on December 12, 2006, at 10:00 a.m., or as soon thereafter as the matter may be heard before the Honorable Patricia V. Trumbull, Plaintiff Financial Fusion, Inc. (FFI) will and hereby does move this Court for an Order granting Plaintiff leave to file a Second Amended Complaint in this litigation. FFI brings this Motion to add counts seeking declaratory judgments of non-infringement and invalidity of U.S. Patent No. 6,295,530 ("the `530 Patent"), the parent patent to U.S. Patent No. 6,961,737 ("the `737 Patent) that is already at issue in this litigation. This motion is based upon this Notice of Motion, the accompanying Memorandum of Points and Authorities, the Declaration of Linda Thayer, all papers and pleadings on file, and such additional argument and evidence as may be presented to the Court at or prior to the hearing on this Motion. MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Pursuant to Rule 15 of the Federal Rules of Civil Procedure, Plaintiff FFI seeks an order granting leave to amend its complaint that already seeks declaratory judgments of non-infringement and invalidity of the `737 Patent to add additional claims of non-infringement and invalidity of the `530 Patent that is the parent patent to the `737 Patent. A copy of FFI's proposed Second Amended Complaint is attached to this brief as Exhibit 1. On April 6, 2006, after Declaratory Judgment Defendants Ablaise Ltd. and General Inventions Institute A, Inc., (collectively, "Defendants") asserted that FFI's customers using FFI's products, including Bank of America, allegedly infringe the Defendants' `737 Patent, FFI filed a declaratory judgment action to defend its customers pursuant to an indemnification agreement. In disregard for FFI's first-filed action in this jurisdiction, Defendants subsequently filed suit against FFI's customer, Bank of America, in Delaware on August 28, 2006, charging Bank of America with infringing the same `737 Patent. On October 10, 2006, Defendants amended their Delaware complaint to add a claim of infringement of the `530 Patent against Bank of America. FFI now seeks to add the parent `530 Patent to this litigation -- the first-filed action between these parties on this subject matter.

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The Ninth Circuit instructs that courts should be extremely liberal in allowing plaintiffs to amend their complaints, particularly at an early stage in the litigation. Thus, the burden is upon Defendants to show that FFI's complaint should not be amended. Defendants must prove that (a) Plaintiffs have acted in bad faith, (b) that this motion is untimely, (c) Defendants would suffer prejudice as a result of this amendment, and (d) the proposed amendment would be futile. Defendants cannot meet their burden, and therefore this motion should be granted. All the evidence shows that FFI acted in good faith, notifying Defendants of its intention to add the `530 Patent. FFI acted promptly within days of learning that Defendants had accused its customer of infringing the `530 Patent. Defendants would suffer no prejudice because this litigation is in the very early stages, with the Case Management Conference previously scheduled for September 26, 2006 continued to a yet to be determined date. To date, no discovery has been served or taken that would require amendment upon entry of this Second Amended Complaint. Moreover, the proposed amendment would not be futile. Furthermore, the `530 Patent is the parent of the `737 Patent already at issue in this litigation, and this Court has already determined that it has jurisdiction of the `737 Patent and these parties. Judicial economy would be served by allowing the issues of non-infringement and invalidity of the parent `530 Patent to be resolved by this Court at the same time as the non-infringement and invalidity of the child `737 Patent. II. BACKGROUND AND PROCEDURAL HISTORY Plaintiff FFI and its parent Sybase, Inc. filed a Complaint on April 6, 2006 ("Complaint") seeking a declaratory judgment of non-infringement of the `737 Patent, a continuation of the `530 Patent. See Complaint, ¶ 1. They requested declaratory relief after Defendants sent letters to two customers of FFI, including Bank of America, accusing the customers' websites designed by FFI of infringing the `737 patent. Before Defendants filed an Answer, Plaintiffs filed an Amended Complaint adding a request for declaration judgment of invalidity of the `737 Patent for failure to comply with one or more provisions of 35 U.S.C. §§ 101, 102, 103, and 112. See Amended Complaint, ¶ 25.

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On July 26, 2006, in lieu of an answer, Defendants filed a Motion to Dismiss the Amended Complaint, alleging that this Court lacked subject matter jurisdiction on the basis that Defendants had never contacted FFI or Sybase directly, only its customers, such as Bank of America. Plaintiffs filed their Opposition to the Motion on August 22, 2006, citing their fear that if this action were not allowed to proceed in this judicial district, Defendants would be free to continue harassing their customers, including Bank of America, by filing suit in other judicial districts. On August 28, 2006, Defendants did just that, filing suit against Bank of America in Delaware, alleging infringement of the `737 Patent, the same patent already at issue in this litigation. See Declaration of Linda J. Thayer ("Thayer Decl."), ¶1, Ex. A (Ablaise et al. v. Bank of America, Civil Action No. 06-530-SLR (D. Delaware) ("the Delaware action")). Defendants' Complaint in the Delaware action so broadly describes the allegedly infringing Bank of America technology that it encompasses the same Military Bank website that FFI is already defending against infringement in the instant action. Thayer Decl., ¶1. Rejecting Defendants' arguments that this Court should decline jurisdiction and allow its second-filed action to proceed in Delaware, on September 27, 2006, this Court denied Defendants' Motion to Dismiss as to FFI, finding that jurisdiction was proper in this judicial district, where FFI could defend all of its customers, including Bank of America and its Military Bank website, in one lawsuit. See Order Denying Motion to Dismiss, pp. 5-6. As neither side had focused on the issue of the propriety of Sybase as a party during oral argument, this Court gave Sybase two weeks from the date of the Order to submit additional briefing on the subject, or be dismissed as a party. Id. Sybase chose not to present additional briefing and therefore, two weeks later, on October 11, 2006, the tentative dismissal of Sybase became the final order of the court. Thayer Decl., ¶2. Despite this Court's denial of Defendants' Motion to Dismiss and the first-filed status of this present action concerning the `737 patent, Defendants are continuing their action on the `737 Patent in Delaware. Thayer Decl., ¶3. In fact, on October 10, 2006, Defendants filed a First Amended Complaint in the Delaware action, adding a claim of infringement of the `530 Patent against Bank of America to which, as mentioned above, FFI must respond in light of its indemnity agreement with Bank of America. Thayer Decl., ¶3, Ex. B (Defendants' First Amended Complaint in Delaware). 3
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On October 26, 2006, after Defendants accused Bank of America of infringing the `530 Patent in the Delaware action, FFI asked Defendants to stipulate to FFI's filing of a Second Amended Complaint in this action. Thayer Decl., ¶¶4-5, Ex. C (Thayer email to Defendants' counsel). FFI informed Defendants that it was seeking to add a claim of invalidity of the `530 Patent in light of the fact that Defendants had amended their complaint in Delaware to allege that FFI's customer, Bank of America, which uses a website designed by FFI, infringes the `530 Patent. Id. FFI suggested to Defendants that because they had not yet filed an Answer to FFI's Amended Complaint -- which had been due the previous day, October 25, 2006 -- it would be most economical for Defendants to stipulate to FFI's filing of its Second Amended Complaint and answer just the newly amended complaint. Id. Mr. Martin Fineman, counsel for Defendants, deferred his response, stating that he needed time to confer with his client. Id. On October 27, 2006, counsel for FFI reminded Defendants by email that FFI was waiting to hear if Defendants would stipulate to FFI's filing of a Second Amended Complaint, but received no response. Thayer Decl., ¶5, Ex. C. Without responding to FFI's requests of October 26 and 27, Defendants filed their Answer to the FFI's Amended Complaint on October 30, 2006. Thayer Decl., ¶6. Defendants have still not responded to FFI's request to stipulate to the filing of FFI's Second Amended Complaint, causing FFI to file this Motion. Thayer Decl., ¶6. III. LEAVE TO AMEND THE COMPLAINT SHOULD BE FREELY GRANTED Federal Rule of Civil Procedure 15(a) directs a court to freely grant a party leave to amend its complaint "when justice so requires" and "should be applied with `extreme liberality.'" DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). The Ninth Circuit advises that there is a "strong policy permitting amendment." See Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1530 (9th Cir. 1995). Additionally, a motion to amend a complaint to add claims should be granted more liberally than a motion to amend to add additional parties. See Union Pac. R.R. Co. v. Nev. Power Co., 950 F.2d 1429, 1432 (9th Cir. 1991). Generally, the Ninth Circuit considers four relevant factors when a party moves to amend its pleading. See Roth v. Garcia Marquez, 942 F.2d 617, 628 (9th Cir. 1991). Because Defendants will be unable to meet its burden of showing any of the four factors support that FFI's motion to amend should not be granted--that Plaintiffs have acted with bad faith, the motion 4
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is untimely, Defendants would suffer prejudice, or the proposed amendment would be futile--FFI's motion should be granted. A. Plaintiffs Have Not Acted in Bad Faith in Seeking Leave to Amend The Supreme Court has defined "bad faith" as it concerns motions to amend to mean that the plaintiff has filed its motion to amend solely for delay or improper purpose. Abels v. JBC Legal Group, P.C., 229 F.R.D. 152, 156 (N.D. Ca. 2005) (citing Forman v. Davis, 371 U.S. 178, 182 (1962)). In the present case, Defendants cannot argue that the present motion to amend has been filed for delay. Defendants added a claim of infringement of the `530 Patent against Bank of America in their Amended Complaint filed on October 10, 2006, in the Delaware action. FFI met and conferred with Defendants regarding its request to amend less than three weeks later, before the Case Management Conference in this matter has been rescheduled and before any discovery has been served or taken. No joint case management statement has been adopted by this Court, so there is no schedule that would be disturbed by granting this motion for leave to amend. Additionally, Defendants cannot point to any improper purpose for filing this motion to amend, especially considering that Defendants caused FFI to amend by recently adding a claim of infringement of the `530 Patent against Bank of America in the Delaware action. In fact, by ensuring that all claims can be before this Court during one litigation, FFI has a proper purpose for filing the present motion. B. Defendants Cannot Claim Prejudice if This Motion to Amend is Granted An amendment's potential prejudice to the opposing party "carries the greatest weight among the four factors in determining whether to grant leave to amend." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). "To deny leave, the prejudice must be substantial." Abels, 229 F.R.D. at 156. Defendants would be hard-pressed to come forth with any possible prejudice that they would suffer if this Court were to grant FFI leave to amend its Complaint, as courts freely do. In the present case, the additional claim for relief that FFI seeks to add concerns the invalidity of the `530 Patent which shares a virtually identical specification with its parent, the `737 Patent, already at issue in this litigation. By adding a claim of infringement of the `530 Patent against Bank of America in Delaware, Defendants made it necessary that FFI move to amend its complaint in this 5
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jurisdiction to include the `530 Patent. Thus, Defendants can hardly claim unfair prejudice or surprise that FFI seeks to have the validity of these two related patents decided at the same time and in the same forum--the site of the first-filed action. In any event, discovery has yet to occur. Defendants, therefore, cannot argue that they would be prejudiced if this motion to amend is granted. C. Amending This Action to Add the Additional Claim of Invalidity is Not Futile An amendment is futile if a claim's defeat on summary judgment would be inevitable. See Roth, 942 F.2d at 628-29. An amendment may also be futile where the moving party seeks to amend only frivolous arguments. See Bonin v. Calderon, 59 F.3d 815, 846 (9th Cir. 1995). In the present case, FFI seeks leave to add a claim of invalidity of the `530 Patent on the basis of prior art of which it has become aware. Defendants cannot reasonably argue that this claim would be defeated on summary judgment or that it is frivolous. Moreover, the `530 Patent is the parent of the `737 Patent already at issue in this litigation, and this Court has already determined that it has jurisdiction of the `737 Patent and these parties. Accordingly, Defendants cannot reasonably argue any futility if this motion is granted. IV. CONCLUSION For at least the foregoing reasons, FFI's motion for leave to file a Second Amended Complaint to add the claim of invalidity of the `530 Patent should be granted.

Dated: November 2, 2006

By:

/s/Linda J. Thayer

Linda J. Thayer FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P. 3300 Hillview Avenue Palo Alto, California 94304-1203 Telephone:(650) 849-6600 Facsimile: (650) 849-6666 Attorneys for Plaintiff FINANCIAL FUSION, INC.

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1 Martin L. Fineman (California State Bar No. 104413) DAVIS WRIGHT TREMAINE LLP 2 One Embarcadero Center, Suite 600 San Francisco, California 94111 3 Telephone: (415) 276-6500 Facsimile: (415) 276-6599 [email protected] 4 Email: 5 Thomas G. Scavone, Member of the N.D. Cal. Bar Matthew G. McAndrews, Pro Hac Vice Application Pending 6 NIRO, SCAVONE, HALLER & NIRO 7 181 West Madison Street, Suite 4600 Chicago, Illinois 60602 8 Phone: (312) 236-0733 Fax: (312) 239-3137 9 E-Mail: [email protected] [email protected] 10 Attorneys for Defendants 11 ABLAISE LTD. and GENERAL INVENTIONS INSTITUTE A, INC. 12 13 14 15 IN THE UNITED STATES DISTRICT COURT THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION Case No. C 06-02451-PVT DEFENDANTS MEMORANDUM IN SUPPORT OF MOTION TO DISMISS Date: September 12, 2006 Time: 10:00 a.m. Before The Honorable Magistrate-Judge Patricia V. Trumbull

DAVIS WRIGHT TREMAINE LLP

16 FINANCIAL FUSION, INC. and SYBASE, ) INC., ) 17 ) Plaintiff, ) 18 ) v. ) 19 ) ABLAISE LTD. and GENERAL INVENTIONS ) 20 INSTITUTE A, INC., ) ) 21 Defendant. ) ) 22 23 24 25 26 27 28

Defendants Ablaise Ltd. ( Ablaise ) and General Inventions Institute A, Inc. ( GIIA ) (collectively, Ablaise ) respectfully move to dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(1) because there is no subject matter jurisdiction supporting Count I requesting declaratory judgment on issues of infringement and validity of Ablaise s 737 patent. There is no actual controversy between Ablaise and Plaintiffs on these issues, and Plaintiffs Amended
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1 Complaint fails to allege any facts sufficient to give rise to such a controversy. 2 As a separate ground for dismissal with respect to Plaintiff Sybase, the Amended

3 Complaint fails to allege any controversy between Ablaise and Sybase, the latter of which 4 Plaintiffs merely identify as the parent corporation of Plaintiff FFI. This allegation is insufficient 5 to confer subject matter jurisdiction over Sybase s claim. 6 I. 7 RELEVANT FACTS As alleged in Plaintiffs Amended Complaint, Defendant Ablaise Ltd. is a British

8 corporation with its principal place of business in London, and Defendant GIIA is a British Virgin 9 Islands corporation with its principal place of business in Tortola, BVI. Collectively, Ablaise Ltd. 10 and GIIA own the 737 and 530 patents. Ablaise does not compete with Plaintiffs and has never

DAVIS WRIGHT TREMAINE LLP

11 had any contact with them, let alone contact that would warrant an apprehension by Plaintiffs that 12 Ablaise intended to file a lawsuit against them for patent infringement. Nor did Ablaise ever 13 compete or have contact with HFN, one of the predecessors-in-interest to FFI referred to in the 14 Amended Complaint. Indeed, before Plaintiffs filed this action, Ablaise had never heard of FFI or 15 HFN, and was only generally aware of Sybase, a large software company specializing in database16 related products. Notwithstanding, on April 6, 2006, Plaintiffs filed this action seeking

17 declaratory relief with respect to Ablaise s 737 and 530 patents. 18 As alleged in the Amended Complaint, on February 6 and February 7, 2006, Ablaise sent

19 letters to Bank of America and First Horizon (collectively, the Alleged Infringers ), respectively, 20 notifying these banks that their websites infringe the 737 patent. The Alleged Infringers operate 21 unique, complex, and customized websites for the use of their banking customers. The

22 functionality and operation of those websites was the subject of Ablaise s notice letters. The 23 homepages of the accused websites identify the sites as belonging to the Alleged Infringers or 24 their related affiliates. To Ablaise s knowledge, the accused websites are owned and operated by 25 the Alleged Infringers and make no mention of Plaintiffs. 26 As also alleged, Ablaise s notice letters to the Alleged Infringers were accompanied by Each analysis provided a

27 multimedia infringement analyses contained on CD-ROMs. 28

representative example of the Alleged Infringer s infringement of claim 1 of the 737 patent.
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1 Claim 1 is a method (or process ) claim, meaning that a direct infringer must perform each step 2 identified as an element of the claim. Two of the several steps of claim 1 are storing content 3 data and maintaining a user database comprising information relating to user preferences. 4 Ablaise does not know whether Plaintiffs perform any steps of claim 1 or any other method

5 claim of the 737 patent, let alone all of the steps of a claim as would be required to support a 6 claim of direct infringement. The Amended Complaint makes no allegations to clarify this point. 7 Notably, Plaintiffs original Complaint alleged that [t]he websites implicated by Ablaise in its 8 notice letters were developed at least in part by FFI under license and development agreements

9 containing indemnification provisions allowing FFI to defend and settle claims of infringement 10 relating to the provided software. Compl. ¶ 23 (emphasis added). The Amended Complaint

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11 makes no similar allegation. Even if it did, however, such an allegation would be insufficient to 12 give rise to a justiciable controversy between the parties. The allegation that the accused websites 13 were developed at least in part is too ambiguous to indicate which, if any, claim elements of the 14 15 737 patent are satisfied by Plaintiffs systems or processes. At least with respect to the steps of storing content data and maintaining a user database, it

16 is unlikely that Plaintiffs perform these steps on their own. Specifically, much of the content 17 data referred to in Ablaise s multimedia infringement analyses relate to the confidential financial 18 information of the Alleged Infringers banking customers. Most likely, this confidential financial 19 data is maintained and stored on secure servers operated by the Alleged Infringers. The same is 20 likely true of data concerning banking customers user preferences. For these and other reasons, 21 Ablaise addressed the issue of infringement with the Alleged Infringers and not Plaintiffs, of

22 which Ablaise had been unaware until receiving a copy of the original Complaint. 23 24 direct The Alleged Infringers are responsible for their own acts of patent infringement. They are infringers of Ablaise s 737 patent, and, as such, are proper parties to a patent

25 infringement action in the event that Ablaise chooses to so proceed. 26 Plaintiffs Complaint comes out of the blue. Ablaise has made no threat or charge of

27 infringement against Plaintiffs directly or indirectly and taken no action which would create any 28 apprehension by Plaintiffs that they are about to be sued by Ablaise, as is required for declaratory3
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1 judgment jurisdiction. Before filing their Complaint, Plaintiffs never communicated with Ablaise 2 about anything. 3 Presumably, Plaintiffs are one of many suppliers of components that can be used in a

4 system that, once built, may allow users to perform the steps of a method, or use or operate a 5 system, that falls within the scope of claims of the 737 patent. As a supplier of components, 6 Plaintiffs liability would likely be that of one who actively induces infringement, see 35 U.S.C. 7 §271(b), or a contributory infringer, 35 U.S.C. §271(c). As discussed, Plaintiffs have not 8 alleged that they operate systems that perform, for example, the steps of method claim 1 of the 9 737 patent. More germane to the instant analysis, however, Ablaise has no basis for making such it has no idea of what, if any, relevance Plaintiffs systems or services have to the

10 an assertion

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11 Alleged Infringers infringement. 12 II. 13 STANDARD FOR SUBJECT MATTER JURISDICTION A motion contesting subject matter jurisdiction requires review of evidence submitted on Federal Circuit law governs [the] review as to whether

14 the issue, and fact finding by the Court.

15 an actual controversy exists under the Declaratory Judgment Act when the underlying merits of an 16 action involve patent infringement and/or validity. Microchip Technology Inc. v. Chamberlain

17 Group, Inc., 441 F.3d 936, 940 (Fed. Cir. 2006). The Plaintiffs have the burden to support their 18 allegations with proof, West Interactive Corp. v. First Data Resources, Inc., 972 F.2d 1295, 1297 19 (Fed. Cir. 1992), and to demonstrate that there is an actual controversy under the Declaratory 20 Judgment Act, 28 U.S.C. §2201: Teva Pharmaceuticals USA, Inc. v. Pfizer Inc., 395 F.3d 1324, 21 1331 (Fed. Cir. 2005). 22 There is a recognized, two-part test for an actual controversy when a party requests a The Plaintiffs must

23 declaratory judgment on issues of patent infringement and validity. 24 demonstrate both: 25 26 27 28

(1) an explicit threat or other action by the patentee which creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity by the declaratory judgment plaintiff which could constitute infringement or concrete steps taken by the declaratory
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1

judgment plaintiff with the intent to conduct such activity.

2 Teva Pharmaceuticals, 395 F.3d at 1330 (citing Amana Refrigeration, Inc. v. Quadlux, Inc., 172 3 F.3d 852, 855 (Fed. Cir. 1999)). This is an objective test applied to the facts at the time the 4 Amended Complaint was filed, June 14, 2006. West Interactive, 972 F.2d at 1297; Sumitomo 5 Mitsubishi Silicon Corp. v. MEMC Electronic Materials, Inc., 2006 U.S. Dist. LEXIS 39994 * 12 6 (N.D. Cal.) (Exhibit A) ( The burden is on the claimant to establish that jurisdiction over its 7 declaratory judgment action existed at, and has continued since, the time the counterclaim was 8 filed. ). 9 Even if there is an actual controversy, the district court is not required to exercise Teva

10 declaratory judgment jurisdiction, but has substantial discretion to decline that jurisdiction.

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11 Pharmaceuticals, 395 F.3d at 1331; see also Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 12 634 (Fed. Cir. 1991) ( When there is no actual controversy, the court has no discretion to decide 13 the case. When there is an actual controversy and thus jurisdiction, the exercise of that jurisdiction 14 is discretionary. ). 15 III. 16 PLAINTIFFS CANNOT PROVE AN ACTUAL CONTROVERSY To constitute an actual controversy, Plaintiffs must show an objectively reasonable

17 apprehension of suit against them, based on conduct by Ablaise. Shoom, Inc. v. Electronic 18 Imaging Systems of America, Inc., 2006 U.S. Dist. LEXIS 39594 *8-9 (N.D. Cal.) (Exhibit B) 19 (quoting Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 887-8 (Fed. Cir. 1992)); see also West 20 Interactive, 972 F.2d at 1297. They cannot meet this burden because Ablaise has had no contact 21 with Plaintiffs at all. Plaintiffs concern about the 737 patent is a matter of their own devising, 22 not the result of any action by Ablaise. In West Interactive, the plaintiff feared an infringement 23 suit (which proved true months later) based on statements of a licensee and the filing of suits 24 against others. Id. at 1296, 1298. But in the absence of any communication between the patent 25 owner and the plaintiff the necessary conduct by the patentee the plaintiff could not establish

26 an objective reason to fear a suit. Id. at 1297-8. 27 28 Having no basis to fear a suit by Ablaise, Plaintiffs rely on Ablaise s notice letters to the Alleged Infringers and the existence of other lawsuits Ablaise has filed for infringement of its
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1 patents. While there are cases where a product manufacturer was permitted to sue for declaratory 2 judgment based on infringement accusations against customers, the facts here fall within contrary 3 authority for the reasons stated in Dow Chemical Co. v. Viskase Corp., 892 F. Supp. 991 (N.D. Ill. 4 1995). Dow properly distinguishes between cases where the customer merely purchased a

5 complete infringing product, which supported a manufacturer s suit, and cases where the customer 6 used the manufacturer s product to make an infringing device, which does not give rise to 7 jurisdiction for a manufacturer s declaratory judgment. Id. at 995. Plaintiffs, as component 8 suppliers, cannot use the notice letters to the Alleged Infringers or the fact of other litigation as a 9 basis for jurisdiction in the absence of any threatening conduct by Ablaise against them. Id. 10 (citing Viking Injector Co. v. Chemtron, Inc., 1993 WL 625543 at *3 (M.D. Pa. Nov. 9, 1993)

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11 (Exhibit C)). As discussed, Plaintiffs make no allegations at all concerning how the structure or 12 functionality of their products or services relate to the claims of the 737 or 530 patents. 13 Although the point is unclear in the Amended Complaint, Plaintiffs interest appears to be

14 limited to a concern that the Alleged Infringers may be using Plaintiffs components as part of an 15 infringing system. As in Dow, this is not the legal interest needed to create declaratory-judgment 16 jurisdiction. Id. at 997. The only charges of infringement made by Ablaise have been against the 17 Alleged Infringers, each of whom is a direct infringer using one or more unique systems that 18 perform unique processes. 19 As stated above, Ablaise has charged the Alleged Infringers with infringement because

20 they own and operate, and their customers use, a system covered by claims of the 737 patent. 21 Plaintiffs, on the other hand, are one of many providers of hardware and software components that 22 can be used in such a system. 23 Ablaise has properly pursued those who have made and used the infringing systems as

24 direct infringers: the Alleged Infringers. That does not give Plaintiffs, or any other component 25 supplier, the right to file their own suit on the 737 patent. Ablaise did not sue Plaintiffs or others 26 similarly situated for the very reason that they are component providers, not the ones who 27 ultimately operate, use and make available the infringing websites. 28 In sum, Plaintiffs cannot use their role as a component supplier to bootstrap Ablaise s
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1 communications with the Alleged Infringers into a reasonable apprehension of a coming suit by 2 Ablaise against Plaintiffs. 3 IV. 4 SYBASE IS NOT A PROPER PARTY TO THIS SUIT The Amended Complaint fails to allege any nexus between a product or service of

5 Plaintiffs and the claims of the 737 or 530 patents. The relationship between Sybase and the 6 Ablaise patents is even more tenuous. Sybase s only apparent connection to the facts of this case 7 is that FFI is a wholly-owned subsidiary of Sybase. Amend. Compl. ¶ 4. No Sybase product or 8 service is mentioned in the Amended Complaint. Nor do Plaintiffs allege that Sybase was a party 9 to any indemnification agreements with the Alleged Infringers. 10 The absence of any connection between Sybase and the facts of this case are a separate

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11 ground for dismissal of Sybase s claim. 12 V. 13 CONCLUSION For the foregoing reasons, Ablaise respectfully requests that the Court dismiss the

14 Amended Complaint with prejudice. 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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Dated: July 26, 2006.

Respectfully Submitted, /S/ Martin L. Fineman Martin L. Fineman, California State Bar No. 104413 DAVIS WRIGHT TREMAINE LLP One Embarcadero Center, Suite 600 San Francisco, California 94111-3834 Phone: (415) 276-6500 Fax: (415) 276-6599 E-Mail: [email protected] Thomas G. Scavone, Member of the N.D. Cal. Bar Matthew G. McAndrews, Pro Hac Vice Application Pending NIRO, SCAVONE, HALLER & NIRO 181 West Madison Street, Suite 4600 Chicago, Illinois 60602 Phone: (312) 236-0733 Fax: (312) 239-3137 E-Mail: [email protected]; [email protected] Attorneys for Defendants ABLAISE LTD. and GENERAL INVENTIONS INSTITUTE A, INC.

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Linda J. Thayer (SBN 195,115) Lily Lim (SBN 214,536) Jeffrey E. Danley (SBN 238,316) FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P. Stanford Research Park 3300 Hillview Avenue Palo Alto, California 94304-1203 Telephone: (650) 849-6600 Facsimile: (650) 849-6666 Email: [email protected] Email: [email protected] Email: [email protected] Attorneys for Plaintiffs FINANCIAL FUSION, INC. and SYBASE, INC. UNITED STATES DISTRICT COURT

10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN JOSE DIVISION 12 13 14 15 16 17 Defendants. 18 19 20 21 22 23 24 25 26 27 28
MEMO ISO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO DISMISS Case No. C 06-02451 PVT

FINANCIAL FUSION, INC. and SYBASE, INC. Plaintiffs, v. ABLAISE LTD., and GENERAL INVENTORS INSTITUTE A, INC.

CASE NO. C06-02451 PVT MEMORANDUM IN SUPPORT OF PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION TO DISMISS Date: September 12, 2006 Time: 10:00 a.m. Courtroom: 5, Fourth Floor Judge: The Honorable Patricia Trumbull

I.

INTRODUCTION Plaintiffs properly brought this declaratory judgment action to stop Defendants from

threatening Financial Fusion's customers with patent infringement lawsuits. In February 2006, Defendants sent notice letters to two customers, First Horizon and Bank of America, accusing their websites of infringing. While Plaintiffs were investigating their claims, and only a few weeks after receiving the initial notice letter, Defendants grew impatient and explicitly threatened to file suit. Before Defendants could follow through with that threat, or threaten other customers, Plaintiffs filed this declaratory judgment action on behalf of FFI's customers.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II.

After directly threatening FFI's customer with a patent infringement suit, Defendants now FFI and its parent, Sybase, out of this lawsuit. The law, however, does not allow patent holders to engage in "scare-the-customer-and-run tactics" that can chill a competitive environment with uncertainty and insecurity. A primary purpose of the Declaratory Judgment Act is to allow product suppliers to resolve claims of patent infringement on behalf of themselves and their customers, reducing piecemeal serial litigation and preventing inconsistent results in multiple judicial districts. Plaintiff FFI, and its parent Sybase, have indemnity obligations to FFI's customers and wish to resolve these matters for themselves and the customers in one lawsuit and in one forum, as the Declaratory Judgment Act intended. For at least these reasons, Defendants' Motion to Dismiss should be denied.

FACTUAL BACKGROUND Defendants Ablaise Ltd. and General Inventions Institute A, Inc. acknowledge sending notice

letters in February 2006 to two customers of FFI, namely, First Horizon and Bank of America, accusing their websites of infringing U.S. Patent No. 6,961,737 ("the `737 patent"). Defendants' Memorandum in Support of Motion to Dismiss ("Memo"), p. 2. When Plaintiffs investigated the Defendants' claims, theylearned that Defendants had filed at least four other lawsuits in United States District Courts in the previous year. Declaration of Linda J. Thayer ("Thayer Decl."), ¶2. Defendants sued CDW Corporation and J & R Electronics in the Northern District of Illinois in October, 2005, and January, 2006, respectively; and sued Salesforce.com, Inc. and E*Trade Securities, LLC. in the Northern District of California in February, 2005, and September, 2005, respectively. Id.; see also Plaintiffs' Amended Complaint ("AC"), ¶10. These lawsuits alleged infringement of U.S. Pat. No. 6,295, 530, the parent to the `737 patent which had only recently issued in November 2005. Id. When Defendants sent a letter to First Horizon explicitly threatening to file a suit for patent infringement (Amended Complaint, Exh. A), Plaintiffs reasonably feared that litigation with Defendants was imminent and quickly filed the instant action. Thayer Decl., ¶3. Plaintiffs Financial Fusion, Inc. ("FFI") and its parent Sybase are ultimately responsible for resolving this dispute on behalf of the customers. As Plaintiffs alleged in their Amended Complaint, 2
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Home Financial Network, Inc. ("HFN") provided web-based software for performing financial transactions and website development services to customer First Tennessee and its parent company, First Horizon National Corporation ("First Horizon"), pursuant to a licensing and development agreement. AC, ¶2. The license agreement between HFN and First Tennessee includes an indemnification provision allowing HFN to defend and settle claims of infringement involving software developed under the agreement. AC, ¶3. In 2000, HFN merged with the Financial Server Software division of Sybase, Inc., creating FFI, a wholly-owned subsidiary of Sybase. AC, ¶4. FFI has provided, and continues to provide, website development and hosting services to customer Bank of America Technology and Operations, Inc. ("BATO") under an agreement that includes an indemnification provision allowing FFI to defend and settle claims of infringement involving software developed under the agreement. AC, ¶5. As alleged in Plaintiffs' Complaint, both websites implicated by Ablaise in its notice letters were developed at least in part by FFI, a wholly-owned subsidiary of Sybase, or its predecessors, under license and development agreements containing indemnification provisions allowing or requiring FFI to defend and settle claims of infringement relating to the provided software.1 Furthermore, FFI has provided, and continues to provide, software to other unnamed customers that may later be implicated by Defendants given their broad reading of the scope of the claims.

III.

THERE IS A REAL, IMMEDIATE AND JUSTICIABLE CONFLICT BETWEEN DEFENDANTS AND PLAINTIFFS FFI AND SYBASE The Declaratory Judgment Act, 28 U.S.C. § 2201(a), states:

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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.

As Defendants correctly note, this last sentence appeared in ¶23 of Plaintiffs' Complaint but appears to have been inadvertently omitted from Plaintiffs' Amended Complaint. Thayer Decl., ¶4. Plaintiffs would happily file a Second Amended Complaint to cure this inadvertent omission. Id.

1

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"The sole requirement for jurisdiction under the Act is that the conflict be real and immediate, i.e., that there be a true, actual `controversy' required by the Act." Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 735 (Fed. Cir. 1988); see Aetna Life Ins. Co. v. Haworth, 300 U.S. 227; 239-241 (1937). The Federal Circuit requires that two elements exist to maintain a declaratory judgment action in a patent case: "(1) acts of defendant indicating an intent to enforce its patent; and (2) acts of plaintiff that might subject it or its customers to suit for patent infringement." Arrowhead Indus., 846 F.2d at 737 (emphasis added); see also Microchip Tech. Inc. v. Chamberlain Group, Inc., 441 F.3d 936, 943 (Fed. Cir. 2006). A. Defendants' Actions Against FFI's Customers Gave Rise to a Reasonable Apprehension of a Patent Infringement Suit by Plaintiffs and Their Customers

Defendants sent notice letters alleging infringement of the `737 patent to two customers of FFI. Memo, p. 2. In accordance with agreements between the parties, both customers sent copies of the notice letters to FFI, which shares a legal department with Sybase. Thayer Decl., ¶1. When Plaintiffs' counsel investigated the Defendants and their claims, they became aware that Defendants had filed at least four other patent infringement lawsuits in United States District Courts in the previous year involving either the `737 patent or its parent, and so advised the customers. Thayer Decl., ¶2. When Defendants sent a letter to First Horizon explicitly threatening to file a suit for patent infringement, Plaintiffs and their customers feared, with good reason, that Defendants would imminently file suit, as they had threatened and as they had done on at least four previous occasions. Thayer Decl., ¶3. B. Defendants' Threats Against Customers Are Sufficient to Constitute Actual Controversy With Plaintiffs Who Supplied Allegedly Infringing Software

The Federal Circuit and a plethora of other courts have held that a supplier or manufacturer need not sit by as its customers are threatened or sued by a patent holder who chooses to avoid confronting the supplier head on. Whether Defendants knew who provided the allegedly infringing software when they sent the notice letters or whether Defendants communicated directly with either
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FFI or Sybase thereafter is irrelevant. Plaintiffs have established in their Complaints that both First Horizon and BATO are customers of FFI and, ultimately, of parent Sybase. The Federal Circuit and other courts have repeatedly held that suits or threats against customers provide the required actual controversy for a supplier's declaratory judgment action, whether or not the patent holder has directly threatened or even communicated with the plaintiff supplier: That a competitor is suing a third party and asking the court to find one's company a co-infringer can hardly contribute to euphoria. The law does not require enterprises to keep their heads in the sand while a patentee picks them off one by one and at its leisure. Arrowhead Indus. 846 F.2d at 738; see, e.g., Grafon Corp. v. Hausermann, 602 F.2d 781, 783-84 (7th Cir. 1979); Sigma-Tau Industrie Farmaceutiche Riunite, S.p.A. v. Lonza Ltd., 36 F. Supp. 2d 26, 30 n.5 (D.D.C. 1999) ("The threat of infringement does not have to be directed against plaintiffs specifically. It is sufficient to create a reasonable apprehension if plaintiffs' customers, or other competitors, are threatened."); M. Dickey v. B & H Mfg., Inc., No. CV-F-91-481 OWW, 1991 WL 322239, at *2 (E.D. Cal. Dec. 18, 1991) ("Suits or threats of suits for patent infringement against a plaintiffs' customers create sufficient grounds for plaintiff to bring a declaratory action against a patent holder."). Suits or threats against a supplier's customers satisfy the case or controversy requirement because "the manufacturer is the true defendant in the customer suit. ... [I]t is a simple fact of life that a manufacturer must protect its customers, either as a matter of contract, or good business, or in order to avoid the damaging impact of and adverse ruling against its products." Codex Corp. v. Milgo Elec. Corp., 553 F.2d 735, 737-38 (1st Cir. 1977). As the Federal Circuit noted in approving the Seventh Circuit's decision in Grafon: Rightly respecting the realities of business life, for example, the court employed a test requiring an apprehension that plaintiff or its "customers face an infringement suit or threat of one." Arrowhead 846 F.2d at 736 (emphasis in original) Similarly, in Societe de Conditionnement en Aluminum v. Hunter Engineering Co., Inc., 655 F.2d 938 (9th Cir. 1981), the Ninth Circuit reversed

5

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the district courts dismissal of a supplier's declaratory judgment action, holding that the patent holders' threats to sue the plaintiff's customer established the required controversy. C. Defendants' Lack of Direct Contact With Plaintiffs is Irrelevant

When determining whether reasonable apprehension of a lawsuit exists, the Federal Circuit instructs courts to consider the totality of the circumstances. See Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888 (Fed. Cir. 1992); see also Arrowhead Indus., 846 F.2d at 736. In considering the totality of the circumstances, "a reasonable apprehension may be found in the absence of any communication from defendant to plaintiff." See Arrowhead Indus., 846 F.2d at 736 (emphasis in original). Defendants' reliance on West Interactive for the proposition that a patentee must contact Plaintiffs directly to create a reasonable apprehension of litigation in Plaintiffs in misplaced. In West Interactive, the court found no controversy existed because the alleged threats were found to be merely unauthorized statements by a non-employee of the patentee, directed at a third-party unrelated to the plaintiff, and therefore could not be attributable to, and form the required conduct of, the patentee. See West Interactive Corp. v. First Data Res., 972 F.2d 1295, 1297 (Fed. Cir. 1992). The West Interactive court found that, coupled with a lack of evidence that the patent holder took any steps to enforce the patents, the purported apprehension was unreasonable. Id. The West Interactive court did note, however, reasonable apprehension may be found when, as is the case here, the patent holder has demonstrated a willingness to enforce its patents. Id. Defendants micharacterize on Shoom, Inc. v. Electronic Imaging Systems of America, Inc., No. C05-03434 (MJJ), 2006 U.S. Dist. LEXIS 39594, at *8-9 (N.D. Cal. June 1, 2006) and, in any event, the case is inapposite. In Shoom, the Court granted a motion to dismiss after finding no actual controversy where: 1) the patent holder sent only form letters to customers, and the letters merely offered a license, but did not allege infringement; 2) the form letters and allegedly threatening statements were not from legal counsel; and 3) no evidence was provided that the patent holder ever filed an action for patent infringement to enforce any of its patents. Id. at *7. In stark contrast, Defendants in the instant action sent what they describe as "multimedia infringement analysis" packages providing a representative example of infringement. The infringement analysis packages 6
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were sent by Defendants' patent counsel, and it was known at the time of filing of the declaratory judgment action that Defendants had previously filed at least four other lawsuits alleging patent infringement. D. Plaintiffs Have Standing to Obtain Declaratory Relief As Indemnitors and/or Based on Possible Liability for Indirect Infringement

At the time this declaratory judgment action was filed, Defendants were actively claiming that two of FFI's customers were directly infringing the patents in suit. In their Amended Complaint, Plaintiffs stated two facts: 1) that FFI developed and provided software to its customers that is potentially implicated by Defendants allegations; 2) that FFI has indemnity obligations to the customers on the basis of the allegedly infringing software. Plaintiffs have standing to bring this action for at least these reasons. First, as Defendants correctly hypothesize in their Motion, if FFI supplied one or more components of a system that is found to be directly infringing, FFI may be liable for inducing infringement under 35 U.S.C. § 271(b) or contributory infringement under 35 U.S.C. § 271(c). Standing to seek declaratory relief does not require that the plaintiff's potential liability be as a direct infringer. The Federal Circuit has long held that declaratory relief is equally available to those who may be liable as indirect infringers. See Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479 (Fed. Cir. 1998) (holding that party allegedly inducing infringement had standing to bring a declaratory judgment action). Second, Plaintiffs also state in their Amended Complaint that FFI provided software to the customers pursuant to underlying agreements that contain indemnification provisions which allow or require FFI to defend and settle claims of infringement involving software developed under the agreement. As the Federal Circuit noted, the Declaratory Judgment Act provides a remedy for those parties "at legal risk because of an unresolved dispute to obtain judicial resolution of that dispute." See Microchip Tech. Inc., 441 F.3d at 943 (emphasis in original). This legal risk may arise because of a legal relationship between the declaratory judgment plaintiff and a customer having an interest adverse to the interests of the patentee. See Microchip Tech., 441 F.3d at 943. An indemnification agreement may create this legal relationship. See Microchip Tech., 441 F.3d at 943. Accordingly, 7
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the indemnification agreement alone creates "a substantial controversy . . . of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." See Microchip Tech., 441 F.3d at 942 (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270 (1941)); see also Joseph Bancroft, 268 F.2d at 523; Minebea Co., 13 F. Supp. 2d at 39-40; Wallace & Tiernan, 291 F. Supp. at 222. In short, Defendants have alleged that FFI's customers are infringing, and Defendants maintain that at least Bank of America is still infringing. FFI has indemnity obligations to its customers, and FFI is a wholly-owned subsidiary of Sybase. Therefore, Plaintiffs have standing in this action either as an indemnitor or based on possible asserted liability for contributory or induced infringement. See BP Chems. v. Union Carbide Corp., 4 F.3d 975, 981 (Fed. Cir. 1993). E. As a Parent Corporation, Sybase is Properly a Party

A common technique of those seeking to waylay an entire industry with dubious patents is to proceed up the "food chain" by pursuing customers first, suppliers or manufacturers second, and ultimately parent corporations. While Defendants may now argue that they never made any threat or charge of infringement against Plaintiffs directly, they never disavowed their intentions to do so at a later date. As Defendants admit, before Plaintiffs filed this action, Ablaise had never heard of FFI or its software and did not know of Sybase's relationship to FFI and its customers. (Defs. Mot. to Dismiss 2.) Now that it has, the only way for Defendants to eliminate Plaintiffs' reasonable apprehension of being sued is by making a covenant not to sue, promising never to bring suit against either FFI or Sybase for direct or indirect infringement of the `530 or `737 patents. Fina Research, 141 F.3d at 1483-84 (citing Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059 (Fed. Cir. 1995); Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 636 (Fed. Cir. 1991)). If Plaintiffs were truly interested in mooting this declaratory judgment action, they should offer to so covenant. If they do not, Plaintiffs FFI and Sybase and their customers would remain in reasonable apprehension of lawsuit if this action were dismissed. IV. THE COURT SHOULD EXERCISE ITS DISCRETIONARY JURISDICTION TO ENSURE THAT THIS MATTER IS LITIGATED BETWEEN THE PROPER PARTIES AND IN THE PROPER FORUM FFI, as a provider of the allegedly infringing software, and its parent Sybase, properly brought this action to quickly and efficiently to clarify their rights and the rights of their customers. 8
MEMO ISO PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO DISMISS Case No. C 06-02451 PVT

Case 1:06-cv-00530-SLR Document 12-8 Case 5:06-cv-02451-PVT Document 19

Filed 08/22/2006 12/22/2006

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This suit fits precisely the purpose of the Declaratory Judgment act. Minnesota Mining and Mfg. Co. v. Norton Co., 929 F.2d 670, 673-74 (Fed. Cir. 1991) ("3M is currently threatened in its business, and the Declaratory Judgment Act gives it certain means for resolving its uncertainties. For the court to fail to hear 3M's case and forego the opportunity to resolve a matter well within its capability pursuant to the role entrusted to it by the Declaratory Judgment Act is an abuse of discretion.") Plaintiffs, on behalf of their customers, are prepared to resolve this matter in this forum, home of parent Sybase and the development division of FFI. FFI, as an indemnitor, and its parent, Sybase, are proper parties to this matter. Were this matter dismissed, Sybase, FFI and its customers would remain in fear that Defendants would subsequently file patent infringement actions inmultiple judicial districts, working their way up the food chain and chilling the marketplace. The Court should exercise its discretion to prevent that injustice. V. CONCLUSION For the reasons set for above, Plaintiffs respectfully request that this Court exercise its unique and substantial discretion to hear this declaratory judgment action and deny Defendants' Motion to Dismiss. Dated: August 22, 2006 By: /s/ Linda J. Thayer