Free Motion for Attorney Fees - District Court of Arizona - Arizona


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Date: December 31, 1969
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State: Arizona
Category: District Court of Arizona
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1 something True Center cannot do after K-Zell’s covenant not to sue. -
2 True Center argues that the 201 and 094 patents p lace a cloud of litigation over True
3 Center’s business, that K-Zell is simply seeking, by its covenant, to avoid a determination
4 of its patents’ validity, and that the covenant therefore does not eliminate the prospect of
5 real injury to True Cent er. The Federal Circuit has held, however,.that such concerns do
6 not provide a sufficient basis for jurisdiction over a declaratory judgment claim of patent
7 invalidity. See Teva Pharms., 395 F.3d at 1331-34. As Teva Pharmaceuticals explained,
8 only a reasonable apprehension of an imminent infringement suit gives rise to the kind of
9 controversy necessary to support jurisdiction over such a claim. Ia'.
10 The Cotut concludes that True Center’s "scarecrow patent" argument, althougi
11 vigorously asserted, does not provide a basis for subject matter jurisdiction over its U
12 invalidity claims. Applicable federal law makes clear that True Center must face an
13 imminent threat of an infringement suit based on its present activity. Because K-Zell’s
14 covenant not to sue has eliminated that threat, the invalidity claims must be dismissed.
15 C. True Center’s Supplemental Memorandum Regarding Jurisdiction. t
16 Following the Court’s announcement of its decision Hom the bench, True Center
17 Hled a supplemental memorandum on subject matter jurisdiction and K—Zell filed a
18 response. Docs. ##186, 188. True Center contends that the Court should look beyond the
. 19 traditional two-part jurisdictional test for declaratory judgment claims of invalidity and 1
20 construe its causes of action as "inventorship disputes" under 35 U.S.C. § 256. Doc. #186
. 21 at 2-5 (citing Fina Oil Chem. C0. v. Ewen, 123 F.3d 1466 (Fed. Cir. 1997); Chou v. Univ. of
22 Chicago, 254 F.3d 1347 (Fed. Cir. 2001)).1 K-Zell argues that True Center’s reliance on Fina
23 ;...._...
24 n ‘Section 256 provides, in pertinent part:
25 Whenever through error a person is named in an issued patent as the
inventor, or through error an inventor is not named in an issued patent and
26 such error arose without any deceptive intention on his part, the Director
27 may, on application of all parties and assignees, with proof of facts and such
other requirements as may be imposed, issue a certificate correcting such
28 error. _
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1 Oil and Chou is misplaced because those cases involved claims to correct or affirm
2 inventorship under § 256, not claims of patent invalidity. Doc. #188 at 1-5. K-Zell further .
3 argues that because True Center seeks a declaration that the 201 and 094 patents are
4 invalid under 35 U.S.C. §§ 102 and 103, the Federal (Circuit’s traditional two-part
5 jurisdictional test applies. Id. at 3-5 (citing Institut Pasteur, 332 F. Supp. 2d at 758; BP
6 Chems., Ltd. v. Union Carbide Corp., 4 F.3d 975 (Fed. Cir. 1993)).
7 The Court agrees with K-Zell. In Chou, a graduate student sued her former
8 professor and the university she attended for correction of inventorship under § 256. 254 t
9 F.3d at 1353. The Federal Circuit held that although the plaintiff was obligated to assign
10 her inventions to the university, she nonetheless had standing to sue for correction of
11 inventorship under § 256. The holding in Chou has no application to this case because
12 True Center has not brought a claim for correction of inventorship under § 256. Docs. ##1,
13 57, 70. Moreover, Clay Puett, the person True Center alleges is the true inventor of the
14 starting gates depicted in the 201 and 094 patents, is not aparty to this action. U
15 In Fino Oil, the plaintiff sought a declaration that the inventors were properly
16 named in the patent at issue in accordance with 35 U.S.C. § 116. 123 F.3d at 1470. I
17 ·Applying the well-pleaded complaint rule, the Federal Circuit looked to the corresponding _
18 suit that the defendant would have brought, i.e., an action for correction of inventorship
19 under 35 U.S.C. §256. Id. The Federal Circuit found that an actual controversy existed ·
20 because the plaintiff owned the patent at issue and had a reasonable apprehension that the _
21 defendant would bring a § 256 action. Because those facts are not present in this case,
22 Fina Oil has no bearing on the Court’s ruling that it lacks jurisdiction over True Center’s
23 invalidity claims. See Institut Pasteur, 332 F. Supp. 2d at 758 ("F ina Oil does not alter the
24 BP Chemicals two—pronged test for determining whether an actual controversy exists in if
25 cases involving a declaratory judgment of patent inva1idity."); Teva Pharms., 395 F.3d at
26 1335-56 (stating that the holding in Fina Oil follows the Federal Circuit’s traditional two-
27 part jurisdictional test and "in no way suggests that the traditional test does not address
28 the Article III requirement of an actual ease or controversy").
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1 True Center also argues that K-Zell’s last—minute-issuance of a covenant not to sue
. 2 is a flagrant abuse of the judicial system and that the dismissal of this action on the second _
3 day of trial is unfair. Doc. #186 at 849. The jurisdictional inquiry, however, focuses on
4 judicial power, not fairness. See Hercules, Inc. v. United States, 516 U.S. 417, 430 (1996)
5 ("[W]e are constrained- by our limited jurisdiction and may not entertain claims ‘based
6 merely on equitable considerations."’) (citation omitted). What is more, dismissal of the
7 remaining claims in this case is not unfair. This is not a case where the plaintiff sought
8 from the start to establish the invalidity of patents and invested substantial resources in
9 that effort only to have the rug pulled out from under it by a last-minute covenant not to
10 _sue. True Center has been largely unsuccessful in its claims against K-Zell and others and
11 has sought repeatedly to expand and modify those claims throughout the course of this
12 litigation. True Center commenced this action before the 201 and 094 patents were even
13 issued, alleging federal false advertising and trademark violations and a host of state law
14 claims against K-Zell and others. See Doc. #1. True Center ultimately lost all of these C .
15 claims. Nearly a year after tiling suit, True Center unsuccessfully sought to expand the U
16 case by moving to add several more state law claims againstdefendants.2 See Docs. ##33,
17 56. True Center eventually was permitted to add declaratory judgment claims conceming
18 the alleged invalidity of the K-Zell patents, but these claims were added only after much
19 litigation on other claims.
20 All of the claims in this case have come from True Center. K-Zell has litigated and
21 overcome the vast majority of claims asserted by True Center. K-Zell has never counter-
22 claimed for infringement of the 201 and 094 patents. K-Zell instead has argued from the
23 inception of the invalidity claims that True Center does not face and has never faced a
24 threat of infringement litigation. The fact that K-Zell made this fact unmistakably clear by
25 _i.. ..
26 2 True Center moved to amend the complaint for a third time more than three years
27 after it tiled suit and more than three months after the Court granted summary judgment in
defendants’ favor on all but the declaratory judgment claims. See Docs. ##139, 165. The
28 Court denied this attempt by True Center to expand the case yet again. I
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