The opinion of the court was delivered by: Kahn, District Judge.
In their First Amendment Complaint ("Amended Complaint"),
Plaintiffs Minds-Eye-View, Inc. ("MEV") and Ford Oxaal ("Oxaal"),
the President of MEV, allege six claims against Defendant
Interactive Pictures Corporation ("IPIX") arising out of alleged
misuse of trade secrets which Plaintiffs provided to the
Defendant. The claims, in order, are (1) breach of contract, (2)
misappropriation of trade secrets, (3) breach of confidence, (4)
fraud in the inducement,
(5) misrepresentation and (6) a claim pursuant to the Declaratory
Judgment Act, 28 U.S.C. § 2201, requesting a declaration that one
of the Defendant's patents is invalid and/or that title to the
patent is held by the Plaintiffs.
Presently pending before this Court is the motion by Defendant
IPIX for an order pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6)
dismissing Count VI, the declaratory judgment claim, or in the
alternative staying proceedings with respect to this claim
pending arbitration. Defendant also moves for an order staying
proceedings with respect to Counts I through V. Because the
requirements for jurisdiction over a declaratory judgment action
are not present, Defendant's motion to dismiss is granted.
Defendant's motion seeking a stay of the proceedings with respect
to Counts I-V is referred to the Magistrate Judge for
For purposes of deciding Defendant's motion to dismiss Count
VI, the Court accepts the allegations of the First Amended
Complaint as true. Plaintiff MEV is a company engaged in the
development and marketing of full-surround imaging technology.
Around December of 1994, Oxaal, who is both President of MEV and
inventor of much or all of the MEV technology at issue, entered
into discussions with representatives of TeleRobotics
International, Inc. ("TRI"), the predecessor corporation of IPIX,
regarding a proposed joint venture to develop certain products
using MEV's full-surround imaging technology and TRI's
interactive technology. However, in a letter dated December 28,
1994, Oxaal stated that before discussions regarding a joint
venture could move beyond the preliminary stage, TRI would have
to enter into a Confidentiality Agreement covering any of MEV's
trade secrets that might be revealed in the course of the
negotiations. On December 28, 1994, the parties entered into a
Confidentiality Agreement. In reliance on the agreement, Oxaal
revealed details of MEV's full-surround imagery generation and
Subsequently, TRI filed U.S. Patent Application, Serial No.
08/494, 599, which Plaintiffs allege covered subject matter
expressly identified in the Confidentiality Agreement as
Plaintiffs' trade secrets. Oxaal was not identified as the
inventor on TRI's patent application. TRI's successor in
interest, Defendant IPIX, later abandoned this patent application
in favor of a Continuation-in-Part Application, Serial No.
08/516,629, which was filed on August 18, 1995 and issued as U.S.
Patent No. 5,764,276 (hereinafter "Patent '276"). Plaintiffs
allege that the subject matter of Patent '276 also includes trade
secrets of the Plaintiffs that were identified in the
In the sixth cause of action of their Amendment Complaint,
Plaintiffs seek a declaratory judgment pursuant to
28 U.S.C. § 2201(a) holding Patent '276 to be invalid or else declaring
Plaintiffs to be owners of title over the patent.
Defendant seeks dismissal of the declaratory judgment claim on
the grounds that this Court lacks subject matter jurisdiction.
"For a district court to have jurisdiction over a declaratory
judgment action, there must be an `actual controversy'". Hunter
Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1326
(Fed.Cir. 1998) (quoting 28 U.S.C. § 2201(a)). This requirement
is identical to the constitutional requirement of Article III
that there be a case or controversy. Id.
To determine whether there is an actual controversy in
declaratory judgment actions involving allegations of patent
noninfringement, invalidity, or unenforceability, the courts
apply a two-step inquiry: "There must be both (1) an explicit
threat or other action by the patentee, which creates a
reasonable apprehension on the part of the declaratory plaintiff
that it will face an infringement suit, and (2) present activity
which could constitute infringement or concrete steps taken with
the intent to conduct such activity." Fina Research v. Baroid
Limited, 141 F.3d 1479, 1481 (Fed.Cir. 1998) (citation and
internal quotations omitted). In this inquiry, the first prong
looks to the patentholder's conduct, the second to that of the
declaratory judgment plaintiff. Hunter Douglas, Inc., 153 F.3d
at 1326. The burden of proving the existence of an actual
controversy is on the party bringing the declaratory judgment
action. See Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 887
(Fed.Cir. 1992); Indium Corp. of America v. Semi-Alloys, Inc.,
781 F.2d 879, 883 (Fed.Cir. 1985).
Turning to whether the first prong is satisfied, Plaintiffs
point to a number of facts which they argue demonstrate that they
have a "reasonable apprehension" that Defendant will initiate an
infringement suit against them. First, they allege that they have
several allowed or pending patents which overlap the claim
coverage of the Defendant's '276 patent. Second, they point to a
recent press release by the Defendant allegedly posted on its
Internet website after Defendant won a favorable judgment in a
patent infringement suit which it brought against another party,
Infinite Pictures, Inc. See Dkt. No. 20, Ex. A.*fn1 Plaintiffs
point in particular to the following statements in the release:
"This is the first court test of our patent portfolio
and the jury has stated loud and clear that IPIX
technology is pioneering, unique, and protected,"
said Jim Phillips, CEO of Interactive Pictures. "A
judicially tested and vindicated portfolio makes
Interactive Pictures a much stronger company and
gives us a tremendous advantage in penetrating new
markets and growing our company."
Id. The release further stated that "[a]s a result of the
decision, Interactive Pictures is now the only company in the
United States with the rights to use a wide-angle fisheye lens to
create immersive photographs." Id. Plaintiffs argue that this
press release contains an implicit threat of litigation against
all potential competitors. Finally, Plaintiffs argue that
reasonable apprehension is further supported by the fact that
Plaintiffs have informed IPIX of their intentions to enter "the
marketplace" in a cease-and-desist letter directing the Defendant
not to use any technology owned by the Plaintiffs.
The press release provides some evidence that the Defendant
would bring suit to enforce its patents where it believed that
those patents have been infringed. However, a patent owner's
willingness and capacity to enforce its patent rights, while
pertinent to a reasonable apprehension inquiry, is not
conclusive. West Interactive Corp. v. First Data Resources,
972 F.2d 1295, 1298 (Fed.Cir. 1992). There can, in general, be no
reasonable apprehension of suit where the patent holder has not
indicated any opinion with regard to whether the actual plaintiff
who seeks the declaratory judgment has itself infringed a
relevant patent. Cf. Scholle Corp. v. Blackhawk Molding Co.,
Inc., 133 F.3d 1469, 1472 n. 1 (Fed. Cir. 1998) (holding that a
party who simply states that it is unwilling to offer an
infringement opinion does not create reasonable apprehension of
suit). Thus, evidence that a patent holder will bring suit where
it perceives its patent to be infringed has been held to create a
reasonable apprehension of suit where additional conduct by the
patent holder indicated that it specifically found the
declaratory judgment plaintiff's conduct to be infringing or
where the product produced by the plaintiff was identical to the
product involved in the prior litigation. See Arrowhead Indus.
Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 737 (Fed.Cir.
1988) (finding plaintiff had a reasonable apprehension where
defendant had previously brought a suit against a third-party to
enforce a patent, and where defendant had sent letter to
plaintiff indicating intent to enforce its patent against
plaintiff by litigation); Dupont Merck Pharmaceutical v.
Bristol-Myers Squibb, 62 F.3d 1397, 1401 (Fed. Cir. 1995)
(finding that maker of generic heart drug based on defendant's
patent had reasonable apprehension where defendant had previously
sued other generic drug companies attempting to produce the same
drug and where defendant had sent plaintiff a letter relating to
defendant's patent). It is undisputed that Defendant IPIX has
made no charge or suggestion to the ...