Opinion
CASE NO. 4:09CV1243.
January 4, 2010
ORDER
This matter is before the Court upon a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for Lack of Subject Matter Jurisdiction filed by Defendants EMSAT Advanced Geo-Location Technology, LLC and Location Based Services, LLC (collectively "EMSAT"). (Dkt. # 7). Plaintiff Google, Inc., ("Google") has filed a Response (Dkt. # 8) and EMSAT has filed a Reply (Dkt. # 9).
I. BACKGROUND
The Complaint in the instant matter was filed on May 29, 2009. (Dkt. # 1). In the Complaint, Google requests a declaratory judgment, seeking "a declaration of its rights against threats of patent infringement litigation made by Defendants" concerning one of Google's products, Google Maps. (Dkt. # 1, at ¶ 4). The patent alleged to be infringed is U.S. Patent No. 7,289,763 ("the `763 Patent"), held by EMSAT. Pursuant to the Declaratory Judgment Act ("DJA"), 28 U.S.C. § 2201, Google seeks a declaration that Google Maps does not infringe the `763 Patent of EMSAT (Count I), and that the `763 Patent is invalid for failure to satisfy the requirements for patentability (Count II).
In a related case, EMSAT Advanced Geo-Location Technology, LLC and Location Based Services, LLC v. T-Mobile USA, Inc., N.D. Ohio Case No 4:08CV00817 ("the T-Mobile Litigation"), EMSAT has accused T-Mobile USA, Inc. ("T-Mobile") of patent infringement. EMSAT alleges that T-Mobile is infringing the `763 Patent by its use and sale of "mobile E911 services," including Google Maps (Count IV). (Case No. 4:08CV00817, Dkt. # 6, at 6). In its Answer, T-Mobile submitted counterclaims seeking a declaratory judgment that its products do not infringe any of EMSAT's patents, including the `763 Patent, (Counterclaim I) and that the patents, including the `763 Patent, are invalid (Counterclaim II). (Case No. 4:08CV00817, Dkt. # 18, at 7-8).
On July 31, 2009, in the instant matter, in lieu of filing an Answer to the Complaint, EMSAT filed a Motion to Dismiss pursuant to Rule 12(b)(1) for lack of Subject Matter Jurisdiction. (Dkt. # 7). The instant Motion to Dismiss argues that this Court should use its substantial and unique discretion to decline to exercise jurisdiction over the declaratory judgment action.
II. LAW AND ANALYSIS
A. Standard of Review
A motion to dismiss pursuant to Rule 12(b)(1) challenges the court's subject matter jurisdiction. Rule 12(b)(1) motions to dismiss fall into two general categories: facial attacks and factual attacks. Fed.R.Civ.P. 12(b)(1); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack challenges the pleading itself. On such an attack, the Court must take all material allegations in the complaint as true, and construe them in the light most favorable to the nonmoving party. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134-35 (6th Cir. 1996).
A factual attack is a challenge to the factual existence of subject matter jurisdiction. "On such a motion, no presumptive truthfulness applies to the factual allegations, and the court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Id. (internal citations omitted). In reviewing such motions, a district court has wide discretion to allow affidavits, documents, and even conduct a limited evidentiary hearing if necessary. Ohio Nat'1 Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990).
A motion to dismiss in a declaratory judgment action is considered a factual attack on subject matter jurisdiction. 3D Sys. v. Envisiontec, Inc., 575 F. Supp. 2d 799, 804 (E.D. Mich. 2008). Therefore, the Court need not afford a presumption of truthfulness to the pleadings. Dow Jones Co. v. Harrods, Ltd., 237 F. Supp. 2d 394, 407 n. 43 (S.D.N.Y. 2002) (aff'd 346 F.3d 357 (2d Cir. 2003)).
B. Motion to Dismiss for Lack of Subject Matter Jurisdiction
The DJA does not confer jurisdiction on federal courts, and therefore, Google's Complaint must have an independent basis for subject matter jurisdiction. Toledo v. Jackson, 485 F.3d 836, 839 (6th Cir. 2007); Heydon v. MediaOne of S.E. Mich., Inc., 327 F.3d 466, 470 (6th Cir. 2003). District courts have federal question jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. In the instant matter, this Court has subject matter jurisdiction because Google "seeks a declaration of its rights against threats of patent infringement," which arises under a federal law, Title 35 of the United States Code. (Dkt. # 1, at ¶ 4).
1. Case or Controversy
Once it has been established that a court has subject matter jurisdiction, the court must determine that the claim is justiciable, meaning there must be a "case of actual controversy." Genentech v. Eli Lilly Co., 998 F.2d 931, 936 (Fed. Cir. 1993). A declaratory judgment claim is justiciable 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 to warrant the issuance of a declaratory judgment." Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008) (quotingMedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)). This standard, recently altered by MedImmune, "enhances the availability of declaratory judgment jurisdiction in patent cases." 3D Sys., 575 F. Supp. 2d at 802.
In the instant matter, Google alleges that EMSAT identified Google Maps as infringing the `763 patent in the T-Mobile Litigation. (Dkt. # 1, at ¶ 9). While EMSAT claims that it never accused Google of infringing its patent, EMSAT admits that it has accused T-Mobile of infringement of the `763 Patent because of its use and sale of Google Maps. (Dkt. # 7, at 2). Because Google created the Google Maps technology alleged to be infringing EMSAT's `763 Patent in the T-Mobile Litigation, there is a substantial controversy sufficient to satisfy the constitutional requirement.
2. Discretionary Relief
EMSAT argues in its Motion that this Court should decline to exercise jurisdiction over the dispute. "A court may lack subject-matter jurisdiction, or may properly exercise its discretion to deny declaratory judgment, in cases where a more appropriate form of relief does exist." Dow Jones, 237 F. Supp. 2d at 442.
Under the DJA, a court "may declare the rights and other legal relations of any interested party seeking such declaration."Travelers Indem. Co. v. Bowling Green Prof'1 Assocs., PLC, 495 F.3d 266, 271 (6th Cir. 2007) (citing 28 U.S.C. § 2201(a) (2006)). However, the DJA "confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995); Allstate Ins. Co. v. Mercier, 913 F.2d 273, 277 (6th Cir. 1990).
In the Sixth Circuit, there are five factors a court should consider when deciding whether to exercise its discretion to hear a case under the DJA. Those five factors are: (1) whether the declaratory action would settle the controversy; (2) whether the declaratory action would serve a useful purpose in clarifying the legal relations in issue; (3) whether the declaratory remedy is being used merely for the purpose of procedural fencing or to provide an arena for a race for res judicata; (4) whether the use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether there is an alternative remedy which is better or more effective. Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 554 (6th Cir. 2008) (citing Grand Trunk R.R. Co. v. Consol. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984)).
a. Resolution of the Controversy
In deciding whether the declaratory judgment action would settle the controversy, the Court considers the competing policy considerations of consolidating litigation into one court versus permitting a party to determine its legal obligations as quickly as possible. Scottsdale, 513 F.3d at 555.
Generally, in deciding whether to decline jurisdiction because of concurrent proceedings in another federal court, the Court is faced with proceedings involving the same parties and issues. See Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1463 (Fed. Cir. 1990). While the issues are similar in the instant matter and the T-Mobile Litigation, only EMSAT is a party to both proceedings. Exercising our discretion to entertain the declaratory judgment action would settle the controversy as between Google and EMSAT because Google is not currently a party to the T-Mobile Litigation. It could not settle the entire T-Mobile Litigation, however, because that case involves additional parties and issues. Nevertheless, because exercising jurisdiction would at least determine Google's liability to EMSAT with respect to the `763 Patent, the first factor favors exercising jurisdiction.
b. Useful Purpose
The second factor this Court must consider is whether the declaratory action would serve a useful purpose in clarifying the legal relations at issue. Declaratory relief is meant to serve both an adjudicative and preventative role, to "avoid the dispute escalating into additional wrongful conduct." Dow Jones, 237 F. Supp. 2d at 405. However, where "complex factual issues are present and the action parallels" another action, declaratory judgment may be inappropriate. Am. Home Assurance Co. v. Evans, 791 F.2d 61, 64 (6th Cir. 1986). Especially in the context of complex intellectual property infringement disputes "it would be particularly inappropriate . . . to invoke a statute whose primary aim is to promote swift and efficient declaration of rights and to bring finality to legal conflicts." Dow Jones, 237 F. Supp. 2d at 435-36.
The legal and factual claims at issue in the instant matter are identical to some of those pending in the T-Mobile Litigation, i.e., whether Google Maps infringes the `763 Patent and whether the `763 Patent is valid. A court may decline jurisdiction when the same issue is presented in another forum and can be satisfactorily adjudicated in that other forum. Empire Indem. Ins. Co. v. Special Foster Care. Servs., 908 F. Supp. 483, 485 (N.D. Ohio 1995).
Because the same issues are presented in both forums, there are two possible outcomes. Either this Court could reach the same conclusion as that of the T-Mobile Litigation, and "the declaration would have been unnecessary and the federal litigation a waste of judicial resources," or the two courts could disagree, "resulting in inconsistent judgments." Bituminous Cas. Corp. v. J. L. Lumber Co., 373 F.3d 807, 813-14 (6th Cir. 2004). Neither of these outcomes are desirable, because "[t]he purpose of preventing multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters is as valid for declaratory action as any other."Eli Lilly, 998 F.2d at 938 (internal citations omitted).
Additionally, courts have held that declaratory judgments do not serve a useful purpose where there is a "pending coercive action, filed by the natural plaintiff," which encompasses all of the same issues as the declaratory judgment action. AmSouth Bank v. Dale, 386 F.3d 763, 787 (6th Cir. 2004). Coercive actions are generally preferred because they address harms that have already occurred rather than potential future harm as in declaratory judgment actions. Moreover, "this is not a situation in which a declaratory plaintiff will suffer injury unless legal relations are clarified," because T-Mobile is actually promoting Google's interest by arguing in the T-Mobile Litigation that Google Maps does not infringe the `763 Patent, rather than acting "at the peril" of Google. Id. at 786.
Because the same issues are presented in the instant matter as in the T-Mobile Litigation, and can be satisfactorily adjudicated in that forum, and because the T-Mobile Litigation is a coercive suit by the natural plaintiff, a declaratory judgment in the instant matter would not serve a useful purpose. Therefore, the second factor favors this Court declining to exercise its jurisdiction.
c. Race for Res Judicata
The third factor this Court must consider is whether the declaratory remedy is being used merely for the purpose of procedural fencing or to provide an arena for a race for res judicata.
In the instant matter, it cannot be said that Google has filed this declaratory judgment action for the purpose of procedural fencing because Google filed this suit in the same district as the T-Mobile Litigation. That the T-Mobile Litigation is before another judge in this district is simply a matter of coincidence. This is not a situation in which the declaratory plaintiff hurried to file a lawsuit in order to obtain a more favorable forum for itself. However, when there are two competing lawsuits, the first to be filed generally has priority absent special circumstances. Kmart Corp. v. Key Indus., 877 F. Supp. 1048, 1053 (E.D. Mich. 1994).
Similarly, this action was not filed as an arena for a race for res judicata because res judicata only applies to multiple lawsuits involving the same parties. However, while res judicata is not at issue, if this Court exercises its jurisdiction over the instant matter, it may result in a race for collateral estoppel. Because the policy behind both res judicata and collateral estoppel seeks to prevent parties from litigating the same issues in multiple actions, a possible race for collateral estoppel would also counsel this Court against exercising its jurisdiction.
Exercising jurisdiction in the instant case could result in a race for collateral estoppel because the issues are similar to the issues in the T-Mobile Litigation. Should Google prevail in its declaratory judgment action, T-Mobile may try to offensively preclude EMSAT from litigating the same issues, i.e. whether Google Maps infringes the `763 patent. Conversely, if the T-Mobile Litigation is concluded first and T-Mobile prevails in the lawsuit against EMSAT, Google may attempt to offensively preclude EMSAT from relitigating the issues.
Therefore, from Google's point of view there is no risk to bringing a separate action because it cannot be bound as a result of the T-Mobile litigation, but may use a judgment in T-Mobile's favor to its advantage. EMSAT is therefore forced to absorb all the risk, because a loss in either lawsuit may result in it being precluded from relitigating the issues in the other pending suit. While a court in its discretion may decide not to allow T-Mobile or Google to use offensive non-mutual preclusion against EMSAT, the mere possibility informs our decision of whether to exercise our jurisdiction in the instant matter. Because of the possibility of a race to collateral estoppel, the third factor favors declining to exercise jurisdiction over the declaratory judgment action.
d. Conflict with Another Jurisdiction
The fourth factor is whether the use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction. However, because both the instant matter and the T-Mobile Litigation are pending in federal court this factor is irrelevant to our analysis. See Mt. Hawley Ins. Co. v. Packers Sanitation Servs., No. 06-2569, 2007 U.S. Dist. LEXIS 47382, at *17 (N.D. Ohio June 22, 2007).
e. Adequate Alternative Remedy
The fifth factor this Court must consider in deciding whether to exercise its jurisdiction is whether there is an alternative remedy which is better or more effective. If there is a better or more effective remedy, a court has discretion to decline jurisdiction "whether or not further relief is or could be sought." Micron Tech., 518 F.3d at 903.
Since both the instant matter and the T-Mobile Litigation must resolve whether Google Maps infringes the `763 Patent, "clearly it would be a waste of judicial resources to litigate this dispute in more than one forum." Internet Transaction Solutions, Inc. v. Intel Corp., No. 06-035, 2006 U.S. Dist. LEXIS 29532, at *21 (S.D. Ohio May 8, 2006). It would be more effective to resolve this question in the T-Mobile Litigation than in this Court because the T-Mobile Litigation was filed first, it involves a coercive lawsuit rather than a declaratory action, and because discovery has already begun.
If Google would like to have a court determine its liability to EMSAT, there are two remedies which Google could obtain without pursuing a declaratory judgment action in this Court and which would avoid litigating the same issue in more than one forum. The first alternative remedy would have been to consolidate the instant declaratory judgment action with the T-Mobile Litigation. Rule 42(a) allows the court, upon motion of the parties, to consolidate two actions if they involve a common question of law or fact. Fed.R.Civ.Pro. 42(a). Although the instant matter has been pending since May 29, 2009, and involves common questions of law and fact, neither party has moved to consolidate it with the T-Mobile Litigation.
The second alternative remedy would be for Google to intervene in the T-Mobile Litigation pursuant to Rule 24 rather than bringing a separate declaratory judgment action. Rule 24 allows parties to intervene either of right or permissively if they have an interest in the litigation. Under Rule 24(a) a party can intervene of right if they submit an application that (1) is timely, (2) shows an interest in the subject matter of the action, (3) shows that the protection of the interest may be impaired by the disposition of the action, and (4) shows that the interest is not adequately represented by an existing party. Fed R. Civ. Pro. 24(a). Rule 24(b) allows permissive intervention, in the court's discretion, by any party sharing a common question of law or fact with the main action.
Because there are better or more effective remedies, the fifth factor favors this Court declining to exercise its jurisdiction. Rather than pursuing duplicative litigation in this Court, either consolidation or intervention would be more appropriate remedies. This factor favors dismissal even if the parties cannot or choose not to pursue the more effective remedies. Micron Tech, 518 F.3d at 903.
Pursuant to Local Rule 3.1(b)(3) this Court requested a transfer of the instant matter to Judge Adams, in front of whom the T-Mobile Litigation is pending, but Judge Adams declined to accept the transfer.
III. CONCLUSION
As explained above, while the first factor favors exercising jurisdiction and the fourth factor is irrelevant, the second, third, and fifth factors all favor dismissal. A declaratory judgment action will not be useful because there is a pending coercive action, the case provides an arena for a race for collateral estoppel, and there are better and more effective remedies.
Therefore, for the foregoing reasons, Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction is hereby GRANTED. (Dkt. # 7). The instant action is hereby DISMISSED.