Assurance Not to Sue Did Not Avoid Declaratory Judgment Jurisdiction

Thanks to JurisNotes.com (subscription only) for abstracting and linking to Digital Packet Licensing, Inc. v. AT & T (ND Tex. February 27, 2006) where U.S. District Court Judge Terry Means in Fort Worth, Texas denied Digital Packet's motion to dismiss for lack of Declaratory Judgement jurisdiction based upon the aprehesion of sut created by the following patent infringement notification letter:

Please understand that [DPL] has no plans to sue your company. In part due to other ongoing litigation, [DPL] has not fully investigated your company’s products or
services to determine the extent to which any claims of the ‘485 Patent may be infringed by your company. However, we do believe that at least your company’s Packet Voice Gateway Communication Server 2000, and other VoIP products
may infringe one or more of the claims of the ‘485 Patent, the ‘136 Patent and the ‘707 Patent either directly or by contributing to or inducing the direct infringement of others.

At this time, we merely want to make sure that you are aware of the ‘485, ‘136 and ‘707 Patents so you may appropriately consider the potential relevance of the
patent claims to your company’s products and services. We would be happy to discuss a preferred licensing arrangement under the patents with you or your counsel. Please note, however, that this preferred licensing window may only be open to you for a limited time. If, on the other hand, you believe that your company does not need to be licensed under these patents, it would be most helpful if you would provide us with some insight into your reasoning.

According to the opinion, "DPL’s self-serving assurances regarding its present intent aside, and given the timing of the 2005 letter, its content, and DPL’s related litigation, there is a future threat supporting an objectively reasonable apprehension. See Teva Pharms.
USA, Inc. v. Pfizer Inc., 395 F.3d 1324, 1342-43 (Fed. Cir. 2005):"

The 2005 letter did not contain an express charge of infringement; in fact, it specifically stated that there were no plans to sue Nortel, now AT&T. (Nortel’s Mot. Dismiss Ex. A. (letter).) See Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888-89 (Fed. Cir. 1992) (“We agree with Amoco that a statement that Shell's activities ‘fall within’ Amoco's claims in the context of the parties' licensing negotiations can hardly be considered an express charge of infringement.”). Because there is no express charge of infringement, the Court must review the totality of the circumstances at the time of Nortel’s commencement of this suit.

The 2005 letter certainly indicated DPL’s intent to enforce its patents. It informed Nortel of DPL’s patent ownership, indicated that DPL was currently enforcing the ‘485 patent in an infringement suit in this Court, stated DPL’s belief that Nortel’s products may infringe DPL’s patents, and offered to Nortel the opportunity to
discuss licensing arrangements.

Moreover, the infringement suit touches directly upon Nortel’s interests. Though Nortel is not a defendant in the infringement suit, Nortel’s customers are. “Related litigation may be evidence of a reasonable apprehension.” Shell Oil, 970 F.2d at 888.
Furthermore, in bolstering its claims in the infringement suit, DPL specifically referred to those customers’ uses of Nortel products. An example is a letter from DPL to infringement-suit defendant Sprint Corporation (“Sprint”) which stated:
"Our investigation reveals that Sprint sells many types of phone service that exploit the claimed voice-over-packet system of the ‘485 patent. . . . The attached claim charts are exemplary and represent how calls marketed by Sprint may be serviced in a way that infringes the ‘485 patent." (Pls.’ App. at 121.)

Attached to the claim chart was a Nortel press release discussing Nortel’s “network migration” with Sprint through its “supply[] to Sprint [of] the key elements required for a carriergrade Voice over IP network.” (Id. at 192.)

The infringement suit is undoubtedly related to Nortel’s claims for declaratory relief.
Nortel’s “network migration” with Sprint relates to the very type.of system through which Sprint allegedly infringed DPL’s patents--a voice-over packet system.
Furthermore, though the literature referring to Nortel is only “exemplary” and represents how Sprint’s services “may” infringe the ‘485 patent, DPL’s reliance on Sprint’s use of Nortel’s technology, combined with the 2005 letter, certainly could create an objectively reasonable apprehension on Nortel’s part that it was next to be
sued.

An “accusation [of infringement] need not be made directly to the declaratory judgment plaintiff, but may be made to its customers or the industry at large.” Nippon Electric Glass Co. v. Sheldon, 489 F.Supp.119, 121 (S.D.N.Y. 1980); see also Airship Indus. (UK) Ltd. v. Goodyear Tire & Rubber Co., 643 F.Supp. 754, 759 (S.D.N.Y. 1986) (same) (quoting Nippon). Such a conclusion would only be strengthened by DPL’s statements in the 2005 letter that it believed Nortel may
be infringing DPL’s patents. It is worth noting that at least one of the Nortel elements used by Sprint (as stated in the press release)--the Communication Server 2000--is referenced by DPL in the 2005 letter as possibly infringing DPL’s patents.

In addition, the related litigation (the infringement suit) is not against unrelated third parties. See W. Interactive Corp. v. First Data Res., Inc., 972 F.2d 1295, 1298 (Fed. Cir. 1992); Am. Dental Techs. v. Kreativ, Inc., CIVIL ACTION NO. C-97-374, 1997 U.S. Dist. LEXIS 21579, at *8 (S.D. Tex. Dec. 5, 1997). And, DPL’s commencement of the infringement suit establishes DPL’s willingness and capacity to enforce its patent rights. See W. Interactive, 972 F.2d at 1298 (citing Arrowhead, 846 F.2d at 737). Plus, given all of these facts, Nortel would not have been unreasonable in viewing
the 2005 letter as a method for strong-arming Nortel into beginning licensing-agreement negotiations with DPL.