Posted On: April 9, 2012 by Robert Vrana

Judge Andrews Reviews Objections to Counterclaims and Applies New Federal Circuit Standard

In Quantum Loyalty Systems Inc. v. TPG Rewards Inc., C.A. No. 09-22-RGA (D. Del. April 4, 2012), Judge Andrews reviewed the findings of a Magistrate Judge, after the plaintiffs filed objections to those findings.  Judge Andrews first found that two of the plaintiffs’ objections were subject to review for abuse of discretion and that there had not been such an abuse.  Therefore, those objections were denied.  Id. at 1-2.

He then considered the plaintiffs’ two objections that the Magistrate Judge’s rulings were “contrary to law.”  The first of these was the Magistrate Judge’s decision that the defendants’ counterclaims for noninfringement and invalidity of patents related to the patent-in-suit did not state a “case or controversy.”  After the Magistrate Judge’s decision, the Federal Circuit decided Streck, Inc. v. Research & Diagnostic Systems, Inc., 665 F.3d 1269, 1283 (Fed. Cir. 2012), in which it held that “a counterclaimant must show a continuing case or controversy with respect to withdrawn or otherwise unasserted claims.”  Because the defendants had not met this standard, Judge Andrews found the plaintiff’s objection well-taken and dismissed the counterclaims.  Id. at 2.

Finally, Judge Andrews denied the plaintiffs’ motion to transfer cybersquatting counterclaims to the Southern District of New York.  Although the parties had previously settled litigation there, their settlement agreement provided only that issues concerning that court’s final judgment were subject to the jurisdiction of that court.  The present controversy related to a different domain name and would involve only issues concerning the settlement agreement rather than the previous judgment.  Therefore, there was no basis to transfer the counterclaims.  Id.

Quantum Loyalty Systems Inc. v. TPG Rewards Inc., C.A. No. 09-22-RGA (D. Del. April 4, 2012).