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Judge Burke recommends dismissing declaratory judgment claims in part

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In Intel Corporation v. Future Link Systems, LLC, 14-377-LPS (D. Del. Feb. 12, 2015), Magistrate Judge Christopher J. Burke addressed Future Link’s motion which sought to dismiss Intel’s declaratory judgment complaint related to nine patents on various grounds. In particular, Future Link alleged “(1) that the Complaint should be dismissed for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), as Intel does not have standing to bring the declaratory judgment claims at issue; (2) that Intel’s claims regarding direct and indirect non-infringement should be dismissed for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6); (3) that Intel’s claims regarding a license defense and the doctrine of patent exhaustion also fail to state a claim pursuant to Rule 12(b)(6); and (4) that the Court should exercise its inherent authority under the Declaratory Judgment Act to dismiss the suit.” Id. at 6.

Judge Burke recommended granting Future Link’s motion, in part. Specifically, Judge Burke recommended that the court dismiss Counts 1-14 and 17-20 of the Complaint.  Judge Burke further recommended that the motion be denied as to Count 16, and granted in part with respect to Count 15.  In particular, with respect to Count 15, Judge Burke recommended that the motion to dismiss be granted with respect to indirect infringement of all claims of the ’0576 patent and direct infringement of claims 17-19, and denied with respect to direct infringement of claims 1-16 and 20-21. The dismissal of these claims was recommended to be without prejudice.  Id. at 29-30.

As Judge Burke explained, “Intel’s first theory as to why subject matter jurisdiction exists relates to the infringement allegations Future Link made against Intel’s customers Dell, HP and Promise” in various letters. See id. at 2-5, 8.  As to direct infringement of certain claims of one patent at issue, the ’0576 Patent, Judge Burke found subject matter jurisdiction to exist.  Judge Burke explained that “since it is reasonable to infer that Future Link has accused Dell, HP, and Promise of infringement based solely on the use and sale of Intel components, there is necessarily an implied accusation that Intel itself has also directly infringed the 18 arrangement claims. This is because Intel, in both making these components and selling them to its three customers, would have been performing its own independent acts of infringement (assuming that these components are, in fact, infringing).” Id. at 15. On the other hand, Judge Burke found Intel’s allegations as to direct infringement of the other eight patents at issue insufficient to support subject matter jurisdiction. Judge Burke explained that “[h]ere, at most these allegations indicate that (1) Intel’s customers have been accused of infringement, and (2) Intel produces at least some (unspecified number of) ‘components’ that are the subject of these accusations. But unlike in Arris or DataTern, here there are: (1) no allegations that Future Link had ever directly accused Intel of infringement of these eight patents; (2) no allegations that Future Link ever communicated with Intel regarding Intel’s role in Dell, HP or Promise’s asserted acts of infringement; and (3) again, no allegations that Future Link specifically listed Intel’s own products by name when discussing its customers’ alleged infringement of the patents.” Id. at 20. Judge Burke also found that the complaint did not provide sufficient allegations to establish subject matter jurisdiction with respect to induced or contributory infringement.  Id. at 17-18, 23-24.

Judge Burke then turned to Intel’s second theory of subject matter jurisdiction, which was based on Intel’s alleged indemnity obligations to its customers.  Judge Burke found this theory insufficient to support subject matter jurisdiction, as it was “not clear enough from the Complaint (and the Dell, HP and Promise Letters) that Future Link was actually putting Intel components at issue.” As Judge Burke explained, Intel did not cite any authority that “courts have found subject matter jurisdiction to exist when it was unclear from the Complaint that a patent holder’s allegations against the customer in fact related to the sale or use of the supplier’s equipment in the first place.” Id. at 25.

Lastly, Judge Burke recommended denying Future Link’s motion to dismiss for failure to state a claim of non-infringement.  As to the claims at issue, Judge Burke noted that “[a]lthough Intel’s allegations in Count 15 are sparse as to the products at issue, the remainder of its Complaint provides needed context.” Id. at 28.

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