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Magistrate Judge Burke Grants-in-Part, Denies-in-Part Motion to Dismiss for Lack of Declaratory Judgment Jurisdiction

Future Link is a patent owner and a declaratory judgment defendant in this case. In 2013, Future Link sent demand letters regarding nine patents to Dell, HP, and other computer manufacturers. The demand letters implicated various CPUs and other components manufactured by Intel. Intel, therefore, filed a declaratory judgment action seeking judgment of invalidity and that Intel’s components do not infringe Future Link’s patents and that its customers do not infringe Future Link’s patents directly or indirectly by using the Intel-provided components. Intel Corp. v. Future Link Systems, LLC, C.A. No. 14-377-LPS, Report and Recommendation at 2-3 (D. Del. Mar. 31, 2016). Following resolution of an earlier motion to dismiss for lack of jurisdiction and Intel’s filing of an amended complaint, Future Link again moved to dismiss several of Intel’s claims. The previous motion to dismiss “concerned the existence of subject matter jurisdiction over Intel’s requests for non-infringement declarations regarding Intel’s own products, [which were] no longer an issue here . . . [because] Future Link filed counterclaims of infringement against Intel regarding the Future Link patents . . . . Thus, there is now no dispute that jurisdiction exists with respect to the question of Intel’s infringement of the 17 patents-in-suit.” Id. at 10.

Instead, Magistrate Judge Burke explained, “the crux of the dispute presented by Future Link’s Second and Third Motions is whether the Court has subject matter jurisdiction to issue declarations regarding the infringement of Intel’s customers’ products which include accused Intel components.” Id. This question, in turn, depended on whether Intel adequately alleged an obligation to indemnify its customers for infringement. For those customers (aside from Dell and HP) for whom Intel did not allege an indemnification obligation, Judge Burke was “not persuaded that even if the District Court must adjudicate Intel’s indirect infringement of the asserted patents, an actual controversy exists with respect to the direct infringement of all of Intel’s innumerable and largely unidentified customers whose products incorporate and use the Intel products at issue.” Id. at 12. Judge Burke continued: “Intel’s theory here-that Future Link’s allegations of direct infringement by Intel’s customers, a predicate to Future Link’s claims of indirect infringement against Intel, effectively create declaratory judgment jurisdiction as to all of Intel’ s unnamed customers’ products that use or incorporate any accused Intel product-is belied by well-settled law. One way to see that this is so is to recognize that the Declaratory Judgment Act requires Intel to show that a ‘substantial controversy’ exists ‘of sufficient immediacy and reality to warrant issuance of a declaratory judgment.’ And yet Intel’s declaratory judgment claims – to the extent they seek to sweep in a declaration that all of its customers do not infringe the patents-in-suit due to their ‘incorporation or use’ of any Intel accused product – lack any real ‘immediacy and reality.’ That is because indirect infringement claims do not require showings of direct infringement by each and every one of the third party direct infringers in question.” Id. at 15.

Regarding Dell and HP, however, Judge Burke found jurisdiction based on “Intel’s agreements with Dell and HP, attached as exhibits to Intel’s [amended complaint, which] state that Intel will indemnify Dell and HP as to two sets of patent claims: (1) claims that an Intel product ‘when used alone and not together with or in combination with any other product’ infringes a patent; and (2) certain claims that Intel products in combination with each other or in combination with other devices infringe a patent, so long as certain conditions are met.” Id. at 26. “[O]ne can see that the allegations in the Future Link demand letters are broad enough to plausibly fall within the ambit of the types of claims for which Intel has agreed to indemnify Dell and HP (both as to claims that certain Intel hardware products infringe when used alone, or that certain Intel products infringe when used in combination with other products). To the extent that Future Link asserts that more than this is required, it asks too much of Intel.” Id. at 30.

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