The opinion of the court was delivered by: Judge Sylvia H. Rambo
This case arises out of a dispute over whether some of Plaintiff QRG, Ltd.'s ("QRG") products infringe Defendant Nartron Corporation's ("Nartron") patents. QRG seeks a declaratory judgment by the court, declaring that its products do not violate Nartron's patents (U.S. patents: 4,731,548; 4,758,735; 4,831,279; 5,087,825; 5,796,183 ("patents")). Nartron has filed this motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), claiming that this court lacks subject matter jurisdiction. Nartron alleges that jurisdiction is lacking because no case or controversy exists. Since the facts support a finding that a case or controversy does exist with regard to at least one product and because it is within the court's declaratory judgment discretion, this court will deny Nartron's motion to dismiss in part.*fn1
QRG is a corporation with its principal place of business in England that also maintains an office in Pittsburgh, Pennsylvania. Nartron is a corporation with its principal place of business in Michigan.
The parties have conducted business in the past and were communicating during the end of 2001. Nartron sent a letter to QRG, dated November 27, 2001, referencing the patents it holds and addressing QRG's specific QProx, QTouch, and QLevel products. (Doc. 22, Ex. G.) In the brief correspondence, Nartron wanted to bring QRG's attention to a possible conflict between its own patents and QRG's products. (See id.) The letter further notes a future possibility of Nartron licensing QRG products and asks for QRG's timely attention to the possible conflict. (See id.) QRG responded with correspondence dated January 2, 2002, claiming it had reviewed the patents and did not see possible infringement with its products. (Doc. 23, Ex. 3.) QRG invited Nartron's reply detailing the specific infringement issues. (See id.) Nartron replied with correspondence dated April 16, 2002, disagreeing with QRG's assessment and claiming QRG's product was "obviously an infringement of [its] patented technology." (Doc. 23, Ex. 5.) Nartron also notified QRG of its intent "to pursue this claim of infringement and suggest that [QRG] immediately contact [Nartron's] attorney." (Id.)
In addition, QRG alleges Nartron has repeatedly made oral and written threats of suit for patent infringement. (Declaratory J. Compl., Doc. 1 ¶ 7.)
Both parties agree on the procedural posture of this case. On or about April 13, 2006, QRG filed a declaratory judgment suit against Nartron in the United States District Court for the Western District of Pennsylvania. On May 8, 2006, Nartron filed a motion to dismiss for lack of personal jurisdiction. On September 7, 2006, that motion was denied and the court further ordered the case transferred to the United States District Court for the Middle District of Pennsylvania.
On November 1, 2006, Nartron filed a motion to dismiss for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), claiming that no case or controversy exists. Both sides have briefed the issue and the matter is ripe for disposition.*fn2
II. Legal Standard - 12(b)(1) Motion to Dismiss
" 'A motion to dismiss under Rule 12(b)(1) challenges the jurisdiction of the court to address the merits of the plaintiff's complaint.' " Vieth v. Pennsylvania, 188 F. Supp. 2d 532, 537 (M.D. Pa. 2002) (quoting Ballenger v. Applied Digital Solutions, Inc., 189 F. Supp. 2d 196, 199 (D. Del. 2002)). The motion should be granted where the asserted claim is "insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy." Coxson v. Pennsylvania, 935 F. Supp. 624, 626 (W.D. Pa. 1996) (citing Growth Horizons v. Delaware County, 983 F.2d 1277, 1280-81 (3d Cir. 1993)).
A motion to dismiss under Rule 12(b)(1) may present either a facial or factual challenge to subject matter jurisdiction. See Carpet Group Int'l v. Oriental Rug Imps. Ass'n, 227 F.3d 62, 69 (3d Cir. 2000). This case presents a facial challenge because Defendant does not dispute, at this juncture, the jurisdictional facts alleged in the complaint. See 2 James Wm. Moore et al., Moore's Federal Practice ¶ 12.30 (3d ed. 1999) (explaining the difference between a facial and factual challenge to subject matter jurisdiction pursuant to Rule 12(b)(1)). Therefore, the court must accept the facts alleged in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Zinermon v. Burch, 494 U.S. 113, 118 (1990); Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000).
Finally, in the Third Circuit, a court must grant leave to amend before dismissing a complaint that is merely deficient. See, e.g., Weston v. Pennsylvania, 251 F.3d 420, 428 (3d Cir. 2001); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000). "Dismissal without leave to amend is justified only on the grounds of bad faith, undue delay, prejudice, or futility." Alston v. Parker, 363 F.3d 229, 236 (3d Cir. 2004) (citations omitted).
Nartron argues this court lacks jurisdiction because no case or controversy exists. First, Nartron argues that the plaintiff in this case is not the party that it has conducted business with in the past. It avers that "QRG, Ltd." and "Quantum Research Group, Ltd." are distinct entities and that it has only been acquainted with Quantum Research Group, Ltd. in the past, not QRG, Ltd. Nartron posits that no case or controversy could exist when this suit involves a party with which it has never conducted business. Second, Nartron alleges that no case or controversy exists under the two-prong test applicable to patent infringement declaratory judgment actions. Nartron ...