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QRG, Ltd. v. Nartron Corp.

August 1, 2007

QRG, LTD., PLAINTIFF,
v.
NARTRON CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Judge Sylvia H. Rambo

JURY TRIAL DEMANDED

MEMORANDUM

This case arises out of a dispute over whether some of Plaintiff QRG, Ltd.'s ("QRG") products infringe some of Defendant Nartron Corporation's ("Nartron") patents. QRG seeks a declaratory judgment by the court, that its QProx, QTouch, QSlide, QWheel, QMatrix, and QField product lines do not infringe U.S. patents: 4,731,548; 4,758,735; 4,831,279; 5,087,825; 5,796,183 ("patents"). Nartron asserts a counterclaim that some of QRG's QProx products infringe the 4,758,735 patent ("the '735 patent"). Presently, the parties are at an impasse with respect to their attempts to narrow the patents and products at issue for the purposes of discovery. The parties' inability to overcome this impasse on their own has compelled the court to undertake a more searching review. In doing so, the court revisits its earlier consideration of the requirements of Article III and the Declaratory Judgment Act. The court now finds that it lacks subject matter jurisdiction over all but a handful of claims that involve products specifically identified throughout the course of the litigation. Accordingly, the court will dismiss all of QRG's claims that are based on nothing more than broad identifications of product lines. The only surviving claims are those involving the five named patents and QRG's QProx E2SR, QT110, QT113, QT9701, and QT1106 products. The court's findings today should sufficiently narrow the scope of discovery and allow this case, at long last, to proceed.*fn1

I. Background

QRG commenced this action by filing a declaratory judgment complaint on April 13, 2006, in the United States District Court for the Western District of Pennsylvania (Doc. 1-1). Nartron subsequently filed a motion to dismiss for lack of personal jurisdiction. The Western District court denied the motion and transferred the case to this court on September 7, 2006 (Doc. 1-47). On November 1, 2006, Nartron filed a motion to dismiss for lack of subject matter jurisdiction (Doc. 21). In a March 2, 2007 order (Doc. 30), the court found that QRG met the requirements of Article III and the Declaratory Judgment Act in establishing that a case or controversy existed, with respect to its identification of the Form QProx product line.*fn2 The court reserved its ruling with respect to QRG's identification of "a family of capacitive touch sensor products," finding that the description failed to satisfy the case or controversy requirement because it was too general to identify a specific product. The court permitted QRG to amend the complaint; as a result QRG filed an amended complaint on March 8, 2007 (Doc. 32) that identified its QProx, QTouch, QSlide, QWheel, QMatrix, and QField product lines as the products at issue.

Nartron filed its answer to the amended complaint (Doc. 33) on March 19, 2007, and at that time asserted its counterclaim of patent infringement. QRG subsequently filed a motion to strike the counterclaim (Doc. 34), which the court denied on April 23, 2007 (Doc. 39). On May 7, 2007, QRG filed its reply/answer to Nartron's counterclaim (Doc. 41).

As the parties proceeded to discovery, disputes quickly arose concerning the scope and necessity of the information sought. In addition, on May 7, 2007, Nartron filed two motions for partial summary judgment -- one addressing the issue of enforceability of the patents (Doc. 42), the other addressing the issue of the validity of the patents (Doc. 47). Following a May 10, 2007 scheduling conference, the court stayed briefing of the summary judgment motions to afford the parties time to jointly determine whether the issues and patents in this case could be narrowed. (See Doc. 54). Nartron was directed to inform the court, no later than August 17, 2007, whether it intends to let the existing motions stand or to withdraw the motions in order to file a new dispositive motion. (Id.)

On June 14, 2007, Nartron voluntarily filed a status report addressing the parties' unsuccessful attempts to narrow the issues and patents involved (Doc. 55). The court held a telephonic conference call on June 26, 2007, and, subsequently, requested a status report from QRG that responded to the issues raised in Nartron's report. QRG filed said status report on July 9, 2007 (Doc. 58). On July 13, 2007, Nartron filed a reply to QRG's report (Doc. 59). The status reports, as well as the positions conveyed by the parties during multiple conference calls, have made it clear to the court that the parties have reached an impasse -- the court is not confident that they will soon, if ever, overcome this impasse on their own.*fn3

II. Discussion

It is well-settled that the court may sua sponte dismiss an action for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(h)(3) ("Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.") (emphasis added). To that end, the court has reviewed the parties' explanations of the patents and issues involved in the instant case, as well as the exhibits and affidavits that the parties have filed at various times throughout this litigation. In addition, the court has re-examined the requirements of Article III and the Declaratory Judgment Act, which it considered when disposing of Nartron's motion to dismiss for lack of subject matter jurisdiction.

The Declaratory Judgment Act provides in relevant part that "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Act's actual controversy requirement parallels the federal jurisdictional requirement found in Article III of the Constitution. Teva Pharms. USA, Inc. v. Pfizer Inc., 395 F.3d 1324, 1331 (Fed Cir. 2005). Essentially, the court must determine "'whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issue of a declaratory judgment.'" Id. (quoting EMC Corp. v. Norand Corp., 89 F.3d 807, 810 (Fed Cir. 1996)). If no actual controversy exists, then the court lacks jurisdiction to hear the case. Id. at 1332.

The inquiry regarding whether an actual controversy exists in a suit seeking a declaration of patent non-infringement is two-fold. Id.

There must be both (1) an explicit threat or other action by the patentee [that] creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity by the declaratory judgment plaintiff [that] could constitute infringement, or concrete steps taken with the intent to conduct such activity.

Id. In order to meet the requirements of Article III and the patent laws, a party must identify a specific product as opposed to an entire product line. Laitram Corp. v. Cambridge Wire Cloth Co., 919 F.2d 1579, 1580-82 (Fed. Cir. 1990), superseded by statute in non-relevant part.*fn4 This premise guided the court's conclusion in Interdigital Technology Corp. v. OKI America, Inc. that "[b]oth the controversy requirement of Article III and the patent case law preclude[d the] court from rendering any decision regarding infringement or potential infringement [that was] not limited to specific accused products before the court." 845 F. Supp. 276, 282 (E.D. Pa. 1994) (citing Laitram, 919 F.2d 1579). The Interdigital court did not dismiss the case though, because it determined that an industry standard provided a sufficient means to identify specific products. Id. In contrast, no such standard or sufficiently limiting descriptor is present here -- the phrase "capacitive touch sensor products" is simply too broad, as the court previously held, to identify specific products at issue and meet the ...


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