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` IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`MICROSOFT CORPORATION,
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`Plaintiff,
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`v.
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`SYNKLOUD TECHNOLOGIES, LLC,
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`Civil Action No. 20-0007-RGA
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`Defendant.
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`MEMORANDUM OPINION
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`Kelly E. Farnan, Travis S. Hunter, RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE;
`Richard A. Cederoth, SIDLEY AUSTIN LLP, Chicago, IL; Ching-Lee Fukuda, Ketan V. Patel,
`SIDLEY AUSTIN LLP, New York, NY, Attorneys for Plaintiff.
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`David S. Eagle, Sean M. Brennecke, KLEHR HARRISON HARVEY BRANZBURG LLP,
`Wilmington, DE; Deepali Brahmbhatt, ONE LLP, Newport Beach, CA; John Lord, ONE LLP,
`Beverly Hills, CA, Attorneys for Defendant.
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`September 8, 2020
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 2 of 24 PageID #: 818
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`/s/ Richard G. Andrews
`ANDREWS, UNITED STATES DISTRICT JUDGE:
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`Before me is Defendant Synkloud’s motion to dismiss “[p]ursuant to Federal Rules of
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`Civil Procedure 12(b)(1), 12(h)(3), Lack of Standing and 12(b)(6).” (D.I. 8). I have reviewed the
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`parties’ briefing. (D.I. 9, 24, 28). For the reasons that follow, I will grant-in-part and deny-in-part
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`SynKloud’s motion.
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`I. BACKGROUND
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`Plaintiff Microsoft filed its Complaint on January 3, 2020, seeking declaratory judgment
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`of non-infringement of eleven patents: U.S. Patent Nos. 9,098,526 (“the ’526 patent”),
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`10,015,254 (“the ’254 patent”), 8,606,880 (“the ’6880 patent”), 8,856,195 (“the ’195 patent”),
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`8,868,690 (“the ’690 patent”), 9,219,780 (“the ’780 patent”), 9,239,686 (“the ’686 patent”),
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`7,870,225 (“the ’225 patent”), 7,792,923 (“the ’923 patent”), 7,849,153 (“the ’153 patent”), and
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`7,457,880 (“the ’7880 patent”)1 (collectively, the Asserted Patents). (D.I. 1).
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`SynKloud moves to dismiss the Complaint for lack of subject matter jurisdiction and
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`standing,2 and for failure to state a claim. (D.I. 8).
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`II. LEGAL STANDARDS
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`A. Subject Matter Jurisdiction
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`Federal Rule of Civil Procedure 12(b)(1) allows for dismissal where the court lacks
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`subject matter jurisdiction over an action. “A motion to dismiss for want of standing is []
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`properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter.”
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`1 Microsoft concedes that after jurisdictional discovery (see D.I. 22, 23), it has no basis to
`continue with the ’7880 patent. (D.I. 24 at 18).
`2 A party has standing to bring an action under the Declaratory Judgment Act if an “actual
`controversy” exists, which is the same as an Article III case or controversy. MedImmune, 549
`U.S. at 127. Thus, a separate “standing” inquiry has no independent effect on the analysis under
`the facts of this case.
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`2
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 3 of 24 PageID #: 819
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`Ballentine v. U.S., 486 F.3d 806, 810 (3d Cir. 2007). Motions brought under Rule 12(b)(1) may
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`raise either a facial or factual challenge to the court’s jurisdiction. “In reviewing a facial attack,
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`the court must only consider the allegations of the complaint and documents referenced therein
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`and attached thereto, in the light most favorable to the plaintiff.” Gould Elecs. Inc. v. United
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`States, 220 F.3d 169, 176 (3d Cir. 2000). Factual attacks allow the court to delve beyond the
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`pleadings to determine if the evidence supports the court’s subject matter jurisdiction. Mortenson
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`v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1997). The party asserting subject
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`matter jurisdiction bears “the burden of proof that jurisdiction does in fact exist.” Id. Pursuant to
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`Fed. R. Civ. P. 12(h)(3), a court must dismiss a complaint if “it determines that it lacks subject
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`matter jurisdiction.”
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`The Supreme Court has held that a “case or controversy” exists when “the facts alleged,
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`under all the circumstances, show that there is a substantial controversy, between the parties
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`having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
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`declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). “The
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`dispute must be ‘definite and concrete, touching the legal relations of parties having adverse
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`legal interests . . . .’” Arris Grp., Inc. v. British Telecomm. PLC, 639 F.3d 1368, 1373 (Fed. Cir.
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`2011). A “subjective or speculative fear of future harm” does not suffice. Prasco, LLC v. Medicis
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`Pharm. Corp., 537 F.3d 1329, 1335 (Fed. Cir. 2008).
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`B. Failure to State a Claim
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`Rule 12(b)(6) permits a party to seek dismissal of a complaint for failure to state a claim
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`upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A complaint must contain “a short
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`and plain statement of the claim showing that the pleader is entitled to relief, in order to give the
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`defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp.
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`3
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 4 of 24 PageID #: 820
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`v. Twombly, 550 U.S. 544, 545 (2007). When considering a Rule 12(b)(6) motion to dismiss, the
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`court must accept as true all factual allegations in the complaint and view them in the light most
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`favorable to the plaintiff. Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008). Dismissal
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`under Rule 12(b)(6) is only appropriate if the complaint does not contain “sufficient factual
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`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
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`556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp, 550 U.S. at 570); see also Fowler v. UPMC
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`Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
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`III. DISCUSSION
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`A. Subject Matter Jurisdiction
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`SynKloud argues that this Court lacks subject matter jurisdiction over this case because
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`Microsoft has not alleged any affirmative acts against it by SynKloud, Microsoft has not alleged
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`any indemnity obligation to its customer – HP – that Synkloud has sued, Microsoft’s references
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`to Adobe and Dropbox litigations unrelated to Microsoft’s products should be disregarded, and
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`Microsoft has not alleged a dispute based on any infringement liability since it has asserted
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`patents here not asserted by SynKloud against HP, Adobe, or Dropbox. (D.I. 9 at 6-10).
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`In declaratory judgment actions, the plaintiff must show that “a case of actual
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`controversy” exists to establish subject matter jurisdiction sufficient to maintain an action in
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`federal court. 28 U.S.C. § 2201(a). “[T]he question in each case is whether the facts alleged,
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`under all the circumstances show that there is a substantial controversy, between parties having
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`adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
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`declaratory judgment.” MedImmune, 549 U.S. at 127. In an action for a declaratory judgment of
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`non-infringement or invalidity of a patent, the plaintiff must show “(1) an affirmative act by the
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`patentee related to the enforcement of his patent rights and (2) meaningful preparation to conduct
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`4
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 5 of 24 PageID #: 821
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`potentially infringing activity.” Ass’n for Molecular Pathology v. U.S. Patent & Trademark
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`Office, 689 F.3d 1303, 1318 (Fed. Cir. 2012). The patentee’s affirmative acts must be directed at
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`the “specific plaintiffs” seeking a declaratory judgment. Id. at 1323.
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`The “immediacy and reality” inquiry can be viewed through the lens of standing. Prasco,
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`537 F.3d at 1338. To establish standing, the plaintiff must allege (1) an injury-in-fact, i.e., a harm
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`that is “concrete and actual or imminent, not conjectural or hypothetical,” (2) that is “fairly
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`traceable” to the defendant’s conduct, and (3) redressable by a favorable decision. Caraco
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`Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1291 (Fed. Cir. 2008). Absent an
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`injury-in-fact fairly traceable to the patentee, there can be no immediate and real controversy.
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`Prasco, 537 F.3d at 1338.
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`Jurisdiction will not arise merely on the basis that a party perceives that a patent poses a
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`risk of infringement. Id. (“The mere existence of a potentially adverse patent does not cause an
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`injury nor create an imminent risk of an injury; absent action by the patentee, ‘a potential
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`competitor . . . is legally free to market its product in the face of adversely-held patent.’”).
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`Rather, when deciding jurisdiction and standing questions in such actions, the Federal Circuit
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`looks at a variety of factors, including the presence of any accusations of infringement or threats
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`of suit, see, e.g., id. at 1340 (“the defendants have not accused Prasco of infringement . . . [t]he
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`lack of any evidence that defendants believe or plan to assert that plaintiff’s product infringes
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`their patents creates a high barrier to proving that Prasco faces an imminent risk of injury”),
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`demands for royalty payments or a licensing agreement, see, e.g., MedImmune, 549 U.S. at 128,
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`the existence of a covenant not to sue, see, e.g., Dow Jones & Co. v. Ablaise Ltd., 606 F.3d 1338,
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`1346 (Fed. Cir. 2010), or actual economic injury. See, e.g., Arris Grp., 639 F.3d at 1368 (noting
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`that a potential economic injury alone is insufficient to confer standing).
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`5
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 6 of 24 PageID #: 822
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`The Supreme Court has emphasized that a fear of future harm that is only subjective is
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`not an injury or threat of injury caused by the defendant that can be the basis of an Article III
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`case or controversy. City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983). Rather, “it is the
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`reality of the threat of . . . injury that is relevant to the standing inquiry.” Id. at 107 n.8 (emphasis
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`in original). Although MedImmune clarified that an injury-in-fact sufficient to create an actual
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`controversy can exist even when there is no apprehension of suit, it did not change the bedrock
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`rule that a case or controversy must be based on a real and immediate injury or threat of future
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`injury that is caused by the defendants – an objective standard that cannot be met by a purely
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`subjective or speculative fear of future harm.
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`Where a patent holder accuses customers of direct infringement based on the sale or use
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`of a supplier’s equipment, the supplier has standing to commence a declaratory judgment action
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`if (a) the supplier is obligated to indemnify its customers from infringement liability, or (b) there
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`is a controversy between the patentee and the supplier as to the supplier’s liability for induced or
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`contributory infringement based on the alleged acts of direct infringement by its customers. Arris
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`Grp., 639 F.3d at 1375.
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`1. Whether an Indemnity Obligation Exists Between Microsoft and HP
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`Where a patent owner accuses a supplier’s customer (here, an original equipment
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`manufacturer or OEM) of infringement based on the sale and use of the supplier’s software and
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`the supplier acknowledges and accepts a duty to defend the customer accused of infringement,
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`the supplier has standing to commence a declaratory judgment action on those asserted patents.
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`Id.
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`Microsoft argues that it has accepted an obligation to defend HP. (D.I. 24 at 9).
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`As the Court noted during the April 1, 2020 discovery teleconference and based
`on the current allegations, Plaintiff has accepted an obligation to defend, and is
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`6
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 7 of 24 PageID #: 823
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`currently defending HP against Defendant’s infringement allegations. Although
`SynKloud has threatened to sue each OEM, it has not yet sued any others. On this
`basis alone, there is sufficient record evidence to support an actual controversy as
`to Microsoft’s alleged liability for HP’s infringement of the ’526, ’254, and ’225
`patents.
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`(Id.). SynKloud argues that while Microsoft pleads that HP is its OEM, it fails to allege the
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`contextual detail of any request for indemnification or that Microsoft has agreed to or is
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`obligated to indemnify HP or any other OEM. (D.I. 9 at 2). SynKloud argues that it is not enough
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`for Microsoft to rely on SynKloud’s prior suit against HP to support subject matter jurisdiction.
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`(Id. at 8).
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`Absent a “clear, direct allegation” that a declaratory judgment plaintiff is obligated to
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`indemnify its customers, a case or controversy does not exist based on an indemnity theory.
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`Microsoft Corp. v. DataTern, 755 F.3d 899, 904 (Fed. Cir. 2014). A customer request to
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`indemnify against patent infringement does not create subject matter jurisdiction. Id. at 903-04;
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`see also Cisco Sys, Inc. v. Alberta Telecomms. Research Ctr., 538 F. App’x 894, 898 (Fed. Cir.
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`2013) (while Cisco had filed suit to protect its customers, it had “never asserted that it had
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`indemnity obligations for any liability its customers might incur”).
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`In Microsoft v. DataTern, DataTern had sued Microsoft’s and SAP’s customers, accusing
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`them of using the suppliers’ software packages to infringe the asserted method claims, but there
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`were no arguments that there was a case or controversy between DataTern and the suppliers as to
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`direct infringement. 755 F.3d at 904. If the suppliers had an obligation to indemnify their
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`customers, they would then have standing to bring suit. Id. In that instance, the suppliers would
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`stand in the shoes of the customers and would be representing the customers’ interests because of
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`their legal obligation to indemnify. Id. But there was no evidence of such an obligation.
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`7
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 8 of 24 PageID #: 824
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`As an initial matter, the transcript from the referenced teleconference reveals no
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`acknowledgment to the Court that Microsoft had accepted an obligation to indemnify HP. (See
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`D.I. 23). In its Complaint, Microsoft alleges only that HP is an OEM. (D.I. 1 at ¶ 3). Microsoft
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`does not allege that it will indemnify HP. Microsoft does not identify what conditions, if any,
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`require it to indemnify its OEMs, including HP, and does not point to any such agreement or
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`obligation.
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`Microsoft argues in its briefing that it has “accepted an obligation to defend, and is
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`currently defending HP against SynKloud’s infringement allegations.” (D.I. 24 at 9). The
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`complaint, however, is silent as to any indemnity obligations that Microsoft might have. Thus,
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`unlike in Arris, Microsoft has not asserted that it has indemnity obligations for any liability its
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`customers might incur. See 639 F.3d at 1375. While Microsoft counsel stated at a discovery
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`conference that Microsoft has “accepted an obligation to defend,” there is no evidence in the
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`record of any such agreement, promise, or obligation. Without alleging that it has accepted an
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`obligation to indemnify, there is no case or controversy between the parties on the basis of
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`indemnification. See id.
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`2. Whether There is a Controversy Between Microsoft and SynKloud Based on
`Alleged Acts of Direct Infringement by Third Parties
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`a. Controversy Based on SynKloud’s “Litigation Campaign”
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`Microsoft notes that SynKloud has “launched a litigation campaign based on the Patents-
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`in-Suit,” including filing against several Microsoft competitors accusing cloud storage
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`technology similar to that accused in the HP action as infringing patents with substantially
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`similar claims as those patents asserted against HP. (D.I. 1 at ¶¶ 3, 27, 28). Microsoft alleges that
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`SynKloud’s claims directed to the cloud storage industry generally, and Microsoft’s OneDrive
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`product specifically, have placed a “cloud of uncertainty” over Microsoft and its products,
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`8
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 9 of 24 PageID #: 825
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`creating a concrete and immediate justiciable controversy between Microsoft and SynKloud. (Id.
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`at ¶¶ 4, 29). SynKloud has alleged that HP “infringes the ’225, ’526, and ’254 patents in part
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`because of HP’s inclusion of Microsoft’s OneDrive cloud storage software . . . in the accused HP
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`products.” (Id. at ¶ 3).
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`SynKloud contends that it did not communicate with or threaten Microsoft pre-suit at all.
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`(D.I. 9 at 7). This argument to defeat jurisdiction is, by itself, a non-starter. Direct
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`communication between a patentee and a declaratory plaintiff is not necessary to confer standing.
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`Arrowhead Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988) (“[I]f
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`the circumstances warrant,” an actual controversy “may be found in the absence of any
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`communication from the defendant to the plaintiff.”).
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`A patentee’s aggressive enforcement strategy, even in the absence of direct threats
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`against the declaratory judgment plaintiff, may support jurisdiction, however. DataTern, 755
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`F.3d at 906. Prior litigious conduct is one circumstance to be considered in assessing whether the
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`totality of circumstances creates an actual controversy. Prasco, 537 F.3d at 1341.
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`In Prasco v. Medicis, Prasco argued that a case or controversy had been created because
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`Medicis had caused Prasco to suffer actual harm—namely, “paralyzing uncertainty” from fear
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`that Medicis would bring an infringement suit against it, given Medicis’ history of enforcing
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`patent rights to protect its “core products.” Id. at 1338. Prasco had not alleged that defendants
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`had restrained its right to freely market its product; rather, it was the threat of future injury that
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`formed the basis for its complaint. Id. at 1339. The Court held that Prasco did not meet its
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`threshold burden of proving an immediate and real controversy. Id. The defendants had not
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`accused Prasco of infringement or asserted any rights against the relevant product, nor had they
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`taken actions that implied such claims. Id. at 1340.
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`9
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 10 of 24 PageID #: 826
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`The Court in Prasco also held that one prior suit concerning different products covered
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`by unrelated patents was not the type of pattern of prior conduct that made reasonable an
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`assumption that Medicis would also take action against Prasco regarding its new product. Id.
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`Accordingly, Medicis’ prior suit premised on other patents could not by itself create a real and
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`immediate controversy, and it was entitled to minimal weight in analyzing whether such a
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`controversy had been created. Id.
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`In DataTern, software suppliers filed noninfringement and invalidity declaratory
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`judgment actions against a patentee. 755 F.3d at 902. The patentee argued that the court lacked
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`jurisdiction because the patentee never approached the suppliers regarding a license, never
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`accused them of infringement, and indicated that it did not intend to sue the suppliers. Id. at 903.
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`The software suppliers responded that jurisdiction existed because the patentee’s infringement
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`claims against the suppliers’ customers were “based on” the customers’ use of their products and
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`thus impliedly asserted indirect infringement against the suppliers. Id. The suppliers also
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`contended that the indemnification demands that they received from their customers, and the
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`patentee’s aggressive litigation strategy (it had sued more than 100 entities for infringement of
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`the patents in question) supported the existence of a substantial controversy. Id.
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`To the extent that the suppliers argued that the patentee’s suits against its customers
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`automatically gave rise to a case or controversy regarding induced infringement, the Court in
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`DataTern did not agree. Id. at 902. The Court was “sympathetic” to the suppliers’ arguments that
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`the patentee’s litigiousness supported the existence of a controversy between the parties in the
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`case. Id. at 906. The Court noted, however, that the patentee’s litigation strategy appeared to
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`involve suing software users, not software suppliers. Id. at 907. And there was no record
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`evidence that the suppliers encouraged the acts that amounted to alleged direct infringement by
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`10
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 11 of 24 PageID #: 827
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`its customers in the other actions. Id. This cut against the suppliers’ arguments that they might be
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`next or that litigiousness against direct infringers alone created a substantial controversy
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`regarding inducement. Id.
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`In determining whether there is a case or controversy of sufficient immediacy to establish
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`declaratory judgment jurisdiction, the Court looks to the elements of the potential cause of
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`action. See Arris Grp., 639 F.3d at 1376-78. It is not the case that definitive proof must exist that
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`would establish each element. DataTern, 755 F.3d at 905. But, to establish a substantial
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`controversy, there must be allegations by the patentee or other record evidence that establish at
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`least a reasonable potential that such a claim could be brought. Id.
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`Microsoft has asserted eleven patents in this declaratory judgment action. SynKloud
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`asserted three of them – the ’254, ’526, and ’225 patents – in the HP action. (D.I. 1 at ¶ 1).
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`Microsoft has included eight other patents that are not in the HP action. (Id.). In support of
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`Microsoft’s argument that there is a case or controversy between Microsoft and SynKloud as to
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`the additional eight patents, Microsoft alleges that SynKloud has initiated a “litigation
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`campaign” against Microsoft competitors Adobe and Acrobat, accusing cloud storage technology
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`“similar to that accused in the HP action as infringing patents with substantially similar claims as
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`those patents asserted against HP,” referring to three cases filed in the Western District of Texas.
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`(Id. at ¶ 27).
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`Microsoft argues that SynKloud’s licensing demands to Samsung, ASUS, and Dell have
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`created legal adversity between SynKloud and Microsoft due to SynKloud’s implied assertions
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`of indirect infringement against Microsoft as to the ’254, ’526, ’225, and ’780 patents. (D.I. 24 at
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`10). The claim charts provided to Samsung, ASUS, and Dell include references to Microsoft
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`11
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 12 of 24 PageID #: 828
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`OneDrive as well as other cloud storage products, such as Samsung Cloud and Google Drive.
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`(D.I. 25-2, Exs. B-D).
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`When the holder of a patent with method claims accuses the supplier’s customers of
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`direct infringement based on their use of the supplier’s product in the performance of a claimed
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`method, an implicit assertion of indirect infringement may arise. See Arris, 639 F.3d at 1375-76.
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`In Arris, plaintiff Arris was a developer, manufacturer, and supplier of cable telephony and data
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`products for cable system operators for use in voice over Internet protocol (VoIP) systems.
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`Defendant BT was a telecommunications company owning relevant patents. BT had sued Arris’
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`customer for patent infringement. BT’s infringement accusations against Arris’ customer
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`“explicitly and repeatedly singled out” Arris’ products, carrying the implied assertion that Arris
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`was contributorily infringing, and BT repeatedly communicated that implicit accusation directly
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`to Arris during the course of a “protracted negotiation process.” Id. at 1377, 1381.
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`Arris sought a declaratory judgment that it did not infringe any of BT’s patents. Id. at
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`1373. The Court of Appeals held that a case or controversy existed between Arris and BT
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`regarding Arris’ potential liability for contributory infringement. Id. at 1375. Although BT did
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`not expressly accuse Arris itself of direct or indirect infringement, the Court deemed such an
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`accusation to be unnecessary. Id. at 1379. The Court found it relevant that Arris was “directly
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`and substantially involved” in BT’s infringement and licensing negotiations. Id. at 1378. For
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`example, Arris and BT conferred over conference calls during which Arris presented its non-
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`infringement arguments and BT responded. Id. at 1379. An Article III case or controversy
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`existed between the parties regarding Arris’ potential liability for contributory infringement, as
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`required for declaratory judgment jurisdiction for determination of non-infringement and
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`invalidity. Id.
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`12
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 13 of 24 PageID #: 829
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`In Hewlett-Packard Co. v. Acceleron LLC, the Federal Circuit held that an actual
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`controversy as to infringement existed where the patent owner sent the declaratory judgment
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`plaintiff two letters seeking “to discuss” the patent. 587 F.3d 1358, 1363 (Fed. Cir. 2009). The
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`Court, however, cautioned: “A communication from a patent owner to another party, merely
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`identifying its patent and the other party’s product line, without more, cannot establish adverse
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`legal interests between the parties, let alone the existence of a ‘definite and concrete’ dispute.”
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`Id. at 1362.
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`Here, while they also incorporate other parties’ products, SynKloud’s claim charts show
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`that Samsung, ASUS, and Dell’s use of Microsoft OneDrive are central to SynKloud’s
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`infringement contentions. For example,
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`• The claim chart provided to Samsung for the ’780 patent refers to “remote storage
`space provided by a storage service from Samsung Cloud Drive, Google Drive, or
`Microsoft OneDrive” (D.I. 25-2, Ex. B at 6), and “A storage server of OneDrive
`allocates e.g. 5GB free storage space” (Id. at 18).
`• The claim chart provided to ASUS for the ’526 patent uses OneDrive as the
`exemplary storage space software (D.I. 25-4, Ex. D at 15-17).
`• The claim chart provided to Dell for the ’254 patent refers to “storage space provided
`by the Microsoft OneDrive” and “The Dell Laptop couples with the storage server of
`the Microsoft OneDrive” (D.I. 25-6, Ex. F at 9-10).
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`SynKloud’s letters to Samsung, ASUS, and Dell each state that SynKloud believes that the
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`products offered by Samsung, ASUS, and Dell practice SynKloud’s patented methods and invite
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`the companies to engage in licensing negotiations. (See, e.g., D.I. 25-3, Ex. C).
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`As in Arris, where the Court of Appeals found the existence of an “actual controversy,”
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`SynKloud has “explicitly and repeatedly singled out” Microsoft products used in Samsung,
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`ASUS, and Dell’s products to support its infringement contentions. See 639 F.3d at 1377. Unlike
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`Arris, however, there is no evidence of Microsoft having been “directly and substantially
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`involved” in the alleged infringement and licensing communications between SynKloud and
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`13
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 14 of 24 PageID #: 830
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`Samsung, ASUS, and Dell. See id. at 1378. SynKloud has not initiated litigation against
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`Samsung, ASUS, and Dell, as it has with HP. See DataTern, 755 F.3d at 903. SynKloud’s letters
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`invite Samsung, ASUS, and Dell to engage in licensing negotiations, but do not include an
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`accusation of infringement. (See D.I. 25-1, Ex. A; D.I. 25-3, Ex. C; D.I. 25-5, Ex. E). And while
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`SynKloud has acted by sending letters to third parties Samsung, ASUS, and Dell, it is Microsoft
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`that is the declaratory judgment plaintiff in this case. See Hewlett-Packard Co., 587 F.3d at 1364.
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`Overall, these circumstances do not indicate that there is a dispute between Microsoft and
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`SynKloud concerning Microsoft’s liability for infringement based on the assertions against
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`Samsung, ASUS, and Dell that is sufficient to constitute an Article III case or controversy.
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`Microsoft also argues that SynKloud’s pursuit of litigation against Microsoft competitors
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`Adobe and Dropbox, including on different—but related—patents, is enough to establish a case
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`or controversy between SynKloud and Microsoft in this case. (D.I. 24 at 14). Each case that
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`Microsoft cites in support of its position is distinguishable. In Arkema Inc. v. Honeywell
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`International, Inc., the defendant patentee had already asserted claims against the same plaintiff
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`in the declaratory judgment suit for infringement of other patents covering similar technology as
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`the asserted patents. 706 F.3d 1351, 1358 (Fed. Cir. 2013). In Dror v. Kenu, Inc., the Court noted
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`that a patentee’s accusing a party in litigation of infringing its patents can give rise to jurisdiction
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`for the accused party to bring declaratory judgment claims for related patents of the patentee.
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`2019 WL 5684520, at *9 (N.D. Cal. Nov. 1, 2019). Microsoft, however, is not the accused party
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`in the Adobe and Dropbox litigations. See id.; see also Miotox LLC v. Allergan, Inc., 2015 WL
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`2084493, at *2 (C.D. Cal. May 5, 2015).
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`Microsoft’s argument that related patents should be considered together where those
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`patents were asserted against different entities is not persuasive under the Supreme Court’s
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`14
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 15 of 24 PageID #: 831
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`MedImmune test, which demands “sufficient immediacy and reality to warrant the issuance of a
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`declaratory judgment.” See 549 U.S. at 127. SynKloud’s pursuit of litigation against Microsoft’s
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`competitors Adobe and Dropbox is insufficient to create jurisdiction in this case between
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`Microsoft and SynKloud.3 See Prasco, 537 F.3d at 1339.
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`b. Controversy Based on Infringement
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`For the ’254, ’526, and ’225 patents which are asserted by SynKloud against HP,
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`Microsoft’s OEM, I will assess whether claims of infringement liability by SynKloud against HP
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`create an actual case or controversy between Microsoft and SynKloud.
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`Direct infringement occurs when a person without authorization makes, uses, offers to
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`sell or sells any patented invention within the United States or imports into the United States a
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`patented invention. See 35 U.S.C. § 271(a). “[A] party that sells or offers to sell software
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`containing instructions to perform a patented method does not infringe the patent under §
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`271(a).” Ricoh Co., Ltd. v. Quanta Comput. Inc., 550 F.3d 1325, 1335 (Fed. Cir. 2008).
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`Actively inducing direct infringement of a patent by another constitutes infringement. 35
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`U.S.C. § 271(b). To prove induced infringement, the patentee must show that the accused
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`inducer took an affirmative act to encourage infringement with the knowledge that the induced
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`acts constitute patent infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766
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`3 The ’923 and ’154 patents are not specifically referred to in the claim charts submitted in
`connection with the Adobe or Dropbox litigations, nor do they show up in the claim charts
`appended to the licensing communications. I assume, therefore, that Microsoft is asserting the
`’923 and ’154 patents in this action on the theory that they are related to the other cloud storage
`technology patents and SynKloud might thus be inclined to assert them at some point. Thus, they
`are particularly dubious candidates for a declaratory judgment. For the same reasons discussed
`above, I decline to find that there is a case or controversy between Microsoft and SynKloud as to
`these two patents.
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`15
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`Case 1:20-cv-00007-RGA Document 31 Filed 09/08/20 Page 16 of 24 PageID #: 832
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`(2011). Absent the knowledge and affirmative act of encouragement, no party can be liable for
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`induced infringement.
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`An act of contributory infringement may include either the sale of a “component of a
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`patented machine, manufacture, combination or composition,” or the sale of a “material or
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`apparatus for use in practicing a patented process.” 35 U.S.C. § 271(c). The statute covers
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`contributory infringement of, among other things, system claims and method claims. Arris Grp.,
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`639 F.3d at 1375. To hold a supplier liable for contributory infringement, a patent holder must
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`show, among other things, that (1) the supplier’s product was used in the system or method to
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`commit acts of direct infringement; (2) the product’s use constituted a material part of the
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`patented system or method; (3) the supplier knew its product was “especially made or especially
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`adapted for use in an infringement” of the patent; and (4) the product is “not a staple article or
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`commodity of commerce suitable for substantial noninfringing use.” 35 U.S.C. § 271(c).
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`In DataTern, plaintiffs were software suppliers Microsoft and SAP. Defendant DataTern
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`owned certain patents. DataTern sued several Microsoft and SAP customers for patent
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`infringement. The claim charts provided to SAP’s customers alleged direct infringement of two
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`patents based on customers’ use of SAP’s BusinessObjects product. 755 F.3d at 905. The claim
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`charts also variously cited to Microsoft, SAP, and third party-provided user guides and