Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 1 of 9 PageID #: 187
`
`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF KENTUCKY
`BOWLING GREEN DIVISON
`CASE NO. 1:12-CV-00179
`
`
`SUN STYLE INTERNATIONAL, LLC
`
`v.
`
`SUNLESS, INC.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` PLAINTIFF
`
`
`
`
`
`
`
`
`
` DEFENDANT
`
`
`
`
`MEMORANDUM OPINION AND ORDER
`
`
`
`
`This matter comes before the Court on the Defendant’s motion to dismiss for lack of
`
`subject-matter jurisdiction. (Def.’s Mot., Docket Number (“DN”) 14.) The Plaintiff responded.
`
`(Pl.’s Resp., DN 22.) The Defendant replied. (Def.’s Reply, DN 25.) For the following reasons,
`
`the Defendant’s motion is DENIED.
`
`I.
`
`
`
`Plaintiff Sun Style International, LLC (“SSI”) brings this declaratory judgment action
`
`against Defendant Sunless, Inc. (“Sunless”) and asks the Court to declare that a patent held by
`
`Sunless is invalid and unenforceable and that SSI will not infringe on the patent by making,
`
`using, selling, or offering to sell its product into the sunless tanning product market. In response
`
`to the action, Sunless moves to dismiss the complaint pursuant to Federal Rule 12(b)(1) on
`
`grounds that there is no case or controversy between the parties and the Court lacks jurisdiction
`
`to the hear the case. Applying the “all of the circumstances” test established by the Supreme
`
`Court in MedImmune, Inc. v. Genetech, Inc., 549 U.S. 188 (2007), and relying on cases from the
`
`Federal Circuit applying that test, the Court finds that a justiciable controversy exists in this
`
`action and that the Court has jurisdiction to adjudicate SSI’s claims.
`
`The sunless tanning industry sells cosmetology products that purportedly offer the look of
`
`II.
`
`1
`
`
`
`
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 2 of 9 PageID #: 188
`
`a suntan without the health risks associated with prolonged sun exposure. An increasingly
`
`popular form of sunless tanning is a “spray tan,” wherein an individual enters a tanning booth
`
`and is sprayed with a liquid that imitates a suntan when applied.
`
`SSI and Sunless make and sell the booths and the internal components necessary to apply
`
`spray tans. SSI’s booth is known as the Sun Style booth, while Sunless’s goes by the name Versa
`
`Spa. Portions of the Vera Spa booth are protected by U.S. Patent No. 8,201,288 (the “’288
`
`Patent”), which is held by Sunless. In particular, Sunless points the Court to two features of the
`
`Vera Spa booth covered by the ʼ288 Patent: the merger of multiple fluid paths inside a series of
`
`high pressure, low volume nozzles and the use of check valves along the fluid paths. SSI
`
`brought this declaratory judgment action asking the Court to determine that the ʼ288 Patent is
`
`invalid and that the Sun Style booth does not infringe on the ʼ288 Patent.
`
`In 2012, SSI had finalized the Sun Style booth and was in the process of bringing it to
`
`market. In order to promote the booth, SSI displayed a non-functioning, but fully equipped,
`
`prototype at the West Coast Tanning Expo held in Las Vegas during June of that year.
`
`Representatives from Sunless were present at the expo and inspected the Sun Style booth.
`
`According to SSI employees, Mark DeMayo, a Sunless employee, entered the booth and spent
`
`more than one hour examining its components. DeMayo disputes this account and states that
`
`while he observed the booth from a distance, he never entered it or manipulated its components.
`
`On October 3, 2012, four months after the Las Vegas expo, Sunless instructed its counsel
`
`to send letters to Jerry Deveney of JK North America and Ed Jerger of Four Seasons Sales &
`
`Service, Inc.1 for the purpose of informing them of the existence of the ʼ288 Patent. In
`
`
`1 Ed Jerger is the executive chairman of Four Seasons Sales & Service, Inc. Jerry Deveney is the president of
`Ergoline, a division of JK North America. Four Seasons, JK North America, and another entity, Pan-Oston, Inc., are
`the three members that comprise Sun Style International, LLC. Together these entities manufacture and market the
`Sun Style booth.
`
`
`
`2
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 3 of 9 PageID #: 189
`
`coordination with those letters and as a “professional courtesy,” David Gold, Sunless’s interim
`
`CEO, also called Deveney and Jerger on October 3 to inform them of the forthcoming letter.
`
`Gold spoke with Deveney on October 3 but did not speak with Jerger until Jerger returned his
`
`call the next day. According to Jerger, Gold explained that Sunless owned the ʼ288 Patent and
`
`that the company aggressively enforced its rights in it. Gold allegedly also identified a lawsuit it
`
`had filed against a non-party, Heartland Tanning, Inc., to enforce the ʼ288 Patent. Jerger asked
`
`Gold if he was being threatened with litigation. Gold responded that there was no such threat but
`
`went on to reiterate that Sunless would aggressively pursue any violation of the ʼ288 Patent.
`
`Despite Gold’s comments, Jerger was left with the impression that he was being “threatened with
`
`immediate legal action, and [he] informed others in [his] office that [they] had been threatened
`
`by Sunless regarding [their] booth.” (Aff. Ed. Jerger, DN 22-1, ¶ 7.)
`
`Jerger and Deveney received Sunless’s letter shortly after the phone calls with Gold.
`
`Aside from the addresses, the letters are substantively identical. In their entirety they read:
`
` We are intellectual property counsel for Sunless, Inc., a market leader in
`professional sunless equipment. Sunless protects the intellectual property
`associated with its products and aggressively enforces its rights against infringers
`on a worldwide basis.
`
`Sunless is the owner of the patent rights described in U.S. Patent No. 8,201,288,
`which issued on June 19, 2012 (“the ʼ288 patent”). A copy of the patent is
`attached hereto. The inventions in this patent and other pending applications have
`been commercialized by Sunless in the form of its Versa Spa booth. As you may
`know, 35 U.S.C. § 154(a) provides Sunless with the right to exclude others from
`importing, making, using, offering for sale, or selling the inventions claimed in
`the ʼ288 patent anywhere in the United States. In furtherance of these rights,
`Sunless has sued Heartland Tanning, Inc. for infringement of the ʼ288 patent. The
`suit was filed by Sunless in the U.S. District Court for the Eastern District of
`Texas on September 18, 2012, a copy of which is attached hereto.
`
`It has recently come to our attention that [your company] is attempting to enter
`the professional sunless tanning equipment market. While we are unaware of any
`specific features that [your company’s] equipment may have, we advise you to
`proceed carefully with any product launch in light of ʼ288 patent. Sunless may
`
`
`
`3
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 4 of 9 PageID #: 190
`
`pursue a variety of remedies for patent infringement, including an injunction and
`damages, if it were to determine that your equipment is covered by the ʼ288
`Patent.
`
`
`(Letter to Ed Jerger, DN 15-1; Letter to Jerry Deveney, DN, 15-2.)
`
`
`
`Shortly after receiving Sunless’s letters and phone calls, SSI instituted this action for
`
`declaratory judgment. Sunless moves to dismiss on grounds that there is no justiciable
`
`controversy between the parties because Sunless has never alleged that SSI infringed on the ʼ288
`
`Patent, has not threatened litigation, and has no knowledge as to whether the Sun Style booth has
`
`internal components similar to the Vera Spa booth. In all, Sunless claims that SSI’s complaint
`
`was so premature that any adjudication by this Court would merely be an advisory opinion in
`
`violation of the Article III requirement that federal courts can only decide cases in which live
`
`controversies exist.
`
`III.
`
`
`
`The Federal Rules of Civil Procedure provide that a party may file a motion to dismiss
`
`for “lack of subject-matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). “Subject matter jurisdiction is
`
`always a threshold determination,” Am. Telecom Co. v. Leb., 501 F.3d 534, 537 (6th Cir. 2007)
`
`(citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101 (1998)), and “may be raised at
`
`any stage in the proceedings," Schultz v. Gen. R.V. Ctr., 512 F.3d 754, 756 (6th Cir. 2008). “A
`
`Rule 12(b)(1) motion can either attack the claim of jurisdiction on its face, in which case all
`
`allegations of the plaintiff must be considered as true, or it can attack the factual basis for
`
`jurisdiction, in which case the trial court must weigh the evidence and the plaintiff bears the
`
`burden of proving that jurisdiction exists.” DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir.
`
`2004). “If the court determines at any time that it lacks subject matter jurisdiction, the
`
`court must dismiss the action.” Fed. R. Civ. P. 12(h)(3); see also Bauer v. RBX Indus. Inc., 368
`
`
`
`4
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 5 of 9 PageID #: 191
`
`F.3d 569 (6th Cir. 2004). Sunless’s motion to dismiss attacks the factual basis for jurisdiction.
`
`Therefore, the Court may properly consider evidence outside of the pleadings in ruling on such a
`
`motion, and SSI bears the burden of proving that the Court has jurisdiction to hear the case.
`
`IV.
`
`
`
`An initial consideration courts must undertake in determining whether they have subject-
`
`matter jurisdiction is whether there is a justiciable controversy between the parties. This
`
`requirement arises from Article III of the U.S. Constitution which “limits the exercise of the
`
`judicial power to ‘cases’ and ‘controversies.’” Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239
`
`(1937). To be justiciable, the disagreement “must be definite and concrete, touching the legal
`
`relations of the parties having adverse interests.” Id. at 240. It must not be “of a hypothetical or
`
`abstract character” or “academic or moot.” Id. There must be a “real and substantial controversy
`
`admitting of specific relief through a decree of conclusive character, as distinguished from an
`
`opinion advising what the law would be upon a hypothetical state of facts.” Id. at 241.
`
`
`
`In the context of declaratory judgment actions involving patent disputes, the Supreme
`
`Court has provided clear guidance on what constitutes a justiciable controversy. To determine
`
`whether such a controversy exists, “the question . . . is whether the facts alleged, under all the
`
`circumstances, show that there is a substantial controversy, between the parties having adverse
`
`legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory
`
`judgment.” MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118, 127 (2007) (quoting Maryland
`
`Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)).
`
`
`
`The “all of the circumstances” test established in MedImmune repudiated the “reasonable
`
`apprehension” test previously applied by the Federal Circuit and lower courts to determine
`
`whether a
`
`justiciable controversy exists
`
`in patent disputes.
`
` See SanDisk Corp v.
`
`
`
`5
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 6 of 9 PageID #: 192
`
`STMicroelectronics, Inc., 480 F.3d 1372, 1380 (Fed. Cir. 2007). The MedImmune test is a more
`
`lenient standard and “facilitates or enhances the availability of declaratory judgment jurisdiction
`
`in patent cases.” Micron Tech. Inc. v. Mosaid Techs., Inc., 518 F.3d 897 (Fed. Cir. 2008). After
`
`MedImmune, a court will have jurisdiction to hear a patent dispute “where a patentee asserts
`
`rights under a patent based on certain identified ongoing or planned activity of another party, and
`
`where that party contends that it has the right to engage in the accused activity without a
`
`license[.]” SanDisk, 480 F.3d at 1381. In such circumstances, “the party need not risk a suit for
`
`infringement by engaging in the identified activity before seeking a declaration of its legal
`
`rights.” Id.
`
`Finally, the test for declaratory judgment jurisdiction in patent cases is objective.
`
`Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1363 (Fed. Cir. 2009) (quoting
`
`Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988)). “[I]t is the
`
`objective words and actions of the patentee that are controlling.” BP Chems v. Union Carbide
`
`Corp., 4 F.3d 975, 979 (Fed. Cir. 1993). Therefore, only “conduct that can be reasonably
`
`inferred as demonstrating intent to enforce a patent can create declaratory judgment jurisdiction.”
`
`Hewlett-Packard, 587 F.3d at 1363.
`
`V.
`
`
`
`After considering all of the circumstances in the present case, the Court finds that
`
`Sunless’s conduct can objectively and reasonably be inferred as demonstrating intent to enforce
`
`the ʼ288 Patent against SSI. When compared with other recent cases, jurisdiction was readily
`
`apparent in this action. See ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345 (Fed. Cir. 2011);
`
`Hewlett-Packard, 587 F.3d at 1358; Micron Tech., 518 F.3d at 897.
`
`To the extent that Sunless claims that it was unaware of SSI’s existence prior to filing this
`
`6
`
`
`
`
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 7 of 9 PageID #: 193
`
`action, the Court finds the argument of little consequence given the composition of the company.
`
`In its reply brief, Sunless acknowledged that the spray tan booth it inspected at the Las Vegas
`
`Expo was a joint venture between Four Seasons Sales & Service, Inc., and Ergoline, a division of
`
`JK North America. (Def.’s Reply, DN 25, p. 2, n.2.) What it apparently did not know at the time
`
`of inspection was that Four Seasons and JK North America were responsible for marketing and
`
`distributing the booth, while Pan-Oston, Inc., manufactured it. SSI is a limited liability company,
`
`and these three corporate entities comprise its membership. Accordingly, the Court finds it of
`
`little consequence that Sunless’s letters and phone calls were not addressed directly to SSI. The
`
`Court will not decline to find jurisdiction where Sunless contacted two-thirds of SSI’s
`
`membership with the same communications it would have directed to SSI had it known of its
`
`precise structure.
`
`The Federal Circuit has held that, without more, declaratory judgment jurisdiction will
`
`not be established by “a communication from a patent owner to another party, merely identifying
`
`its patent and the other party’s product line[.]” Hewlett-Packard, 587 F.3d at 1362. In the
`
`present action, the contact between the parties was not limited or merely a one-time
`
`communication. Here, Sunless’s employees performed an inspection of the Sun Style booth at
`
`the Las Vegas Expo. Although there is some debate about the extent of that inspection, Sunless
`
`does not dispute that it occurred. A few months later, Sunless’s CEO, David Gold, placed phone
`
`calls to two of SSI’s members. According to Ed Jerger, Four Season’s executive chairman, Gold
`
`stated that Sunless owned the ʼ288 Patent, that it would aggressively enforce its rights in the
`
`patent, and that it had previously taken legal action against another entity to do so. Although
`
`Gold stated he was not threatening legal action, Jerger was left with the impression that legal
`
`action was imminent. The substance of the conversation was reflected in a letter that Jerger
`
`
`
`7
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 8 of 9 PageID #: 194
`
`received from Sunless after the phone call. Again, Sunless identified the ʼ288 Patent, stated it
`
`“aggressively enforces its rights against infringers,” identified a separate case for infringement of
`
`the ʼ288 Patent it had already filed against another entity, and advised the company to “proceed
`
`carefully with any product launch” because “Sunless may pursue a variety of remedies for patent
`
`infringement . . . if it were to determine that your equipment is covered by the ʼ288 Patent.” The
`
`Court acknowledges that Sunless’s letter does not threaten litigation by its plain language, but
`
`“[t]he purpose of a the declaratory judgment action cannot be defeated simply by the stratagem
`
`of a correspondence that avoids magic words such as ‘litigation’ and ‘infringement.’” Hewlett-
`
`Packard, 587 F.3d at 1362. “[A] specific threat of infringement litigation by the patentee is not
`
`required to establish jurisdiction[.]” ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345, 1348 (Fed.
`
`Cir. 2011); see Arrowhead Indus. Water, 846 F.2d at 734-35 (describing the conduct of patent
`
`holders prior to enactment of the Declaratory Judgment Act as a “guerrilla-like” attempt at
`
`“extra-judicial patent enforcement with scare-the-customer-and-run tactics”).
`
`In this case, Sunless was aware that the Sun Style booth was preparing to enter the
`
`sunless tanning market and would compete with its own Vera Spa booth. Although Sunless may
`
`not have known precisely how the Sun Style booth operated, it clearly gleaned enough
`
`information from the inspection to warrant a phone call and letter in which Sunless specifically
`
`identified the ʼ288 Patent and stated that the company had and would continue to aggressively
`
`pursue its rights under the patent. It further warned SSI to “proceed carefully,” indicating that
`
`Sunless was prepared to file suit at the faintest whiff of infringement. Faced with such
`
`circumstances, the Court finds that jurisdiction exists because “the patentee [has] assert[ed]
`
`rights under a patent based on certain identified ongoing or planned activity of another party.”
`
`SanDisk, 480 F.3d at 1381.
`
`
`
`8
`
`

`
`Case 1:12-cv-00179-TBR Document 26 Filed 08/01/13 Page 9 of 9 PageID #: 195
`
`CONCLUSION
`
`
`
`Defendant Sunless, Inc., moved to dismiss the declaratory judgment action filed by
`
`Plaintiff Sun Style International, Inc. For all of the foregoing reasons, IT IS HEREBY
`
`ORDERED that the motion to dismiss for lack of subject-matter jurisdiction is DENIED.
`
`
`
`
`
`9