Takeaway: Petitioner’s district court action seeking declaratory judgment for non-breach of a license agreement relating to alleged contractual and tortious business conduct did not create a real and substantial controversy as to any patent infringement meeting the threshold standing requirements of 37 C.F.R. § 42.302(a).

In its Decision, the Board denied institution of any covered business method patent review of challenged claims 1, 9, 16, 18-25, 34, 49-52, and 57 of the ‘849 patent. It was the Board’s reasoning that Petitioner did not have standing under AIA § 18(a)(1)(B) and 37 C.F.R. § 42.302.

Petitioner and Patent Owner had entered into a technology License Agreement under which Patent Owner was to provide Petitioner with “certain proprietary computer generated metrics for determining the quality and relevance of patents.” After some time various disputes arose, resulting in three lawsuits that were consolidated into a single action before the U.S. District Court for the Northern District of Illinois.

The District Court action alleged various improprieties on the part of Patent Owner’s Chief Executive Office, including breach of an employment agreement, breach of fiduciary duty, and tortious interference with a prospective business advantage. Neither the Petition nor any Complaint in the District Court action alleged that Petitioner had been sued for infringement of the ‘849 patent. As characterized by the Board, the Complaint did not mention the ‘849 patent and did not request any declaratory judgment of non-infringement of the ‘849 patent; and neither the Complaint nor the Petition alleged that Petitioner had otherwise “ been expressly charged with infringement of the ‘849 patent.”

Patent Owner had filed an amended counterclaim in the District Court action alleging multiple causes of action. Petitioner, in the instant proceeding, had asserted that “it [had] alleged an affirmative defense to the amended counterclaim that Patent Owner’s patents are invalid, and [that it had] filed a summary judgment motion of invalidity.” According to the Board, “[t]he summary judgment motion identifies eight of Patent Owner’s patents, but the ‘849 patent is not among them.”

As for standing, Petitioner contended that it had an exclusive license to use Patent Owner’s patent analysis technology, and citing Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), “that [Petitioner] is in breach of the License Agreement constitute a threat that [Patent Owner] will bring suit against [Petitioner] based on [Patent Owner’s] Patents and creates a reasonable apprehension by [Petitioner] that [Patent Owner] will enforce [its] Patents against [Petitioner].” Patent Owner responded that “[a] mere business relationship – even one built upon a foundation of patents – does not automatically amount to a charge of infringement as to a specific patent” and that its amended counterclaim in the District Court action “does not assert that unpaid revenues are due for Petitioner’s use of the [Patent Owner’s] patents.”

The Board concluded that Petitioner did not have standing to file the Petition. In support of this conclusion, the Board found that: (1) there was no evidence that Patent Owner had sued Petitioner for infringement of the ‘849 patent, whether in its amended counterclaim in the District Court action or in any other legal proceeding; (2) the instant facts were distinguishable from those in Medimmune because, for example, the instant disputes “did not specifically relate to the infringement or validity of a particular patent with respect to any particular identified product[;]” (3) “Patent Owner’s . . . discovery requests in the Illinois action cannot place Petitioner in apprehension of being sued for patent infringement as to the ‘849 patent, because that patent was not included in the scope of those discovery requests[;]” and (4) “Petitioner’s cause of action for declaratory judgment of non-breach of contract does not establish a real and substantial controversy for purposes of covered business method review standing[.]”

Ocean Tomo, LLC v. Patent Ratings, LLC, CBM2015-00157

Paper 17: Decision Denying Institution of Covered Business Method Review

Dated: January 26, 2016

Patent:  9,075,849 B2

Before:  Barry L. Grossman, Kristina M. Kalan, and Peter P. Chen

Written by:  Chen