Short Summary: Subject matter jurisdiction for a declaratory judgment action must be determined on a product-by-product basis.

Case: Microsoft Corp. v. Datatern, Inc., No. 2013-1184 (Fed. Cir. Apr. 4, 2014) (precedential). On appeal from S.D.N.Y. Before Rader, Prost, and Moore.

Procedural Posture: Defendant patentee appealed grant of summary judgment of noninfringement in a declaratory judgment action. CAFC affirmed-in-part and reversed-in-part.

  • Subject Matter Jurisdiction: Patentee’s charges of infringement by sending the plaintiffs’ customers claim charts identifying certain patents and products was sufficient basis for subject matter jurisdiction for plaintiffs’ declaratory judgment action vis-à-vis those patents each plaintiff was accused of infringing, respectively. Defendants could not avoid a declaratory judgment by communicating to plaintiffs its intention not to sue them directly.
  • Subject Matter Jurisdiction: Jurisdiction for a declaratory judgment of non-infringement must be determined on a product-by-product basis, and, therefore the district court incorrectly granted a judgment of non-infringement for those products not identified by the patentee’s threat letters. Even though Plaintiff-Microsoft’s customers received a threat letter from defendant regarding its and Co-Plaintiff SAP’s products, Microsoft was only entitled to a declaratory judgment regarding the patents its software was accused of infringing. Requests from its customers for indemnification regarding both patents would not provide sufficient basis for jurisdiction. Additionally, patentee’s strategy of suing software users, not suppliers, weighed against granting jurisdiction for those patents not alleged to have been infringed.
  • Claim Construction: district court correctly construed “object model” as requiring “object classes” under the plain meaning of the term. Patentee’s stipulation to a narrower definition of object class, requiring both class attributes and behaviors, has no bearing on whether the district court correctly construed “object model” under its plain meaning. Based on this construction, plaintiffs’ software did not infringe defendant’s patents.

Rader, dissenting-in-part:

  • Subject Matter Jurisdiction: The determination of subject matter jurisdiction for a declaratory judgment action should be flexible and take in consideration the totality of the circumstances. Microsoft had a reasonable apprehension that it would be sued for both patents after its customers had received claim charts for the alleged infringement of its software for one of the patents and charts for alleged infringement of Plaintiff SAP’s software. By analyzing patentee’s actions in isolation, the majority provides aggressive parties with “a roadmap to avoid supplier suits.”