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Triteq Lock & Security LLC v. Hmc Holdings LLC

July 5, 2011

TRITEQ LOCK & SECURITY LLC, PLAINTIFF,
v.
HMC HOLDINGS LLC, DEFENDANT.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant HMC Holdings, LLC's (hereinafter, "HMC") Motion to Dismiss Triteq Lock & Security LLC's (hereinafter, "Triteq") Complaint. The Complaint seeks in Count I a declaration of patent invalidity under the Declaratory Judgment Act, 28 U.S.C. § 2201, and alleges in Count II false patent marking under 35 U.S.C. § 292. For the reasons that follow, the Motion is denied as to Count I, but granted as to Count II.

I. BACKGROUND

Triteq's request for a declaratory judgment of patent invalidity is based on a letter sent by George Garifalis ("Garifalis"), the Chief Financial Officer of HMC. Apparently, according to HMC's Motion to Dismiss, at one point the parties had a business relationship in which Triteq purchased products from Homak Manufacturing, a predecessor company of HMC, and then from HMC directly. Triteq purchased and resold locking pistol boxes from HMC, but in early 2010 decided to begin manufacturing its own boxes.

Currently, there is pending litigation between Triteq and entities that share common ownership with HMC. In relation to that litigation, attorneys for Triteq sent a letter to Garifalis on January 18, 2011, questioning the completeness of his response to certain subpoenas served on those entities. Garifalis responded with an angry missive, dated January 31, 20011, in which he described the discovery requests as "garbage" and said his responses were complete. Relevant to the instant case, he added that he wanted to provide Triteq "with formal notice on two other unrelated matters that require immediate attention." First, Garifalis said that Triteq was using certain of HMC's logos on its Web site without permission. Garifalis then added:

Secondarily, it would appear that Tri--Teq is selling a RouTeq safe that is a direct copy of an HMC patented pistol box. US Patent No. US D461,955 S. http://www.triteqlock.com/products3.html. Tri--Teq does not have authorization to manufcature [sic] from HMC, nor has Tri--Teq paid for the delivery of a small batch of said boxes from HMC. First, Tri--Teq must either pay for the units delivered, or return them in their original condition. Second, Tri--Teq must cease from ony [sic] further sale and advertisement of said box. Furthermore, it is requested that Triteq hand over all records of any sales of this Box since January 15, 2006, the customers' names and contact details, dollar amounts and any open orders, as well as who may may [sic] contracted for its manufacture. Failure to promptly respond to this very serious breach of our patent rights will not be tolerated. A response within 7 days from receipt of this letter is required.

Triteq responded by bringing the instant Complaint on February 7, 2011.

II. ANALYSIS

A. COUNT I: Declaratory Judgment

HMC's Motion to Dismiss Count I is brought pursuant to FED. R. CIV. P. 12(b)(1) because it contends that the Court lacks subject-matter jurisdiction. On a Rule 12(b)(1) motion, the Court may consider matters beyond the allegations in the complaint. Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188, 191 (7th Cir. 1993).

Under the Declaratory Judgment Act, a party to an "actual controversy" can seek a declaration of its legal rights. 28 U.S.C. § 2201(a). HMC argues, however, that there is no actual controversy in this case because Triteq created the dispute "in its own mind and to suit its own purposes."

The parties agree that the relevant test for determining whether a case or controversy exists under the Declaratory Judgment Act is set out in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). There, the Court held that there is no bright-line rule as to when the case-or-controversy requirement is satisfied by a declaratory judgment action. Id. at 127. But the dispute must be "definite and concrete, touching the legal relations of parties having adverse legal interests," and it must be "real and substantial" and "admit of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Id. (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240--41 (1941)).

The Federal Circuit has viewed MedImmune as abrogating its "reasonable apprehension" test, which the Court had used to determine whether there was an actual controversy in suits requesting a declaration of patent invalidity. Sony Elec., Inc. v. Guardian Media Tech., Ltd., 497 F.3d 1271, 1283 (Fed. Cir. 2007). That test required a two-pronged inquiry into: (1) whether the plaintiff produced or was prepared to produce an allegedly infringing product; and (2) whether conduct by the patentee had created a reasonable apprehension on the part of the plaintiff that the patentee would file suit if the allegedly infringing activity continued. Id. Instead, the Federal Circuit now applies what it terms an "all circumstances" standard, which means that the court is to take into account the circumstances as a whole in determining if a justiciable controversy exists. Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1341 (Fed. Cir. 2007).

The Federal Circuit has provided helpful guidance in determining when such circumstances exist. Declaratory judgment jurisdiction generally does not arise just because a party learns of the existence of a patent owned by another or perceives that there is a risk of infringement, "without some affirmative act by the patentee." SanDisk Corp. v. STMicroElectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir. 2007). "But Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do." Id. As such, when a patent holder claims rights under a patent based on ...


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