Subject Matter Jurisdiction Exists Even Though Four Year Period Between Threatening Letters And The Filing Of A Declaratory Judgment Action

In Micron Technology, Inc. v. MOSAID Technologies, Inc. (No. 2007-1080; February 29, 2008), the Federal Circuit reverses the District Court’s decision granting MOSAID Technologies, Inc.’s (“MOSAID”) motion to dismiss for lack of subject matter jurisdiction under Article III of the United States Constitution or the Declaratory Judgment Act finding that jurisdiction did not exist under the reasonable apprehension of suit test. Micron Technology, Inc. (“Micron”) is one of four leading dynamic random access memory chip (DRAM) manufactures, along with Samsung, Hynix and Infineon. MOSAID owns several patents in the field of DRAM chips and began enforcing its patents after the four major DRAM manufacturers refused licenses under its technology. Specifically, MOSAID sent four warning letters to Micron suggesting it license its technology from June 2001 through July 2002. MOSAID first sued Samsung and later Hynix. In the interim, Infineon filed an action seeking a declaratory judgment of non-infringement with regard to MOSAID’s patents. All cases were settled. Press reports predicted that Micron was the next target as MOSAID had settled the cases with Samsung, Hynix and Infineon.

Micron filed a declaratory action in the Northern District of California on July 24, 2005 seeking a declaration of non-infringement of fourteen MOSAID patents. The following day, MOSAID filed an infringement action against Micron in the Eastern District of Texas. MOSAID subsequently moved to dismiss the action in California for lack of subject matter jurisdiction and the District Court granted the motion finding no jurisdiction under the reasonable apprehension of suit test. In so concluding, the District Court relied on the first factor of the pre-MedImmune declaratory judgment test and stated that as there were no threats against Micron for the last four years, no threats to Micron’s customers and no public comments from MOSAID that mentioned Micron by name, there was no explicit threat or other action by MOSAID which created a reasonable apprehension of suit against Micron.

The Federal Circuit reverses finding that the District Court applied the wrong legal standard and under the proper legal standard, which requires a showing of whether the facts alleged under all the circumstances show that there is a substantial controversy between parties having adverse legal interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment, the California District Court has jurisdiction. In so finding, the Federal Circuit states that the record evidence amply supports a real and substantial dispute between MOSAID and Micron as Micron received several threatening letters from MOSAID and then watched MOSAID sue each of the other leading DRAM manufacturers. The Federal Circuit further states that the four year lapse since MOSAID’s threatening letters is unavailing because during this period MOSAID was negotiating with other leading DRAM manufacturers. The panel declares that in addition to the threatening letters and litigation strategy, MOSAID’s recent public statements and annual reports also confirm its intent to continue an aggressive litigation strategy. Accordingly, the Federal Circuit concludes that the facts alleged under all the circumstances shows a substantial controversy between the parties with adverse legal interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.