DC finding of no Article III case or controversy remanded; transfer from CA to TX affirmed

Mitek Systems, Inc. v. United Services Automobile Association

Docket No. 2021-1989 (https://cafc.uscourts.gov/opinions-orders/21-1989.OPINION.5-20-2022_1954430.pdf)

DYK, TARANTO, CUNNINGHAM

May 20, 2022

Brief Summary:   DC finding of no Article III case or controversy remanded; transfer from CA to TX affirmed. Summary:  Mitek’s originally requested the CA DC to grant a declaratory judgment (DJ) that its customers have not directly or indirectly infringed USAA’s patents-in-suit relating to digitally depositing a check (e.g., into a bank), but the CA court granted USAA’s request to transfer the case to the DC of the Eastern District of TX.  The TX court dismissed the case for a lack of a case or controversy required by Article III of the Constitution, which Mitek appealed the transfer and the dismissal to the FC.  Mitek is a DE corporation with a place a business in San Diego, CA and “created software for mobile check capture that provides ‘automatic image capture technology’” that “enables the ‘instant capture of quality images with a mobile or desktop device’” which it licenses to financial institutions as MiSnap™.  Mitek alleged that in 2017 USAA “began sending licensing letters to financial institutions, including Mitek customers”, and in 2018 USAA sued Mitek customer Wells Fargo (WF) in the ED of TX that was decided in USAA’s favor.  Mitek filed its complaint against USAA on the third day of the WF trial (before the TX decision) alleging USAA had sent over 1,000 letters to Mitek’s customers, Mitek had received indemnification requests from its customers but, e.g., “did not give concrete examples regarding indemnification”.  Mitek also alleged “USAA ‘implicitly accused Mitek of encouraging and contributing to the infringement of each of the Patents-in-Suit’”.  In 2020, the CA court granted USAA’s motion to transfer the case to TX without ruling on USAA’s motion to dismiss.  In 2021, the TX court granted USAA’s motion to dismiss for lack of case or controversy.  The FC panel reviewed whether the DC had subject-matter jurisdiction de novo (Microsoft, FC 2014) and explained that SCOTUS has held that “the question in each case is 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” (MedImmune, US 2007 (see FN3 of this FC panel decision (“MedImmune rejected a general requirement of a reasonable apprehension of suit” but see also Streck, FC 2012 (“reasonable apprehension is one of multiple ways” a “plaintiff can satisfy the more general all-the-circumstances test”)); Microsoft, FC 2014 (“at the time of the complaint”); Preiser, US 1975 (“must remain present throughout the course of the suit”); Hewlett-Packard, FC 2009 (“‘a communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more,’ does not suffice”).  Mitek argued “it meets the MedImmune standard on each of two bases: (a) its potential liability for infringement; and (b) the alleged demands for indemnity made by many of its licensees after USAA sent them letters”.  The FC panel found Mitek’s arguments and the basis of the TX decision to be “unclear” and therefore remanded the jurisdictional issue.  It also rejected Mitek’s argument that the case should be transferred back to CA (e.g., no abuse of discretion).

This entry was posted in Appeal, Article III disputes, Jurisdiction. Bookmark the permalink.

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