IV’s Own Actions During “True-Up” Negotiations Sufficient to Establish Controversy

January 27, 2012

January 27, 2011- The court denied Intellectual Ventures (IV) motion to dismiss claims related to two patents identified in a complaint for declaratory judgment filed by Xilinx. The court rejected IV’s contention that their was no ”real” controvery over the two patents.  The court disagreed noting, “it was IV’s representative who identified these two patents among the sixteen ‘key’ patents IV believed should be ‘of interest’ to Xilinx. IV made this identification in the context of business negotiations and in an attempt to convince Xilinx that it should ‘true-up’ and invest in the twelve portfolios containing the sixteen ‘key’ patents. Id., Ex. 7. IV, however, refused to allow Xilinx to take licenses to any of the individual ‘key’ patents, insisting that Xilinx instead ‘elect’ into some or all of the twelve portfolios. While IV makes much of the fact that it did not threaten Xilinx with litigation, but instead was simply engaging in ‘business negotiations,’ the Court notes that IV identified the sixteen key patents for Xilinx shortly before filing suit against three of Xilinx’s competitors in order to ‘enforce’ IV’s intellectual property rights but only ‘after our efforts to engage these companies in business discussions broke down.’ Though IV now attempts to argue that there is no ‘real’ and ‘immediate’ controversy over the‘865 and ‘001 patents, based on the record before the Court it appears that those patents were a necessary part of IV’s attempt to induce Xilinx to invest in broad portfolios of patents, by holding out Xilinx’s alleged need to secure licenses to the sixteen ‘key’ patents. Although IV did not provide Xilinx with claim charts for the ‘865 and ‘001 patents, that could be because either Xilinx refused to sign a new NDA or because IV did not believe – despite its attempts to convince Xilinx otherwise – that Xilinx should be interested in the ‘865 and ‘001 patents in light of its current and future products. In support of its motion, IV’s declarant explains that despite Xilinx’s request for claim charts for each of the sixteen ‘key’ patents, IV ‘prepared and delivered’ to Xilinx charts for only a subset of the patents. IV does not explain why it did this, or attempt to rebut Xilinx’s argument. Similarly, while IV’s declarant asserts that the true-up process did not involve allegations of ‘infringement’ with respect to the ‘865 and ‘001 patents, IV does not introduce evidence that it backed away from its belief that the ‘865 and ‘001 patents were ‘key’ and should be of interest to Xilinx given Xilinx’s current or future products, or that IV stopped pushing Xilinx to invest in the specific portfolios containing these two ‘key’ patents. These factors, and IV’s failure to adequately rebut plaintiff’s evidence and arguments, also support a finding of a real, immediate case or controversy. In sum, Xilinx has pointed to sufficient evidence to show that IV’s own actions have created a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the exercise of declaratory judgment jurisdiction over Xilinx’ invalidity claims with respect to the ‘865 and ‘001 patents.

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