IP Law Bulletin

As discovery proceeded, Joao identified its asserted claims, as required by the local patent rules. Telular subsequently moved for judgment on the pleadings that the asserted claims were invalid under 35 U.S.C. § 101 because the claims were directed to non-statutory subject matter. Several months after Joao served its final infringement contentions, Judge Pallmeyer granted Telular’s motion, finding all of the claims in the two asserted patents invalid under 35 U.S.C. § 101.

Joao moved for reconsideration, arguing the Court lacked jurisdiction to rule on the validity of any claims other than the asserted claims. Judge Pallmeyer agreed with Joao. In deciding on Joao’s motion, the Court observed that narrowing the asserted claims under local patent rules can limit a court’s jurisdiction over unasserted claims, even if the court had jurisdiction over those claims at the time the original complaint was filed. The Court concluded that in this case Joao had effectively withdrawn the portion of its complaint addressing the unasserted claims.

However, this still left Telular’s invalidity counterclaim. Judge Pallmeyer concluded Telular needed to show something more than the complaint and counterclaim to support continuing declaratory judgment jurisdiction over the unasserted claims. The Court observed that Supreme Court and Federal Circuit precedent require a party seeking declaratory judgment jurisdiction to demonstrate that it faces an ongoing threat of injury and found that Telular had not made this showing. For example, Telular had not argued that the similarity between the asserted and unasserted claims created a genuine threat that it might be sued for infringement of the non-asserted claims or pointed to demand letters claiming Telular infringed the unasserted claims.

Having found it did not have jurisdiction to address the validity of the unasserted claims, the Court limited its ruling under 35 U.S.C. § 101 to just the asserted claims.

The Joao ruling provides a good example of why it is important for all parties to stay aware of subject matter jurisdiction issues throughout a litigation and look for opportunities to leverage them. Moreover, Joao suggests that defendants who have invalidity counterclaims in order to preserve their ability to challenge the validity of all of the claims of the asserted patents should also consider what additional support they can marshal for declaratory judgment jurisdiction should the need arise during litigation.