Covenant Not To Sue Blocks Declaratory Judgment Action Seeking To Invalidate Patent

The plaintiff, Mytee Products, Inc. ("Mytee") manufactures and sells a sealing fan under the name Tradewind. Defendants Studebaker Enterprises, Inc. ("Studebaker") and Dri-Eaz Products, Inc. ("Dri-Eaz") were assigned ownership rights in the patents-in-suit, which are both entitled "Shrouded Floor Drying Fan." Another of the defendants, Skagit Northwest Holdings, Inc. ("Skagit") is in the business of manufacturing room drying fans that are considered to be covered by the patents-in-suit.

Counsel for Studebaker and Skagit sent a letter to Mytee asserting that Mytee's Tradewind fan infringes their patents. Mytee then filed a declaratory judgment action asserting that the Tradewind did not infringe the patents and that the patents were invalid. Dri-Eaz and Studebaker subsequently executed a covenant not to sue to Mytee and provided the covenant not to sue to Mytee. Defendants then filed a motion to dismiss this patent infringement action for lack of subject matter jurisdiction.

The district court noted that "[t]he Federal Circuit, however, has held that "a covenant not to sue for patent infringement divests the trial court of subject matter jurisdiction over claims that the patent is invalid, because the covenant eliminates any case or controversy between the parties." Dow Jones & Co., Inc. v. Ablaise Ltd., 606 F.3d 1338, 1346 (Fed. Cir. 2010) (emphasis added)."

Mytee asserted that the motion to dismiss should be denied because the covenant was not signed by all three defendants and because it did not protect against future infringement actions. The district court rejected both assertions.

First, the district court found that "[t]he Covenant was signed by the President of Studebaker and the CEO of Dri-Eaz. Mytee argues that this covenant is insufficient because Skagit did not sign it. The inventor assigned ownership rights to Studebaker and Dri-Eaz in a written document (Decl. of Kevin Zeck Ex. B.) that was recorded with the Patent and Trademark Office ("PTO"). (Seecof Evidence Objection.) The recording of an assignment with the PTO creates a presumption of validity and places the burden to rebut such a showing on one challenging the assignment. SiRF Tech., Inc. v. Intl Trade Comm'n, 601 F.3d 1319, 1328 (Fed. Cir. 2010) (applying 37 C.F.R. § 3.54). Mytee has not submitted any specific evidence that rebuts the presumption of validity for the recorded patent assignment. Since the inventor assigned the patents, Studebaker and Dri-Eaz are the past...