Declaratory Judgment Jurisdiction Found Where Patent License Negotiations Reached An Impasse And NDA Did Not Preclude A Lawsuit

Plaintiff Biomet, Inc. ("Biomet") filed a complaint for Declaratory Judgment against Bonutti Skeletal Innovations, LLC ("Bonutti") seeking a declaration that the manufacture, use, or sale of Biomet's products does not infringe on Bonutti's patents. Bonutti filed a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ.P. 12(b)(1), arguing that, at the time the complaint was filed, there was no case or controversy as defined by the Declaratory Judgment Act, 28 U.S.C. § 2201(a).

The district court explained the facts as follows. In June 2012, Acacia Research Group (ARG), Bonutti's parent company, contacted Biomet about a new licensing agreement. Shortly afterwards, Plaintiff and ARG began negotiating the terms of the licensing agreement. The bargaining process included the signing of a Non-Disclosure Agreement ("NDA"). The NDA's purpose was to facilitate the licensing of patents to avoid litigation. There was nothing in the NDA that prevented the parties from filing a lawsuit against each other at any point, for any reason.

The negotiations continued with several emails and phone conferences between the parties. In September 2012, Bonutti advised Biomet that it had filed "multiple patent infringement suits involving at least some of the patents-in-suit against a number of medical device manufacturers." Bonutti further advised Biomet that they believed some of Biomet's products were infringing upon Bonutti's patents, including suture anchors, uni-condylar knees, and other instruments and surgical methods. In January 2012, Bonutti sent Biomet, at Biomet's request, a chart that identified Bonutti's patents and the specific products of Bonutti that Biomet believed were infringing upon Bonutti's patents. Shortly afterwards, Bonutti sent Biomet a list of Bonutti's lawsuits against Biomet's competitors.

Bonutti sent Biomet an email with a final offer to license the patent portfolio, which stated in part: "we request that you accept our offer or make a counter offer by Friday March 8 . . . I would personally like to see a deal occur with Biomet, but must emphasize the urgency of this matter." On March 8, 2013, Biomet responded to the offer stating it thought that a license was unnecessary and that Biomet would not be making a counter-offer. Two hours after this email was sent, the complaint was filed in this action.

After reciting the factual background, the district court then analyzed the relevant legal standard. "To...