Personalized Media Communications, L.L.C. v. Scientific-Atlanta, Inc. ( 2012 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
PERSONALIZED MEDIA COMMUNICATIONS,
L.L.C.,
Plaintiff/Counterclaim Defendant-
Appellee,
v.
SCIENTIFIC-ATLANTA, INC. AND POWERTV, INC.,
Defendants,
v.
TVG-PMC, INC., STARSIGHT TELECAST, INC.,
AND GEMSTAR-TV GUIDE INTERNATIONAL, INC.,
Counterclaimants-Appellants.
__________________________
2011-1466
__________________________
Appeal from the United States District Court for the
Northern District of Georgia in Case No. 02-CV-0824,
Judge Charles A. Pannell, Jr.
_________________________
Decided: August 23, 2012
_________________________
ARUN S. SUBRAMANIAN, Susman Godfrey LLP, of New
York, New York, argued for plaintiff/counterclaim defen-
PERSONALIZED MEDIA v. SCIENTIFIC-ATL 2
dant-appellee. With him on the brief were NATHAN M.
REHN, and STEPHEN D. SUSMAN.
DARYL L. JOSEFFER, King & Spalding, of Washington,
DC, argued for counterclaimant-appellant. With him on
the brief were ADAM M. CONRAD, of Charlotte, North
Carolina, and JOSEPH C. SHARP, Ashe, Rafuse, & Hill,
LLP, of Atlanta, Georgia.
__________________________
Before RADER, Chief Judge, MAYER and DYK, Circuit
Judges.
Opinion for the court filed by Chief Judge RADER. Con-
curring opinion filed by Circuit Judge MAYER.
RADER, Chief Judge.
This appeal comes from a patent infringement suit be-
tween Personalized Media Communications, LLC (“PMC”)
and several defendants in the Northern District of Geor-
gia (“the Georgia litigation”). Appellants (“Gemstar”)
were third-party counterclaimants in the Georgia litiga-
tion. Gemstar claimed the Georgia litigation breached a
license agreement between PMC and Gemstar granting
Gemstar the exclusive right to litigate infringement of the
patents-in-suit. Gemstar also requested a declaratory
judgment on the scope of the licensing agreement.
The district court dismissed Gemstar’s declaratory
judgment claim as moot. It then found it had original,
federal question patent jurisdiction over Gemstar’s breach
of contract claim. It concluded PMC did not breach the
agreement because Gemstar could not show damages.
Gemstar appealed.
This court reverses the decision on original jurisdic-
tion over the contract claim and agrees that the district
court could properly decline to exercise supplemental
3 PERSONALIZED MEDIA v. SCIENTIFIC-ATL
jurisdiction over that claim. Because the parties are now
engaged in new litigation over the issues raised in the
declaratory judgment action, this court affirms the dis-
missal of that claim.
I.
PMC is the assignee of a group of United States pat-
ents called “the Harvey Patents.” The Harvey Patents
disclose and claim numerous inventions relating to the
distribution and control of media and programming
content. Gemstar’s business consists primarily of provid-
ing interactive programming guide (“IPG”) technology to
television set-top box manufacturers. These interactive
programming guides allow television viewers to locate
and view programming and may provide other features
such as parental controls, pay-per-view, and browse
functionalities.
In 2000, Gemstar and PMC signed a license agree-
ment granting Gemstar “the exclusive right, but not the
obligation to enforce” the Harvey Patents “against any
Person operating in the [IPG] Field.” J.A. 2590. The
license remains in effect.
On March 2, 2002, PMC sued Scientific-Atlanta for in-
fringement of the Harvey Patents resulting from the
“unauthorized manufacture, use, sale, offer to sell and/or
importation . . . of products, services and/or systems that
fall within the scope of [PMC’s] patented automated
broadcast control technology, and [PMC’s] patented single
processing apparatuses and methods.” J.A. 1291. In
describing the Harvey Patents, PMC’s complaint repre-
sented that the Harvey Patents involved “technologies
that are used to automate the receipt, storage, scheduling
and rebroadcast of various forms of television program-
ming.” J.A. 1297. In response, Scientific-Atlanta filed
counterclaims against Gemstar on the grounds that
PERSONALIZED MEDIA v. SCIENTIFIC-ATL 4
Gemstar holds “perpetual and exclusive licenses in the
PMC patents in suit and the disposition of [PMC’s suit]
may impede [Gemstar’s] ability to protect that interest
while leaving the [Scientific-Atlanta] subject to a substan-
tial risk of incurring double, multiple, or other inconsis-
tent obligations.” J.A. 1435.
In February 2003, Gemstar filed cross-claims against
PMC for breach of contract and declaratory judgment of
its rights under the license and the Harvey Patents. For
the declaratory judgment, Gemstar stated that based on
the suit between PMC and Scientific-Atlanta, it appears
“PMC claims that it has retained the exclusive right to
bring suit for infringement of the Harvey Patents” but
that “PMC’s assertion of rights in the Harvey Patents . . .
falls (at least in part) within Gemstar’s exclusive rights
under the Harvey Patents.” J.A. 1372–73. Gemstar
alleged a substantial dispute between PMC and itself
regarding, inter alia, “the extent of the parties’ respective
rights under the Harvey Patents.” J.A. 1373. Gemstar
specifically sought a declaration of the respective rights of
PMC and Gemstar with respect to the Harvey Patents.
Id. Gemstar also requested injunctive relief to prevent
PMC from prosecuting its current action against Scien-
tific-Atlanta and from “further interfering with Gemstar’s
right to enforce and/or defend the Harvey Patents. . . .”
J.A. 1374; 1391.
With respect to the breach of contract claims, Gem-
star sought “damages arising naturally from or reasona-
bly foreseeable as a result of PMC’s breach includ[ing],
but not necessarily limited to, all the expenses and costs
that Gemstar has incurred as a result of PMC’s wrong-
fully asserting against Scientific-Atlanta . . . claims for
patent infringement . . . .” J.A. 1446. While Gemstar also
filed counterclaims against Scientific-Atlanta for in-
fringement of the Harvey Patents, Gemstar and Scien-
5 PERSONALIZED MEDIA v. SCIENTIFIC-ATL
tific-Atlanta settled all claims against one another in
June 2005.
Following a three-year stay of the Georgia litigation
for patent reexamination proceedings before the United
States Patent and Trademark Office, the trial court held a
three-day bench trial on Gemstar’s claims against PMC.
Following the bench trial, PMC moved to dismiss Gem-
star’s declaratory judgment claim as moot because of
Gemstar’s settlement with Scientific-Atlanta. In Decem-
ber 2010, the trial court granted PMC’s motion. The trial
court also declined to exercise supplemental jurisdiction
over Gemstar’s remaining claims and found that Gemstar
was no longer an appropriate party to the case.
Gemstar moved for reconsideration of its dismissal.
The trial court refused to reconsider Gemstar’s declara-
tory judgment and injunctive relief claims. However, with
respect to its jurisdiction over Gemstar’s breach of con-
tract counterclaims, it concluded that it had original,
federal question jurisdiction under U.S. Valves, Inc. v.
Dray, 212 F.3d 1368 (Fed. Cir. 2000). The trial court
rejected the merits of Gemstar’s breach of contract claims
because Gemstar had not shown the necessary element of
damages. The trial court entered a final judgment, and
Gemstar made a timely appeal to this court. This court
has jurisdiction under 28 U.S.C. § 1295.
Following Gemstar’s appeal, Gemstar was joined to
another patent infringement suit between PMC and
several other parties (“the Texas litigation”). According to
the trial court in the Texas litigation, Gemstar is a neces-
sary party because the litigation involves the scope of
Gemstar’s license with PMC and Gemstar needs to pro-
tect its interest in the license. Personalized Media
Commc’ns, LLC v. Echostar Corp., No. 2:08-CV-70-RSP
(E.D. Tex., July 10, 2012).
PERSONALIZED MEDIA v. SCIENTIFIC-ATL 6
II.
This court reviews a district court’s determination as
to original patent law jurisdiction without deference. HIF
Bio, Inc. v. Yung Shin Pharm. Indus., 600 F.3d 1347, 1352
(Fed. Cir. 2010). While the court reviews a district court’s
determination as to mootness without deference, CAMP
Legal Defense Fund, Inc. v. City of Atlanta, 451 F.3d 1257,
1268 (11th Cir. 2006), the district court’s ultimate conclu-
sion to deny declaratory judgment jurisdiction and
whether to exercise supplemental jurisdiction contains an
element of discretion, Green v. Mansour, 474 U.S. 64, 71
(1985) (“[T]he declaratory judgment statute is an enabling
Act, which confers a discretion on the courts rather than
an absolute right upon the litigant.”); Carlsbad Tech., Inc.
v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (stating a dis-
trict court’s decision of whether to exercise supplemental
jurisdiction is “purely discretionary”).
III.
28 U.S.C. § 1338 gives district courts original jurisdic-
tion over “any civil action arising under any Act of Con-
gress relating to patents.” There is no original
jurisdiction unless the “right to relief necessarily depends
on resolution of a substantial question of federal patent
law.” Christianson v. Colt Indus. Operation Corp., 486
U.S. 800, 814–15 (1988). See, e.g., U.S. Valves, Inc., 212
F.3d at 1372 (finding jurisdiction over breach of contract
claim because whether the asserted patents covered the
licensor’s products was an element of proving breach);
HIF Bio, Inc. v. Yung Shin Pharm. Indus., 600 F.3d 1347,
1352 (Fed. Cir. 2010) (finding jurisdiction over slander of
title claim because plaintiffs’ allegation that defendants’
public statements of inventorship are false requires a
determination of true inventorship); Bd. of Regents, Univ.
of Tex. v. Nippon Tel. & Tel. Corp., 414 F.3d 1358, 1363–
7 PERSONALIZED MEDIA v. SCIENTIFIC-ATL
64 (Fed. Cir. 2005) (noting that not all breach of contract
actions involving patents are claims arising under federal
patent law).
Here, the district court erroneously determined it had
original patent jurisdiction over Gemstar’s breach of
contract claim. Gemstar’s claim did not involve inventor-
ship, infringement, validity, or enforceability of the Har-
vey Patents. Gemstar has not accused PMC of any direct
or indirect infringement of the Harvey Patents. The sole
issue is the scope of the IPG field, as defined by the licens-
ing agreement between Gemstar and PMC, over which
Gemstar was given the exclusive right to assert the
Harvey Patents in suits against third parties. That scope
does not depend on patent claim scope. Thus, the district
court erred in finding original patent law jurisdiction.
Because the district court erred in finding it had
original patent law jurisdiction, this court vacates the
district court’s decision on the merits of the breach of
contract claim. As discussed below we also agree that the
district court could properly decline to exercise supple-
mental jurisdiction over that claim.
IV.
In 2010, the Georgia district court dismissed Gem-
star’s declaratory judgment claim as moot and declined to
exercise supplemental jurisdiction over the contract
claims. Declaratory judgment and supplemental jurisdic-
tion determinations have a discretionary element. See
Carlsbad Tech., Inc., 556 U.S. at 639; Green, 474 U.S. at
71. Regardless of any error that might have been commit-
ted by the district court, discretion now counsels against
exercising jurisdiction over Gemstar’s claims.
Under the supplemental jurisdiction statute, a district
court “may decline to exercise supplemental jurisdiction”
PERSONALIZED MEDIA v. SCIENTIFIC-ATL 8
if “the district court has dismissed all claims over which it
has original jurisdiction.” 28 U.S.C. § 1367(c). All such
original jurisdiction claims will now have been dismissed.
Nonetheless, Gemstar argues that it would be an abuse of
discretion to decline to exercise supplemental jurisdiction
because substantial resources have been invested in this
case. While we agree that a district court should consider
judicial economy when deciding whether to exercise
supplemental jurisdiction, other factors weigh in favor of
dismissal in this case. 1
On July 10, 2012, the Eastern District of Texas or-
dered that Gemstar be joined to the Texas litigation. The
Texas court reasoned “the scope and meaning of the
license agreement between Personalized Media and
Gemstar will be at issue,” and a ruling in the case “may
as a practical matter impair Gemstar’s ability to protect
its interest in the future sublicensing of the asserted
patents.” Personalized Media Commc’ns, LLC, slip op. at
6.
Gemstar is currently pursuing its claims against PMC
in the context of the Texas litigation. The Texas litigation
1 We note that under the supplemental jurisdiction
statute, the statute of limitations has not yet run on
Gemstar’s breach of contract claim. See 28 U.S.C. § 1367(“The period of limitations for any claim asserted [based
on supplemental jurisdiction] . . . shall be tolled while the
claim is pending and for a period of 30 days after it is
dismissed unless State law provides for a longer tolling
period.”); Myers v. Cnty. of Lake, Ind., 30 F.3d 847, 848–
49 (7th Cir. 1994) (“Section 1367(d), giving the plaintiff at
least 30 days to re-file in state court after a federal court
declines to exercise supplemental jurisdiction, removes
the principal reason for retaining a case in federal court
when the federal claim belatedly disappears.”). Thus,
Gemstar remains free to re-file its contract claim in an
appropriate venue.
9 PERSONALIZED MEDIA v. SCIENTIFIC-ATL
will achieve the same result Gemstar sought in the long-
dead Georgia litigation: a decision on the scope and mean-
ing of the license agreement between PMC and Gemstar,
and, if appropriate, damages for breach of contract.
Additionally, Gemstar did not choose Georgia as the
forum for its declaratory judgment case because it was a
third party brought into the Georgia litigation. Thus,
allowing Gemstar to proceed with its case in Texas does
not impair a plaintiff’s choice of forum. Cf. Voda v. Cordis
Corp., 476 F.3d 887, 904 (Fed. Cir. 2007) (noting that the
plaintiff’s choice of forum is a factor in considering the
exercise of supplemental jurisdiction).
The Texas litigation is not simply an infringement
litigation between PMC and Gemstar but involves the
assertion of independent claims not involved in the Geor-
gia action, and staying the Texas action would therefore
be problematic. This is not a situation in which the
Georgia and Texas cases can comfortably proceed at the
same time. Allowing both claims to go forward would
create duplicate litigation on the same legal issues – one
in Texas, one in Georgia. This potentially would expose
Gemstar and PMC to inconsistent interpretations of their
license agreement and impair their ability to enforcement
the agreement. Such duplicate litigation would also
defeat judicial economy as it would task two courts with
deciding the same issue.
Simply put, any error in the trial court’s decision to
dismiss Gemstar’s declaratory judgment action is harm-
less because circumstances have outpaced this litigation.
Palmer v. Hoffman, 318 U.S. 109, 116 (1943) (noting that
setting aside a judgment because of an erroneous ruling
requires a showing of prejudice).
PERSONALIZED MEDIA v. SCIENTIFIC-ATL 10
V.
The district court erred in finding original patent ju-
risdiction over Gemstar’s contract claims but did not err
in declining to exercise supplemental jurisdiction. As
such, this court reverses the finding of jurisdiction and
vacates the district court’s decision on the merits of Gem-
star’s contract claims. This court affirms the district
court’s dismissal of Gemstar’s declaratory judgment claim
because any error in its decision is rendered harmless by
Gemstar’s participation in the Texas litigation.
AFFIRMED-IN-PART AND REVERSED-AND-
VACATED-IN-PART
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
PERSONALIZED MEDIA COMMUNICATIONS,
L.L.C.,
Plaintiff/Counterclaim Defendant-Appellee,
v.
SCIENTIFIC-ATLANTA, INC. AND POWERTV, INC.,
Defendants,
v.
TVG-PMC, INC., STARSIGHT TELECAST, INC.,
AND GEMSTAR-TV GUIDE INTERNATIONAL, INC.,
Counterclaimants-Appellants.
__________________________
2011-1466
__________________________
Appeal from the United States District Court for the
Northern District of Georgia in case no. 02-CV-0824,
Judge Charles A. Pannell, Jr.
__________________________
MAYER, Circuit Judge, concurring.
I agree that the district court had no original federal
question jurisdiction over the breach of contract claim
brought by Gemstar-TV Guide International, Inc. (“Gem-
star”) against Personalized Media Communications,
L.L.C. (“PMC”). I further agree that because the scope of
PERSONALIZED MEDIA v. SCIENTIFIC-ATL 2
the licensing agreement between Gemstar and PMC will
be adjudicated in other proceedings, see Personalized
Media Commc’ns, L.L.C. v. Echostar Corp., No. 2:08-CV-
70-RSP, slip op. at 6 (E.D. Tex. July 10, 2012), exercising
jurisdiction over Gemstar’s declaratory judgment claim
would “defeat judicial economy as it would task two courts
with deciding the same issue,” ante at 8.
I do not, however, subscribe to the majority’s intima-
tion of error in the trial court’s original decision to dismiss
Gemstar’s declaratory judgment claim as moot. The
subject matter of the litigation before the district court
was whether Scientific-Atlanta, Inc. (“Scientific”) in-
fringed U.S. Patent Nos. 4,694,490, 4,704,725, 4,965,825,
5,109,414, 5,233,654, 5,335,277, and 5,887,243 (collec-
tively “the Harvey patents”). All issues related to the
alleged infringement were rendered moot when Scientific
entered into settlement and licensing agreements with
both Gemstar and PMC. Because Gemstar entered into a
comprehensive settlement agreement with Scientific
related to its rights under the Harvey patents, it had no
continuing interest in the case and the trial court cor-
rectly dismissed its declaratory judgment claim. See
Socialist Lab. Party v. Gilligan, 406 U.S. 583, 586 (1972)
(“It is axiomatic that the federal courts do not decide
abstract questions posed by parties who lack a personal
stake in the outcome of the controversy.” (citations and
internal quotation marks omitted)); Gould v. Control
Laser Corp., 866 F.2d 1391, 1392 (Fed. Cir. 1989) (“Set-
tlement moots an action.”).
Gemstar’s effort to obtain a “declaration of its rights”
in the Harvey patents is a poorly-disguised attempt to
obtain an advisory opinion on the scope of its licensing
agreement with PMC. Gemstar has settled its dispute
with Scientific, and any dispute Gemstar has with PMC
over the scope of their licensing agreement is too remote
3 PERSONALIZED MEDIA v. SCIENTIFIC-ATL
and speculative to support the exercise of declaratory
judgment jurisdiction. A patent licensee is not entitled to
turn to the federal courts for an adjudication of its rights
under a license agreement until such time as there is an
actual and concrete dispute over the scope of those rights.
See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
127 (2007) (declaratory judgment jurisdiction is available
only where the dispute is “definite and concrete” (citations
and internal quotation marks omitted)). Gemstar’s vague
allegation that its hypothetical relationships with un-
named “prospective licensees” might be damaged because
of uncertainties over the scope of its licensing agreement
with PMC, is not the type of “specific live grievance,”
Golden v. Zwickler, 394 U.S. 103, 110 (1969), necessary to
support the exercise of declaratory judgment jurisdiction.
See Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d
1340, 1349 (Fed. Cir. 2007) (concluding that there was “no
evidence of a justiciable controversy” where a declaratory
judgment plaintiff’s potential future expansion plans were
“vaguely defined”); Microchip Tech. Inc. v. Chamberlain
Group, Inc., 441 F.3d 936, 943 (Fed. Cir. 2006) (“Without
an underlying legal cause of action, any adverse economic
interest that the declaratory plaintiff may have against
the declaratory defendant is not a legally cognizable
interest sufficient to confer declaratory judgment jurisdic-
tion.”). Instead, as the trial court correctly concluded,
because “Gemstar no longer ha[d] any stake in the patent
dispute between PMC and [Scientific] . . . any ruling on
Gemstar’s declaratory judgment claim would constitute
an advisory opinion as to the rights that PMC and Gem-
star have in the Harvey patents with respect to a hypo-
thetical party.” Personalized Media Commc’ns, L.L.C. v.
Scientific-Atlanta, Inc., No. 1:02-CV-824-CAP, slip. op. at
4 (N.D. Ga. Dec. 14, 2010).