Mitek Systems, Inc. v. United Services Automobile Association ( 2022 )

Case: 21-1989 Document: 34 Page: 1 Filed: 05/20/2022
United States Court of Appeals
for the Federal Circuit
______________________
MITEK SYSTEMS, INC.,
Plaintiff-Appellant
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION,
Defendant-Appellee
______________________
2021-1989
______________________
Appeal from the United States District Court for the
Eastern District of Texas in No. 2:20-cv-00115-JRG, Chief
Judge J. Rodney Gilstrap.
______________________
Decided: May 20, 2022
______________________
BRIAN MACK, Quinn Emanuel Urquhart & Sullivan,
LLP, San Francisco, CA, argued for plaintiff-appellant.
Also represented by DAVID EISEMAN, IV.
LISA GLASSER, Irell & Manella LLP, Newport Beach,
CA, argued for defendant-appellee. Also represented by
MICHAEL DAVID HARBOUR, JASON SHEASBY, Los Angeles,
CA.
______________________
Before DYK, TARANTO, and CUNNINGHAM, Circuit Judges.
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2 MITEK SYSTEMS, INC. v.
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TARANTO, Circuit Judge.
In November 2019, Mitek Systems, Inc. brought suit in
the United States District Court for the Northern District
of California against United Services Automobile Associa-
tion (USAA). It sought a declaratory judgment, under the
Declaratory Judgment Act, 28 U.S.C. § 2201(a), that Mitek
and its customers have not infringed, either directly or in-
directly, any valid and enforceable claim of USAA’s U.S.
Patent Nos. 8,699,779, 9,336,517, 8,977,571, and 9,818,090
(hereinafter referred to as the patents-in-suit). In re-
sponse, USAA filed a motion making two requests. It
sought dismissal of the complaint on the grounds that
there was no case or controversy between USAA and Mitek
as required by Article III of the Constitution, so the case
should be dismissed under Federal Rule of Civil Procedure
12(b)(1) for lack of subject-matter jurisdiction, and in any
event, the court should exercise discretion not to hear
Mitek’s claim for declaratory relief. In the alternative,
USAA requested transfer of the action to the United States
District Court for the Eastern District of Texas pursuant to
28 U.S.C. § 1404.
In April 2020, the California court, without ruling on
the dismissal part of the motion, ordered the case trans-
ferred to the Texas forum. Mitek Systems, Inc. v. United
Services Automobile Association, No. 19-cv-07223, 2020
WL 1922635 (N.D. Cal. Apr. 21, 2020) (Transfer Order). In
April 2021, the Texas court dismissed for want of a case or
controversy and stated that, even if jurisdiction existed, it
would exercise its discretion to decline to entertain the de-
claratory-judgment action. Order, Mitek Systems, Inc. v.
United Services Automobile Association, No. 2:20-cv-00115
(E.D. Tex. Apr. 28, 2021), ECF No. 69 (Dismissal Order);
see also J.A. 11–19. On Mitek’s appeal, we vacate the
Texas court’s dismissal and remand for further proceed-
ings. The remand is to the Texas court because we affirm
the California court’s transfer order.
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I
A
USAA, a reciprocal inter-insurance exchange, is orga-
nized under Texas law and has its principal place of busi-
ness in San Antonio, Texas. USAA owns the four patents-
in-suit, all of which address the use of a mobile device to
capture an image of a bank check and to transmit it for de-
posit. The related ’779 and ’517 patents describe an “align-
ment guide . . . in the field of view of a camera associated
with a mobile device used to capture an image of a check.”
’779 patent, col. 1, lines 40–42; ’517 patent, col. 1, lines 51–
53. “When the image of the check is within the alignment
guide in the field of view, an image may be taken by the
camera and provided from the mobile device to a financial
institution.” ’779 patent, col. 1, lines 42–45; ’517 patent,
col. 1, lines 53–56. Similarly, the related ’571 and ’090 pa-
tents describe “[t]he monitoring” of an image of a check
that is in the field of view of the camera, which “may be
performed by the camera, the mobile device and/or finan-
cial institution that is in communication with the mobile
device.” ’571 patent, col. 1, lines 38–43; ’090 patent, col. 1,
lines 51–56. “When the image of the check in the field of
view passes monitoring criteria,” such as criteria for proper
lighting or framing, “an image may be taken by the camera
and provided from the mobile device to a financial institu-
tion.” ’571 patent, col. 1, lines 43–46; id., col. 3, lines 58–
61; ’090 patent, col. 1, lines 56–59; id., col. 4, lines 10–13.
For the purposes of this appeal, Mitek deemed claim 1
of the ’779 patent to be representative, which recites:
1. A system for depositing a check, comprising:
a mobile device having a camera, a display and a
processor, wherein the processor is configured to:
project an alignment guide in the display of
the mobile device, the display of the mobile
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4 MITEK SYSTEMS, INC. v.
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device displaying a field of view of the cam-
era;
monitor an image of the check that is
within the field of view;
determine whether the image of the check
aligns with the alignment guide;
automatically capture the image of the
check when the image of the check is deter-
mined to align with the alignment guide;
and
transmit the captured image of the check
from the camera to a depository via a com-
munication pathway between the mobile
device and the depository.
’779 patent, col. 18, lines 36–51.
B
Mitek is a Delaware corporation and has its headquar-
ters and principal place of business in San Diego, Califor-
nia. 1 Mitek created software for mobile check capture that
provides “automatic image capture technology,” J.A. 494
(Carnecchia Decl. ¶ 3) (capitalization altered), which ena-
bles the “instant capture of quality images with a mobile or
desktop device,” J.A. 36 (Compl. ¶ 28). It licenses the soft-
ware, through a product it calls MiSnap™, in the form of a
development kit to financial institutions, often indirectly
through third-party providers of services to such
1 We recite facts from the complaint and from addi-
tional evidence submitted in the district court—without en-
dorsing the assertions of fact—that play roles in the
disposition of the motions at issue discussed later in this
opinion.
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institutions. J.A. 29, 36 (Compl. ¶¶ 3, 28); J.A. 494–96
(Carnecchia Decl. ¶¶ 2–7).
Mitek alleges that, in early 2017, USAA (through its
attorneys at Epicenter Law, based in Burlingame, Califor-
nia) began sending licensing letters to financial institu-
tions, including Mitek customers. J.A. 29–30 (Compl. ¶ 8).
After a Mitek customer, Wells Fargo Bank (headquartered
in San Francisco), received its letter from USAA, USAA
and Wells Fargo held discussions in May and June of 2018.
J.A. 30 (Compl. ¶¶ 9–10). But in June 2018, USAA sued
Wells Fargo for infringement of the patents-in-suit in the
Eastern District of Texas. See Complaint, United Services
Automobile Association v. Wells Fargo Bank, N.A.,
No. 2:18-cv-00245 (E.D. Tex. June 7, 2018), ECF No. 1. In
its First Amended Complaint against Wells Fargo, USAA
mentioned Mitek and/or MiSnap™ at least twice. J.A. 93–
95 (First Am. Compl. ¶¶ 29, 36). As the case progressed,
USAA served Mitek with a subpoena pursuant to Federal
Rules of Civil Procedure 26, 34, and 45 and obtained docu-
ments, source code, and testimony from Mitek regarding
the operation of MiSnap™. J.A. 633–57. The case went to
trial on October 30, 2019, on two of the four patents-in-suit
(the ’571 and ’090 patents), and Mitek and its product were
frequently mentioned in the litigation of USAA’s infringe-
ment charge. E.g., J.A. 515–17; J.A. 686; J.A. 720–23.
On November 1, 2019, the third day of the Wells Fargo
trial, Mitek filed a complaint against USAA in the North-
ern District of California, seeking a declaratory judgment
that “Mitek and its customers have not infringed, either di-
rectly or indirectly, any valid and enforceable claim” of any
of the patents-in-suit. J.A. 38–42 (Compl. ¶¶ 35–58,
Prayer for Relief A–D). In the section of this declaratory-
judgment complaint addressing jurisdiction, Mitek made a
number of allegations.
First, Mitek alleged that USAA “sent over 1,000 patent
licensing demand letters to financial [institutions] across
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6 MITEK SYSTEMS, INC. v.
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the country, most of which are Mitek customers,” and that
“[t]hese letters explained that ‘USAA has asked Epicenter
Law to approach financial institutions to offer a license, on
reasonable terms, as fair compensation for the continued
use of [its] patent-protected invention.’” J.A. 29–30
(Compl. ¶ 8) (quoting J.A. 44 (Compl. Ex. A)). According to
Mitek, “at least some of these letters included one or more
‘claim charts’ detailing Mitek’s customers’ infringement of
one or more of the Patents-in-Suit as well as a ‘Patent List’
identifying one or more of the Patents-in-Suit.” J.A. 30
(Compl. ¶ 8) (citing J.A. 43–82 (Compl. Ex. A)). Mitek also
alleged that “[i]n response to USAA’s massive patent en-
forcement and letter writing campaign, Mitek has received
demands for indemnification from its customers and sup-
pliers pursuant to” contractual agreements with its cus-
tomers, which include “indemnification provisions relating
to actual or alleged patent infringement by Mitek’s tech-
nology.” J.A. 31–32 (Compl. ¶ 13). To support these
claims, Mitek attached one letter as an exhibit: a USAA
licensing letter sent to Mitek customer Mission Federal
Credit Union on January 22, 2018, which included a claim
chart for claims of U.S. Patent No. 8,708,227 (not one of the
patents-in-suit and from a different family), and a Patent
List that included over 70 patents, including three of the
four patents-in-suit. J.A. 43–82 (Compl. Ex. A). Mitek did
not give concrete examples regarding indemnification or
attach any documents embodying an indemnification
agreement or a demand for indemnification from any of its
customers.
Second, concerning the Wells Fargo litigation, Mitek
alleged that USAA “implicitly accused Mitek of encourag-
ing and contributing to the infringement of each of the Pa-
tents-in-Suit by supplying its MiSnap™ technology to
financial institutions for incorporation within their mobile
banking applications,” J.A. 30–31 (Compl. ¶¶ 11–12), and
Mitek attached USAA’s First Amended Complaint against
Wells Fargo as an exhibit, J.A. 83–131 (Compl. Ex. B).
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Elaborating on the allegation, Mitek asserted that “[o]n in-
formation and belief, in the Wells Fargo lawsuit, USAA has
accused Wells Fargo Bank of infringing each of the Pa-
tents-in-Suit at least in part by virtue of Wells Fargo
Bank’s use of Mitek’s software and technology, including
MiSnap™,” and that “USAA also alleged in the Wells Fargo
lawsuit that the accused Mitek technology being used by
Wells Fargo has no substantial non-infringing uses.” J.A.
31 (Compl. ¶ 12). Mitek concluded: “Mitek therefore has a
real and substantial apprehension of imminent litigation
between Mitek and USAA for direct infringement, induce-
ment, and contributory infringement of the Patents-in-
Suit.” J.A. 31 (Compl. ¶ 12).
Five days after Mitek filed its declaratory-judgment
complaint in the California forum, the jury in the USAA
case against Wells Fargo in the Texas forum rendered a
verdict for USAA. See Jury Verdict, United Services Auto-
mobile Association v. Wells Fargo Bank, N.A., No. 2:18-cv-
00245 (E.D. Tex. Nov. 6, 2019), ECF No. 322. A couple of
months later, after USAA obtained an additional verdict
against Wells Fargo on two other patents, a news article
commented that USAA “hailed the latest decision and sug-
gested [that] other banks should be on alert if they use the
same technology” as Wells Fargo. J.A. 768–70 (also stating
“[t]hese lawsuits have repercussions for the industry, be-
cause Mitek’s technology is used by 6,500 other institu-
tions”).
C
On January 15, 2020, in Mitek’s declaratory-judgment
action in California, USAA moved for dismissal under Rule
12(b)(1) for lack of subject-matter jurisdiction, or for dis-
missal based on the discretion granted to the district court
by the Declaratory Judgment Act. J.A. 254–73. In the al-
ternative, USAA sought transfer to the Eastern District of
Texas. J.A. 273–77. In support of its motion, USAA
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8 MITEK SYSTEMS, INC. v.
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submitted additional evidence, including documents and
transcripts from the Wells Fargo litigation. J.A. 278–80.
On April 21, 2020, the California district court granted
USAA’s motion to transfer the declaratory-judgment action
to the Eastern District of Texas, without ruling on the mo-
tion to dismiss. Transfer Order, 2020 WL 1922635, at *1.
After determining that the action could have been filed in
the Eastern District of Texas, the California district court
analyzed whether the convenience of parties and wit-
nesses, and the interests of justice, weighed in favor of a
transfer. Id. at *3. The court determined that the re-
quested transfer would “facilitate at the very least coordi-
nation” with the Wells Fargo litigation (tried by Judge
Gilstrap in the Eastern District of Texas), which involved
the same patents and technology; that Mitek’s choice of fo-
rum in the Northern District of California was entitled to
little deference; and that witness convenience was a neu-
tral consideration. Id. at *3–5.
On July 15, 2020, Judge Gilstrap, having received the
transferred case, heard argument from counsel on the mo-
tion to dismiss. J.A. 957–1014. Eight months later, in
March 2021, Mitek filed a supplemental brief, informing
the court of subsequent developments and submitting ad-
ditional evidence. J.A. 1015–19. Specifically, Mitek in-
formed the court that, in February 2021, Wells Fargo and
USAA had settled their dispute but that, in December
2020, USAA had filed suit against another Mitek customer,
PNC Bank, for infringement of two of the four patents-in-
suit and that PNC had, through a third-party intermedi-
ary, made an indemnity demand. J.A. 1016–17; see also
J.A. 1035–36.
The next month, on April 28, 2021, the district court
granted USAA’s motion to dismiss, ruling that there was
no case or controversy between the parties. Dismissal Or-
der at 8. The district court viewed Mitek’s basis for subject-
matter jurisdiction as resting on either (1) the Wells Fargo
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litigation or (2) USAA’s letters to Mitek customers and in-
demnification demands assertedly received by Mitek, but
the court found each basis insufficient to support jurisdic-
tion. Id. at 2–8. Alternatively, the district court noted that
“[e]ven if the Court’s determination that subject matter ju-
risdiction is lacking were later set aside, the Court would
similarly and for the same reasons exercise its discretion
and decline to exercise jurisdiction over Mitek’s declaratory
judgment action.” Id. at 8–9.
Mitek timely appealed. We have jurisdiction pursuant
to 28 U.S.C. § 1295(a)(1).
II
A
Whether the district court had subject-matter jurisdic-
tion is a question we review de novo. Microsoft Corp. v.
DataTern, Inc., 755 F.3d 899, 903 (Fed. Cir. 2014). But the
evaluation is based on the particular facts (determined ac-
cording to the procedural posture). The Supreme Court has
recognized that its precedents “do not draw the brightest of
lines between those declaratory-judgment actions that sat-
isfy the case-or-controversy requirement and that do not,”
and that, where jurisdiction is being assessed based on the
complaint, “[b]asically, the question in each case is whether
the facts alleged, under all the circumstances, show that
there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment.”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127
(2007) (citation omitted). That formulation—which “sum-
marize[s]” a formulation focusing on whether the dispute
is “definite and concrete, touching the legal relations of
parties having adverse legal interests,” is “real and sub-
stantial,” and “[admitting] of specific relief through a de-
cree of a conclusive character”—indicates the importance
of identifying the particular facts that may bear on
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10 MITEK SYSTEMS, INC. v.
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whether the standard is met in a given case, in light of “all
the circumstances.” Id. (citation omitted).
The case-or-controversy inquiry has a dual temporal fo-
cus. First, “[a] declaratory judgment plaintiff must plead
facts sufficient to establish jurisdiction at the time of the
complaint, and post-complaint facts cannot create jurisdic-
tion where none existed at the time of filing.” Microsoft,
755 F.3d at 906; see also Matthews Int’l Corp. v. Biosafe
Engineering, LLC, 695 F.3d 1322, 1331 (Fed. Cir. 2012);
Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 599
F.3d 1377, 1383–84 (Fed. Cir. 2010). Second, a case or con-
troversy must remain present throughout the course of the
suit. See Preiser v. Newkirk, 422 U.S. 395, 401–02 (1975);
Int’l Medical Prosthetics Research Associates, Inc. v. Gore
Enterprise Holdings, Inc., 787 F.2d 572, 575 (Fed. Cir.
1986).
Different procedural routes are available to identify the
facts underlying the case-or-controversy determination,
and clarity about which route is used is important, in part
because the parties should know what opportunities they
have for establishing facts of potential significance and,
later, because the standard of appellate review is affected
by the route taken. Thus, when determining whether there
was standing at the time of the filing of the action based on
pre-complaint events, and whether standing was main-
tained thereafter, the district court may rely on pleaded
and undisputed facts or on findings that resolve factual dis-
putes, reflecting the different possible treatments of a mo-
tion to dismiss for lack of jurisdiction under Rule 12(b)(1).
Under Fifth Circuit precedent, which we follow on a non-
patent-specific issue such as this, a Rule 12(b)(1) motion
sometimes calls for adjudication of factual disputes and
sometimes does not:
[T]he district court is to accept as true the allega-
tions and facts set forth in the complaint. Addition-
ally, “the district court is empowered to consider
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matters of fact which may be in dispute.” The dis-
trict court consequently has the power to dismiss
for lack of subject matter jurisdiction on any one of
three separate bases: (1) the complaint alone;
(2) the complaint supplemented by undisputed
facts evidenced in the record; or (3) the complaint
supplemented by undisputed facts plus the court’s
resolution of disputed facts.
Choice Inc. of Texas v. Greenstein, 691 F.3d 710, 714 (5th
Cir. 2012) (citations omitted); see also Montez v. Dep’t of the
Navy, 392 F.3d 147, 149 (5th Cir. 2004); Robinson v.
TCI/US West Communications Inc., 117 F.3d 900, 904 (5th
Cir. 1997). In the specific setting of a case-or-controversy
challenge, the Fifth Circuit has said that a challenge is
“factual” rather than “facial” “if the defendant ‘submits af-
fidavits, testimony, or other evidentiary materials.’” Supe-
rior MRI Services, Inc. v. Alliance Healthcare Services, Inc.,
778 F.3d 502, 504 (5th Cir. 2015) (citation omitted). “To
defeat a factual attack, a plaintiff ‘must prove the existence
of subject-matter jurisdiction by a preponderance of the ev-
idence’ and is ‘obliged to submit facts through some eviden-
tiary method to sustain his burden of proof.’” Id. (citation
omitted). 2
2 The Fifth Circuit’s approach reflects the generally
recognized facial/factual distinction in the treatment of ju-
risdictional challenges. See, e.g., 5B C. Wright, A. Miller &
M. Kane, Federal Practice & Procedure Civil § 1350 (3d ed.
Apr. 2022 Update) (Wright & Miller); 5C Wright & Miller
§ 1363; Cedars-Sinai Medical Center v. Watkins, 11 F.3d
1573, 1583–84 (Fed. Cir. 1993); Indium Corp. of America v.
Semi-Alloys, Inc., 781 F.2d 879, 884 (Fed. Cir. 1985).
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12 MITEK SYSTEMS, INC. v.
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B
In this case, Mitek’s jurisdictional argument rests on
two bases. Mitek builds on our recognition of certain suffi-
cient conditions for finding a case or controversy:
[W]here a patent holder accuses customers of direct
infringement based on the sale or use of a supplier’s
equipment, the supplier has standing to commence
a declaratory judgment action if (a) the supplier is
obligated to indemnify its customers from infringe-
ment liability, or (b) there is a controversy between
the patentee and the supplier as to the supplier’s
liability for induced or contributory infringement
based on the alleged acts of direct infringement by
its customers.
Arris Group, Inc. v. British Telecommunications PLC, 639
F.3d 1368, 1375 (Fed. Cir. 2011). Reversing the order, and
urging that it need not concede an indemnity obligation for
customers’ demands for indemnification to suffice, Mitek
asserted in the district court, and asserts here, that it
meets the MedImmune standard on each of two bases:
(a) its potential liability for infringement; and (b) the al-
leged demands for indemnity made by many of its licensees
after USAA sent them letters seeking to sell them licenses
to USAA patents. Mitek Opening Br. 14–26.
To a large extent, the parties have debated the case-or-
controversy issue at too high a level of generality. The is-
sues raised by Mitek’s asserted bases of jurisdiction, we
conclude, require finer parsing of the issues and more par-
ticularized determinations than we have before us, both
from the parties and from the district court. Moreover, the
district court was unclear in identifying whether it was
treating the Rule 12(b)(1) motion as a facial challenge or as
a factual challenge, in whole or in part, and the parties
themselves have been unclear about this. We hold that fur-
ther proceedings are needed in order for the case-or-contro-
versy determination to be made and that, subject to
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forfeiture determinations we leave initially to the district
court, the proceedings should include additional fact-find-
ing proceedings. We therefore vacate the jurisdictional dis-
missal. We remand for further proceedings on the
jurisdictional issue—and also, as we conclude in Part III
infra, on the issue of discretion-based dismissal.
1
Mitek’s first asserted basis of a case or controversy is
its potential liability to USAA for infringement. In arguing
for the existence of a case or controversy on that basis, at
least as of the time of filing of the declaratory-judgment ac-
tion, Mitek focused on what had occurred in USAA’s suit
against Wells Fargo. The trial in the Wells Fargo case was
in progress at the time Mitek filed for a declaratory judg-
ment on November 1, 2019. Though the jury rendered a
verdict in USAA’s favor a few days later, the case was not
resolved until more than a year later, shortly before the
district court ruled on the motion to dismiss, which had
been filed in January 2020 and on which the district court
in Texas had heard argument in July 2020.
The district court concluded that “the Wells Fargo Case
could not have provoked in Mitek a reasonable apprehen-
sion of suit by USAA.” Dismissal Order at 6. 3 The district
3 The Supreme Court in MedImmune rejected a gen-
eral requirement of a reasonable apprehension of suit. 549
U.S. at 132 n.11; see also SanDisk Corp. v. STMicroelec-
tronics, Inc., 480 F.3d 1372, 1380 (Fed. Cir. 2007). Here,
however, the district court’s use of that concept is directly
responsive to Mitek’s particular theory as to whether Arti-
cle III standing existed under the MedImmune standard.
See also Streck, Inc. v. Research & Diagnostic Systems, Inc.,
665 F.3d 1269, 1282 (Fed. Cir. 2012) (“[I]n the wake of
MedImmune, ‘proving a reasonable apprehension of suit is
one of multiple ways that a declaratory judgment plaintiff
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14 MITEK SYSTEMS, INC. v.
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court did not determine that USAA had disclaimed any in-
terest in suing Mitek or had made a strategic decision (e.g.,
that all actions for infringement of the patents-in-suit
should be against banks and other Mitek customers, not
Mitek) that a suit against Mitek was not reasonably possi-
ble. And we find several ways in which the reasons the
district court did give are inadequate on the record before
us.
The court reasoned that “Mitek sitting on its hands
during the Wells Fargo Case and neglecting to intervene is
probative (and perhaps the best indicator) as to . . . any ac-
tual apprehension Mitek felt with regard to litigation by
USAA.” Id. at 4. But the court did not explain why Mitek’s
“neglecting to intervene”—a point distinct from the simple
fact that USAA had not (yet) sued Mitek or might even pre-
fer to sue individual banks—has particular weight as a ba-
sis for concluding that Mitek had no reasonable
apprehension of itself being sued. Assessing the weight of
the choice not to intervene (in USAA’s first suit on these
patents) would require considering the legal, factual, and
contextual factors bearing on the opportunity for interven-
tion and the benefits of intervention in another’s suit com-
pared to alternatives. The district court’s opinion does not
include such an analysis of the intervention choice, and in
the absence of such an analysis, we do not see how the de-
cision not to intervene in the first suit on the patents counts
materially against a finding of a reasonable apprehension
of suit.
The district court also reasoned that the substance of
the evidence in the Wells Fargo case undermined Mitek’s
assertion that it faced potential liability for infringement.
The court explained: “The repeated testimony given during
the Wells Fargo trial was that without significant
can satisfy the more general all-the-circumstances test’ to
establish jurisdiction.” (citation omitted)).
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customization by Wells Fargo, the Mitek Mi-Snap product
does not infringe the asserted patent.” Id. at 4–5. Seem-
ingly on that basis, the court concluded that the Wells
Fargo litigation did not contain implied accusations of in-
fringement by Mitek and, in fact, “gave Mitek every reason
to think that USAA does not intend to pursue any claim for
patent infringement against Mitek.” Id. at 4.
This reasoning is not sufficiently complete to support
the conclusion drawn. Determining whether Mitek reason-
ably might be liable for infringement requires “look[ing] to
the elements of the potential cause of action” and consider-
ing both the patent claims at issue and the alleged facts
concerning Mitek and its customers in light of those ele-
ments. Microsoft, 755 F.3d at 903–05. Although Mitek is
not obligated to prove, for jurisdictional purposes, that it
infringes the patents-in-suit (which is what it ultimately
seeks to disprove in the case), “there must be allegations by
the patentee or other record evidence that establish at least
a reasonable potential that [infringement claims against
Mitek] could be brought.” Id. at 905. This requires sepa-
rate consideration of the separate types of infringement
(notably, direct infringement, inducement of infringement,
and contributory infringement) of the claims of the patents-
in-suit, and of the bearing on any infringement of such
claims of the fact stressed by the district court—namely,
that bank customers customize Mitek’s software.
The district court did not conduct an analysis at this
level of specificity. The district court’s reference to custom-
ization does not identify the choices that Mitek’s customers
make and tie those choices to the coverage of a claim; con-
sequently, the reference does not show that, without the
customer’s choices, Mitek’s product itself is not within the
claim coverage. And even if customization is how a Mitek
customer comes within a claim element, the need for such
customization does not exclude Mitek liability for induce-
ment under 35 U.S.C. § 271(b)—if, for example, Mitek pro-
vides manuals, along with the software, that meet the
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16 MITEK SYSTEMS, INC. v.
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standard of taking an affirmative act to encourage infringe-
ment with the knowledge that the induced acts constitute
patent infringement. Global-Tech Appliances, Inc. v. SEB
S.A., 563 U.S. 754, 765–66 (2011); see, e.g., J.A. 720–22 (ev-
idence potentially relevant to inducement). Analysis of
that possibility appears to be needed. So too of any possi-
bility of contributory infringement if MiSnap™ is not suit-
able for substantial non-infringing uses. 35 U.S.C.
§ 271(c); see, e.g., J.A. 434–35, 566–67 (evidence potentially
relevant to contributory infringement). Even direct in-
fringement may warrant more analysis than is reflected in
the district court’s opinion. See J.A. 31 (Compl. ¶ 12); see
also J.A. 478. 4
The required analysis also should be clear about
whether the Rule 12(b)(1) motion is being treated as pre-
senting a facial or a factual challenge and whether the pre-
conditions for treating such a motion as a factual challenge
were met. The district court, though seeming to recognize
that facts were placed in dispute, was less than clear about
this distinction. Compare Dismissal Order at 2 (implying
in legal standard section that the court was going to decide
the motion on the complaint alone, accepting as true the
allegations and facts set forth therein), with id. at 4–5
(seemingly treating USAA’s motion to dismiss as a factual
attack on whether USAA implicitly accused Mitek of in-
fringement in the Wells Fargo litigation). It appears that
USAA took the steps required to mount a factual attack
that entitled it to a resolution of at least some factual dis-
putes, not just to a decision on the sufficiency of the com-
plaint when combined with undisputed facts. See J.A. 262–
4 The parties have focused on claim 1 of the ’779 pa-
tent on appeal, but oral argument suggested the possibility
that it might not be fully representative for the direct, con-
tributory, or induced infringement analysis. See Oral Arg.
at 22:00–27, 44:17–37, 1:04:36–05:06.
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MITEK SYSTEMS, INC. v. 17
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67 (USAA’s motion to dismiss, submitting evidence from
Wells Fargo trial); J.A. 882–84 (USAA’s reply, specifically
asserting that USAA’s motion was factual, not facial); J.A.
957–1014 (argument to district court, discussing at length
what was shown in the Wells Fargo trial). But we leave
that determination to the district court in the first in-
stance, as we do the determination whether either party
forfeited any particular contention (about a particular type
of infringement, for example) or right to present, or obtain
discovery of, additional evidence.
Also for possible consideration on remand, if not for-
feited, are related issues concerning events and evidence
that post-date the filing of this declaratory-judgment ac-
tion on November 1, 2019. One such issue is whether, even
if a case or controversy between USAA and Mitek existed
on that day based on potential Mitek liability, it ceased to
exist later—for example, once USAA and Wells Fargo had
settled their case and USAA still had not sued Mitek even
though it had sued another bank. Another issue is whether
any case or controversy between USAA and Mitek as of No-
vember 1, 2019, extended beyond the potential for Mitek
liability involving Mitek’s dealings with Wells Fargo spe-
cifically. Both of these issues, and perhaps others, might
involve exploring the extent of similarities between Mitek’s
relationships with Wells Fargo and other customers. 5
In short, on remand, the district court’s primary task
regarding Mitek’s first asserted basis for establishing a
case or controversy will be to ascertain the alleged role of
the Mitek technology in the banks’ applications and the al-
leged role that the Mitek technology plays in infringement
claims. Making those core determinations, and
5 Mitek has included in the record a news article con-
taining statements attributed to USAA about “the banking
industry.” J.A. 768–70. We do not decide what, if any, role
that article has to play in this case.
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18 MITEK SYSTEMS, INC. v.
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considering any other pertinent issues, will supply a fuller
basis for the bottom-line assessment of Mitek’s first theory
of Article III jurisdiction.
2
For similar reasons, the district court’s case-or-contro-
versy analysis of USAA’s letters to Mitek customers com-
bined with subsequent indemnification demands is
inadequate. Concerning the letters specifically, the court
stated that it was “not convinced that these letters create
a justiciable controversy,” observing that Mitek had sub-
mitted only one letter with the complaint—a letter that
came from USAA’s licensing counsel and that did not
threaten litigation, include claim charts for the patents-in-
suit, or identify Mitek or particular products as infringing.
Dismissal Order at 6–7. The court did not address the com-
plaint’s allegations about indemnification requests from
other Mitek customers who had received letters. Id. at 7–
8 (addressing indemnification only with respect to Wells
Fargo and PNC).
The first part of this two-part assertion is that the
USAA letters to Mitek’s customers created an actual in-
fringement controversy between USAA and those custom-
ers that would have sufficed for those customers to seek
declaratory relief. This is a necessary element of the as-
serted indemnity-based interest of Mitek. See BP Chemi-
cals Ltd. v. Union Carbide Corp., 4 F.3d 975, 981 (Fed. Cir.
1993) (“The agreement to defend or indemnify a third per-
son does not provide the actual controversy whereby the
defender or indemnitor may bring a declaratory action on
its own behalf when there is no actual controversy involv-
ing the indemnitee.”). On this first part, we conclude that
the allegations in Mitek’s complaint concerning USAA’s
letter campaign and the attached example letter, viewed in
light of the Wells Fargo litigation, are sufficient to show a
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MITEK SYSTEMS, INC. v. 19
UNITED SERVICES AUTOMOBILE ASSOCIATION
controversy between USAA and Mitek’s customers who re-
ceived letters. 6
As we explained in Hewlett-Packard Co. v. Acceleron
LLC, “declaratory judgment jurisdiction exists ‘where a pa-
tentee asserts rights under a patent based on certain iden-
tified ongoing or planned activity of another party, and
where that party contends that it has the right to engage
in the accused activity without license.’” 587 F.3d 1358,
1361 (Fed. Cir. 2009) (citation omitted). But “a communi-
cation from a patent owner to another party, merely iden-
tifying its patent and the other party’s product line,
without more,” does not suffice. Id. at 1362. Here, there is
just enough “more.”
The example letter attached to the complaint includes
three of the four patents-in-suit (covering both relevant
families) in its patent list, stating that “these are . . . likely
to be relevant to your offering of a mobile check deposit ap-
plication.” J.A. 45, 79–82 (Compl. Ex. A). Additionally, the
letter provides a claim chart that, in addressing a different,
unrelated patent, explains “in detail . . . how the claims re-
late to the mobile deposit application offered by one of the
largest banks in the US,” which USAA states it believes
“operates in a similar way” to the deposit application of the
letter recipient. J.A. 45 (Compl. Ex. A). Particularly in
light of USAA’s recent litigation against Wells Fargo on the
four patents-in-suit, which the customer would know was
in part based on use of Mitek technology, see Micron
6 We do not read USAA’s motion to dismiss as con-
testing the facts concerning the USAA letters to Mitek’s
customers. See J.A. 269–70. We therefore do not view the
motion as presenting a factual challenge on this point, but
only a facial challenge to the legal sufficiency of the com-
plaint’s allegations to establish the letters half of its indem-
nity-based argument for the existence of a case or
controversy.
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20 MITEK SYSTEMS, INC. v.
UNITED SERVICES AUTOMOBILE ASSOCIATION
Technology, Inc. v. Mosaid Technologies, Inc., 518 F.3d 897,
901–02 (Fed. Cir. 2008), we conclude that, under the total-
ity of the circumstances, there is enough for Mitek’s other
customers to reasonably interpret USAA’s actions as an
implicit assertion of infringement based on incorporation
of Mitek technology, Hewlett-Packard, 587 F.3d at 1363.
The second half of Mitek’s indemnity-based assertion
of a case or controversy concerns whether, beyond bare in-
demnity demands or requests, there was actually a “rea-
sonable potential” of Mitek’s indemnification liability, with
that potential giving Mitek the required concrete stake in
litigating the underlying customers’ freedom from infringe-
ment liability to USAA. See Microsoft, 755 F.3d at 905. We
have sometimes used the language of “obligation” when re-
ferring to the indemnity issue in this context. See, e.g., id.
at 904; Arris, 639 F.3d at 1375; Allied Mineral Products,
Inc. v. OSMI, Inc., 870 F.3d 1337, 1340–41 (Fed. Cir. 2017).
But we have never held that the validity of an indemnity
demand, i.e., the applicability of an indemnity agreement
to the demander’s circumstances, needs to be conceded to
establish subject-matter jurisdiction. Indeed, other cases,
such as Microchip Technology Inc. v. Chamberlain Group,
Inc., refer only to the “existence of an indemnity agree-
ment,” not its conceded applicability in the particular case.
441 F.3d 936, 943 (Fed. Cir. 2006); see also Creative Com-
pounds, LLC v. Starmark Laboratories, 651 F.3d 1303,
1316 (Fed. Cir. 2011). Similarly, Microsoft suggests that
only the “merit of the customer request” is relevant, which
does not require a concession of the request’s validity. 755
F.3d at 904. And such a concession is not required to es-
tablish that the declaratory-judgment plaintiff (receiving
indemnity demands) has a definite, concrete, immediate,
real interest in obtaining the declaration sought.
What remains is a need for further proceedings on re-
mand. The district court should first determine which Rule
12(b)(1) framework to apply, i.e., determine whether USAA
mounted a factual attack on the indemnity allegations of
Case: 21-1989 Document: 34 Page: 21 Filed: 05/20/2022
MITEK SYSTEMS, INC. v. 21
UNITED SERVICES AUTOMOBILE ASSOCIATION
Mitek’s complaint. See, e.g., J.A. 267–68, 270–71 (USAA
motion to dismiss); J.A. 883, 885 (USAA reply); J.A. 360,
899 (evidence regarding Wells Fargo indemnification, po-
tentially conflicting with allegations in the complaint, see
J.A. 31–32 (Compl. ¶ 13)). If it finds that USAA has not
mounted a factual attack, the court must closely analyze
the relevant indemnity allegations, J.A. 31–32 (Compl.
¶ 13), to determine whether they suffice. If it finds that
USAA has mounted a factual attack, we again leave it to
the district court to decide how to proceed, including
whether the parties should have the opportunity to present
additional evidence, and to address (at least for purposes
of continuing jurisdiction) issues concerning post-com-
plaint events, such as USAA’s suit against PNC and PNC’s
indemnification request to Mitek through a third party,
J.A. 1035–36. The character of the indemnity demands re-
ceived and the precise scope of the corresponding indem-
nity agreements, see Oral Arg. at 33:20–34:25; Mitek Reply
Br. 17 n.4, may bear heavily on the sufficiency of Mitek’s
indemnity-based interest in obtaining the requested de-
claratory judgment that can be sought based on that inter-
est—namely, a declaration of its customer’s nonliability
because of noninfringement or invalidity of the patents at
issue.
III
The court stated that, in case its “determination that
subject matter jurisdiction is lacking were later set aside,
[it] would similarly and for the same reasons exercise its
discretion and decline to exercise jurisdiction over Mitek’s
declaratory judgment action.” Dismissal Order at 8–9. We
review a district court’s discretionary decision to dismiss
for abuse of discretion. Communications Test Design, Inc.
v. Contec, LLC, 952 F.3d 1356, 1361 (Fed. Cir. 2020).
Where a discretionary decision rests on an inadequate ex-
planation and might well be different without the deficien-
cies, we may vacate the decision and remand for
reconsideration. See, e.g., Whitserve, LLC v. Computer
Case: 21-1989 Document: 34 Page: 22 Filed: 05/20/2022
22 MITEK SYSTEMS, INC. v.
UNITED SERVICES AUTOMOBILE ASSOCIATION
Packages, Inc., 694 F.3d 10, 35–36 (Fed. Cir. 2012). We
follow that course regarding the discretion ruling here.
Given the Declaratory Judgment Act’s use of the word
“may,” 28 U.S.C. § 2201(a), the Supreme Court has stated
that a district court has “unique and substantial discretion
in deciding whether to declare the rights of litigants,” Wil-
ton v. Seven Falls Co., 515 U.S. 277, 286 (1995) (quoted
with approval in MedImmune, 549 U.S. at 136). The Court
likewise has said that “facts bearing on the usefulness of
the declaratory judgment remedy, and the fitness of the
case for resolution, are peculiarly within [district courts’]
grasp.” Id. at 289 (again quoted with approval in MedIm-
mune, 549 U.S. at 136). The scope of the discretion remains
unclear. In Wilton, the Court “conclude[d] only that the
District Court acted within its bounds in staying [an] ac-
tion for declaratory relief where parallel proceedings, pre-
senting opportunity for ventilation of the same state law
issues, were underway in state court.” Id. at 290.
For our part, we have said that, as long as a district
court “acts in accordance with the purposes of the Declara-
tory Judgment Act and the principles of sound judicial ad-
ministration, [it] has broad discretion to refuse to entertain
a declaratory judgment action.” EMC Corp. v. Norand
Corp., 89 F.3d 807, 813–14 (Fed. Cir. 1996). But, consistent
with the constraints imposed by the noted statutory pur-
poses and judicial-administration principles, we have in-
sisted: “There must be well-founded reasons for declining
to entertain a declaratory judgment action.” Capo, Inc. v.
Dioptics Medical Products, 387 F.3d 1352, 1355 (Fed. Cir.
2004); see also Micron, 518 F.3d at 903–05; Genentech, Inc.
v. Eli Lilly & Co., 998 F.2d 931, 936 (Fed. Cir. 1993). As
an example, we explained in Ford Motor Co. v. United
States that, “[w]hile the existence of another adequate rem-
edy does not necessarily bar a declaratory judgment, dis-
trict courts may refuse declaratory relief where an
alternative remedy is better or more effective.” 811 F.3d
1371, 1379–80 (Fed. Cir. 2016) (citations omitted); see also
Case: 21-1989 Document: 34 Page: 23 Filed: 05/20/2022
MITEK SYSTEMS, INC. v. 23
UNITED SERVICES AUTOMOBILE ASSOCIATION
10B Wright & Miller § 2758 & n.6 (4th ed. Apr. 2022 Up-
date).
Here, the district court did not give reasons independ-
ent of its reasons for its jurisdictional dismissal, which we
have held above to be deficient in various respects. With-
out further analysis of why those reasons make it appro-
priate to decline to entertain the claim for declaratory relief
as a matter of discretion when we have determined that the
same reasons do not support the jurisdictional dismissal
(at least at this stage of the proceedings), the district
court’s discretion ruling cannot stand. We note in particu-
lar that the district court may have been suggesting that
the route of intervention in one or more USAA suits against
Mitek customers is preferable, considering statutory pur-
poses and judicial-administration principles, to the declar-
atory-judgment action Mitek initiated here. See Mitek
Opening Br. 32 (so reading the district court opinion);
USAA Response Br. 45 (same). If so, a determination along
those lines would require more analysis of various issues,
such as (but not necessarily limited to): (1) whether Mitek
could intervene in such actions and under what circum-
stances, (2) whether intervention would provide Mitek ad-
equate relief from the harms the Declaratory Judgment
Act recognizes as a basis for such relief, (3) the scope of
what would have to be adjudicated in Mitek’s suit for a dec-
laration of noninfringement on behalf of Mitek and all of
its customers and whether that scope could properly be lim-
ited to address unwieldiness, and (4) whether ultimately
the intervention route is more effective or efficient than the
declaratory-judgment route.
We vacate the discretionary dismissal.
IV
Mitek argues that, if we disturb the dismissal and re-
mand (as we are doing), we should order the case to be
transferred on remand back to the Northern District of Cal-
ifornia because the original order transferring the case to
Case: 21-1989 Document: 34 Page: 24 Filed: 05/20/2022
24 MITEK SYSTEMS, INC. v.
UNITED SERVICES AUTOMOBILE ASSOCIATION
the Eastern District of Texas should be reversed. See
Mitek Reply Br. 25. We reject that argument.
A
As an initial matter, Fifth Circuit law appears to pre-
clude Mitek from successfully challenging the transfer or-
der in the present appeal, taken after final judgment. The
Fifth Circuit has held that “mandamus is the prescribed
vehicle for reviewing rulings on transfers of cases pursuant
to 28 U.S.C. § 1404(a).” Defense Distributed v. Bruck, 30
F.4th 414, 423 (5th Cir. 2022) (citing In re Volkswagen of
America, Inc., 545 F.3d 304, 309 (5th Cir. 2008) (en banc),
and In re Rolls Royce Corp., 775 F.3d 671, 676–77 (5th Cir.
2014)). As we have recognized, a key part of the Fifth Cir-
cuit’s assessment is the conclusion that a party seeking to
challenge a § 1404(a) transfer decision cannot succeed on
an appeal from an adverse final judgment because the
party “would not be able to show that it would have won
the case had it been tried in a convenient forum,” as is re-
quired by 28 U.S.C. § 2111 and Federal Rule of Civil Pro-
cedure 61. In re HTC Corp., 889 F.3d 1349, 1352 n.5 (Fed.
Cir. 2018) (citation omitted). To the extent that those prec-
edents establish a rule of law precluding success in chal-
lenging a § 1404(a) transfer on a final-judgment appeal, or
simply insist on a showing that the transfer was prejudicial
regarding the merits of the judgment appealed, we must
reject Mitek’s challenge regarding transfer here.
After USAA pointed out this case law, Mitek declined
to present a developed or persuasive reply. See Mitek Re-
ply Br. 20–22. 7 Mitek cited (1) a Fifth Circuit decision, not
7 Mitek primarily responded to USAA’s separate and
alternative argument that Mitek forfeited review of the
transfer order by not moving in the Texas forum to retrans-
fer. See USAA Response Br. 49–50. We need not reach
that issue.
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MITEK SYSTEMS, INC. v. 25
UNITED SERVICES AUTOMOBILE ASSOCIATION
involving transfer, recognizing that “generally, ‘a party
may obtain review of prejudicial adverse interlocutory rul-
ings upon his appeal from adverse final judgment,’” Diece-
Lisa Industries, Inc. v. Disney Enterprises, Inc., 943 F.3d
239, 247 (5th Cir. 2019) (citation omitted); (2) a decision of
a different circuit (the Second), indicating that “[t]he fail-
ure to seek mandamus review of an interlocutory [transfer]
ruling does not forfeit the opportunity to obtain review on
appeal from a final judgment,” but not repudiating the
prejudice requirement, SongByrd, Inc. v. Estate of Gross-
man, 206 F.3d 172, 176–177 (2d Cir. 2000); and (3) a prac-
tice guide that adds no supporting authority, The Rutter
Group, Federal Civil Procedure Before Trial, National Edi-
tion, Ch. 4-K, § 6.b.[4:809] (Apr. 2021 Update). This re-
sponse does not dispute the content of Fifth Circuit law or
make a showing that the transfer order here, even if wrong,
was in fact prejudicial.
B
In any event, Mitek has not demonstrated an abuse of
discretion—e.g., legal error, unreasonableness, clear fac-
tual error—in the transfer order issued by the California
district court. Sparling v. Hoffman Construction Co., 864
F.2d 635, 639 (9th Cir. 1988); see also In re Nissim Corp.,
316 F. App’x 991, 992 (Fed. Cir. 2008) (non-precedential).
First, we see no such abuse regarding the court’s assess-
ment and weighing of the location of USAA’s licensing
counsel (Epicenter Law) in the Northern District of Cali-
fornia, Mitek’s location in a different district within Cali-
fornia, and Mitek’s choice of forum. Transfer Order, 2020
WL 1922635, at *4–5. Mitek’s cited authorities are, at a
minimum, not sufficiently on point to undermine the Cali-
fornia court’s conclusions on these matters. See Neelon v.
Bharti, 596 F. App’x 532, 533 (9th Cir. 2014) (non-prece-
dential) (discussing a “heavy burden of proof” to overcome
a plaintiff’s choice of forum and dismiss on forum non con-
veniens grounds); Avocent Huntsville Corp. v. Aten Int’l
Co., 552 F.3d 1324, 1336 (Fed. Cir. 2008) (focusing on
Case: 21-1989 Document: 34 Page: 26 Filed: 05/20/2022
26 MITEK SYSTEMS, INC. v.
UNITED SERVICES AUTOMOBILE ASSOCIATION
enforcement activities for the purposes of determining per-
sonal jurisdiction over a declaratory-judgment defendant);
Sportsman for Sportsman v. California Overland, Ltd.,
No. 17-1064, 2018 WL 1865930, at *5 (D. Minn. Apr. 18,
2018) (analyzing forum shopping in the conflict-of-law con-
text).
Next, concerning the convenience-of-witnesses compo-
nent of the transfer analysis, Mitek contends that the most
critical witnesses are Mitek witnesses who are likely to be
located near its headquarters in the Southern District of
California. See Mitek Opening Br. 39–41. We see no abuse
of discretion, however, in the court’s deeming USAA’s po-
tential witnesses also to be critical and determining that
this factor was neutral. See Transfer Order, 2020 WL
1922635, at *5.
Finally, Mitek argues that the Wells Fargo litigation
should not have supported transfer. Mitek Opening Br.
38–39; see also Transfer Order, 2020 WL 1922635, at *5.
But it is not an abuse of discretion to consider the fact that
the Eastern District of Texas was already familiar with the
patents and technology. See In re Apple Inc., 979 F.3d
1332, 1344 (Fed. Cir. 2020); see also In re Eli Lilly & Co.,
541 F. App’x 993, 994 (Fed. Cir. 2013) (non-precedential).
To be sure, that consideration might be so clearly out-
weighed by other considerations that it cannot support de-
nial of transfer to a “far more convenient” venue, as we
have recognized. See In re Morgan Stanley, 417 F. App’x
947, 949–50 (Fed. Cir. 2011) (non-precedential) (discussing
In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir.
2010), and In re Verizon, 635 F.3d 559 (Fed. Cir. 2011)).
But here, as already discussed, it was reasonable for the
court to find that the Northern District of California was
not far more convenient than the Eastern District of
Texas—and thus to transfer on the basis of judicial econ-
omy, as no other factors favored retaining the action.
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UNITED SERVICES AUTOMOBILE ASSOCIATION
V
For the foregoing reasons, we vacate the district court’s
dismissal for lack of subject-matter jurisdiction, as well as
its alternative discretionary dismissal, and remand to the
Eastern District of Texas for further proceedings consistent
with this opinion.
The parties shall bear their own costs.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED