Microsoft Corporation v. Datatern, Inc. ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
MICROSOFT CORPORATION,
Plaintiff-Appellee,
v.
DATATERN, INC.,
Defendant-Appellant.
______________________
2013–1184
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 11–CV–2365, Judge
Katherine B. Forrest.
------------------------
SAP AG, AND SAP AMERICA, INC.,
Plaintiffs-Appellees,
v.
DATATERN, INC.,
Defendant-Appellant.
______________________
2013–1185
______________________
2 MICROSOFT CORPORATION v. DATATERN, INC.
Appeal from the United States District Court for the
Southern District of New York in No. 11–CV–2648, Judge
Katherine B. Forrest.
______________________
Decided: April 4, 2014
______________________
EDWARD R. REINES, Weil Gotshal & Manges LLP, of
Redwood Shores, California, argued for all plaintiffs-
appellees. With him on the brief were ANDREW L. PERITO
and EVAN N. BUDAJ. Of counsel on the brief were DAN
GOETTLE, DALE M. HEIST and ALEKSANDER J. GORANIN,
Woodcock Washburn, LLP, of Philadelphia, Pennsylvania.
ERIK PAUL BELT, McCarter & English, LLP, of Boston,
Massachusetts, argued for defendant-appellant in case no.
2013-1184. With him on the brief was LEE CARL
BROMBERG.
LEE CARK BROMBERG, McCarter & English, LLP, of
Boston, Massachusetts, argued for defendant-appellant in
case no. 2013-1185. With him on the brief was ERIK PAUL
BELT.
______________________
Before RADER, Chief Judge, PROST and MOORE, Circuit
Judges.
Opinion for the Court filed by Circuit Judge MOORE.
Opinion dissenting-in-part filed by Chief Judge RADER.
MOORE, Circuit Judge.
DataTern, Inc. (DataTern) appeals from the district
court’s grant of summary judgment that certain Microsoft
Corporation (Microsoft) and SAP AG and SAP America,
Inc. (collectively, SAP) products do not infringe asserted
claims of U.S. Patent Nos. 5,937,402 and 6,101,502 and
MICROSOFT CORPORATION v. DATATERN, INC. 3
challenges the scope of the district court’s summary
judgment grant to SAP. DataTern also challenges the
court’s denial of its motion to dismiss Microsoft’s and
SAP’s (collectively, Appellees) declaratory judgment
actions for lack of subject matter jurisdiction. We hold
that the district court had jurisdiction over both Mi-
crosoft’s and SAP’s declaratory judgment challenges to
the ’502 patent and over SAP’s challenge to the ’402
patent, but not over Microsoft’s challenge to ’402 patent.
We therefore affirm-in-part and reverse-in-part the court’s
denial of DataTern’s motion to dismiss for lack of jurisdic-
tion. We also affirm the grant of summary judgment to
Microsoft with regard to the ’502 patent, and affirm-in-
part and reverse-in-part the grant of summary judgment
to SAP.
BACKGROUND
Prior to the cases at issue in this appeal, DataTern
sued several Microsoft and SAP customers, alleging
infringement of the ’402 and/or ’502 patents. DataTern
sent these customers claim charts alleging infringement
based on the customers’ use of Microsoft’s ADO.NET and
SAP’s BusinessObjects software. The claim charts exten-
sively refer to Microsoft and SAP functionality. For
example, claim charts alleging SAP’s customers’ in-
fringement of the ’402 and ’502 patents cite to SAP-
provided BusinessObjects user guides and documentation
for each element of the representative claims. Similarly,
claim charts alleging Microsoft’s customers’ infringement
of the ’502 patent cite to Microsoft-provided ADO.NET
online documentation for each element of the representa-
tive claims. However, the ’402 patent claim charts cite
only to third-party-provided (i.e., not Microsoft-provided)
ADO.NET documentation for several claim limitations.
Several of the customers that had been sued by
DataTern demanded indemnification from Appellees.
4 MICROSOFT CORPORATION v. DATATERN, INC.
After receiving the indemnification requests, a Microsoft
representative contacted DataTern’s CEO to discuss the
ongoing customer lawsuits. During these discussions, the
representative told DataTern’s CEO that Microsoft had no
obligation to defend or indemnify its customers, and the
CEO told the representative that DataTern was not
interested in suing Microsoft. SAP and DataTern did not
discuss the customer lawsuits or the ’402 and ’502 patents
prior to SAP’s declaratory judgment complaint.
The cases at issue in this appeal were initiated when
Appellees filed separate, and later consolidated, nonin-
fringement and invalidity declaratory judgment actions
against DataTern. DataTern moved to dismiss the com-
plaints for lack of subject matter jurisdiction and filed
conditional counterclaims for infringement of both the
’402 and ’502 patents. The district court denied
DataTern’s motion to dismiss. It found that the following
facts weighed in favor of jurisdiction over the declaratory
judgment actions: (1) the claim charts in the customer
lawsuits; (2) the indemnification demands from Appellees’
customers; (3) DataTern’s conditional counterclaims; (4)
DataTern’s reference to Appellees’ “infringement” in its
proposed scheduling order; and (5) DataTern’s refusal to
grant Appellees a covenant not to sue. Microsoft Corp. v.
DataTern, Inc., C.A. No. 11-cv-02365-KBF (S.D.N.Y. Mar.
5, 2012), ECF No. 70.
Following claim construction, DataTern conceded non-
infringement based on the court’s construction of several
claim terms, and the court entered summary judgment.
DataTern appeals.
DISCUSSION
I. Jurisdiction
Whether the district court had subject matter juris-
diction is a question we review de novo. Prasco, LLC v.
MICROSOFT CORPORATION v. DATATERN, INC. 5
Medicis Pharm. Corp., 537 F.3d 1329, 1335 (Fed. Cir.
2008). The threshold question for declaratory judgment
jurisdiction is “whether the facts alleged, under all the
circumstances, show that there is a substantial controver-
sy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance
of a declaratory judgment.” MedImmune, Inc. v. Genen-
tech, Inc., 549 U.S. 118, 127 (2007) (citation omitted).
DataTern argues that the court lacked jurisdiction be-
cause DataTern never approached Appellees regarding a
license, never accused Appellees of infringement, and
indicated that it did not intend to sue Microsoft.
DataTern asserts that Appellees’ only alleged injury—the
risk that they will lose customers—is remote and hypo-
thetical. DataTern contends that because Appellees were
not obligated to defend or indemnify these customers,
they lack a sufficient legal interest to support jurisdiction.
Appellees respond that jurisdiction exists because
DataTern’s infringement claims against their customers
are “based on” the customers’ use of Appellees’ products
and thus impliedly assert indirect infringement against
Appellees. They argue that under Arris Group, Inc. v.
British Telecommunications PLC, 639 F.3d 1368, 1375
(Fed. Cir. 2011), declaratory judgment jurisdiction exists
where a patentee accuses customers of direct infringe-
ment based on the use of the supplier’s product, because
such accusations establish that the patentee could have
brought indirect infringement claims against the supplier.
Appellees contend that the indemnification demands they
have received from their customers support existence of a
substantial controversy. They also argue that DataTern’s
aggressive litigation strategy—it has sued more than 100
entities for infringement of the ’402 and ’502 patents—
supports the existence of a substantial controversy.
6 MICROSOFT CORPORATION v. DATATERN, INC.
We hold that the district court had jurisdiction over
Appellees’ challenges to the ’502 patent and over SAP’s
challenge to the ’402 patent, but not over Microsoft’s
challenge to the ’402 patent. We agree with Appellees
that the claim charts in the customer suits strongly
support the conclusion that the district court had jurisdic-
tion. In Arris, we recognized that “where 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
. . . there is a controversy between the patentee and the
supplier as to the supplier’s liability for induced or con-
tributory infringement based on the alleged acts of direct
infringement by its customers.” 639 F.3d at 1375 (em-
phasis added). We determined that declaratory judgment
jurisdiction existed because the patentee’s charges of
infringement against the declaratory judgment plaintiff’s
customers carried an “implied assertion that [the declara-
tory judgment plaintiff] was committing contributory
infringement, and [the patentee] repeatedly communicat-
ed this implicit accusation directly to [the declaratory
judgment plaintiff] during the course of a protracted
negotiation process.” Id. at 1381. Notably, Arris analyzed
each element required for contributory infringement
under § 271(c) before determining that there was an
implied assertion of contributory infringement that sup-
ported jurisdiction. Id. at 1376–78; see also Microchip
Tech. Inc. v. Chamberlain Grp., Inc., 441 F.3d 936, 943–44
(Fed. Cir. 2006) (finding no declaratory judgment jurisdic-
tion because “there is no indication that [the declaratory
judgment plaintiff] is inducing or contributing to in-
fringement by its customers”); Cisco Sys., Inc. v. Alberta
Telecomms. Research Ctr., 538 F. App’x 894, 897–98 (Fed.
Cir. 2013) (nonprecedential) (finding no declaratory
judgment jurisdiction regarding contributory infringe-
ment after the patentee “conceded that there are substan-
MICROSOFT CORPORATION v. DATATERN, INC. 7
tial non-infringing uses of [the declaratory judgment
plaintiff’s] products”).
To the extent that Appellees argue that they have a
right to bring the declaratory judgment action solely
because their customers have been sued for direct in-
fringement, they are incorrect. DataTern has accused
customers using Appellees’ software packages of infring-
ing the asserted method claims, but there are no argu-
ments that there is a case or controversy between
DataTern and Appellees on direct infringement. If Appel-
lees had an obligation to indemnify their customers, they
would then have standing to bring suit. Arris, 639 F.3d at
1375; Microchip, 441 F.3d at 943. In that instance, Appel-
lees would stand in the shoes of the customers and would
be representing the interests of their customers because of
their legal obligation to indemnify. But here there is no
evidence of such an obligation and Appellees concede that
no such obligation exists. Instead, Appellees seek to
broaden our precedent quite substantially by arguing that
a customer request to indemnify ought to give rise to
standing, without regard, it appears, to the merit of the
customer request. This cannot be. Thus, we decline
Appellees’ request to hold that their customers’ indemnifi-
cation requests, which they concede are not valid, alone
can create standing and thus a basis for jurisdiction over
Appellees’ declaratory judgment actions in the Southern
District of New York.
Importantly, even if there were such an obligation—to
indemnify a customer already sued by the patentee in
Texas—it would not justify what Appellees seek here. A
case has already been filed against these customers in the
Eastern District of Texas. Appellees cannot seek a decla-
ration from a New York court on behalf of customers they
must indemnify where a suit against these very same
customers on all the same issues was already underway
in a Texas court. See Futurewei Techs., Inc. v. Acacia
8 MICROSOFT CORPORATION v. DATATERN, INC.
Research Corp., 737 F.3d 704, 708 (Fed. Cir. 2013). By
agreeing to indemnify any one of their customers, Mi-
crosoft could defend its customers and efficiently and
effectively participate in the Texas action. We do not
address whether Appellees would be entitled to file a
declaratory judgment action if they were obligated to
indemnify a customer who had not already been sued by
DataTern.
To the extent that Appellees argue that DataTern’s
suits against its customers automatically give rise to a
case or controversy regarding induced infringement, we
do not agree. 1 To prove inducement of infringement,
unlike direct infringement, the patentee must show that
the accused inducer took an affirmative act to encourage
infringement with the knowledge that the induced acts
constitute patent infringement. Global–Tech Appliances,
Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011). Absent the
knowledge and affirmative act of encouragement, no party
could be charged with inducement. Thus, in determining
whether there is a case or controversy of sufficient imme-
diacy to establish declaratory judgment jurisdiction we
look to the elements of the potential cause of action. See
Arris, 639 F.3d at 1376–78 (analyzing each contributory
infringement factor to determine whether there was at
the time of the declaratory judgment action a case or
controversy regarding potential contributory infringe-
ment). Certainly it is not the case that definitive proof
must exist that would establish each element. But, to
establish a substantial controversy regarding inducement,
1 For example, suppose that the accused product
was capable of multiple uses and there was no evidence or
allegation that the manufacturer encouraged the use
accused of infringement.
MICROSOFT CORPORATION v. DATATERN, INC. 9
there must be allegations by the patentee or other record
evidence that establish at least a reasonable potential
that such a claim could be brought.
Applying this principle to the appeals before us, we
hold that the claim charts used in the customer lawsuits
support a finding of jurisdiction for only some of the
declaratory judgment challenges at issue. The claim
charts provided to the SAP customers allege direct in-
fringement of the ’402 and ’502 patents based on SAP’s
customers’ use of BusinessObjects. Moreover, these claim
charts cite to SAP-provided user guides and documenta-
tion for each claim element. In other words, DataTern’s
claim charts show that SAP provides its customers with
the necessary components to infringe the ’402 and ’502
patents as well as the instruction manuals for using the
components in an infringing manner. Providing instruc-
tions to use a product in an infringing manner is evidence
of the required mental state for inducing infringement.
See Golden Blount, Inc. v. Robert H. Peterson Co., 438
F.3d 1354, 1363–65 (Fed. Cir. 2006). Considering these
instructions in view of the rest of the evidence on record,
we conclude that SAP has established that there existed a
substantial controversy regarding whether SAP induces
infringement. We thus affirm the district court’s conclu-
sion that declaratory judgment jurisdiction exists for
SAP’s suit on the ’402 and ’502 patents.
The same is true for DataTern’s ’502 patent claim
charts as they relate to Microsoft’s customers. The claim
charts cite to Microsoft-provided online documentation for
each limitation of the ’502 patent’s representative claims.
Thus, these claim charts can be read to allege that Mi-
crosoft is encouraging the exact use which DataTern
asserts amount to direct infringement. This record evi-
dence supports Microsoft’s claim that there is a substan-
tial controversy regarding inducement. Under the totality
of the circumstances, we conclude that Microsoft estab-
10 MICROSOFT CORPORATION v. DATATERN, INC.
lished declaratory judgment jurisdiction for its suit on the
’502 patent.
The ’402 patent claim charts as they relate to Mi-
crosoft’s customers, however, are substantively different.
They cite exclusively to third-party—not Microsoft-
provided—documentation for several key claim limita-
tions. 2 While these claim charts allege the customers’
direct infringement of the ’402 patent based on its use of
Microsoft’s ADO.NET, they do not impliedly assert that
Microsoft induced that infringement. Nothing in the
record suggests that Microsoft encouraged the acts ac-
cused of direct infringement, and simply selling a product
capable of being used in an infringing manner is not
sufficient to create a substantial controversy regarding
inducement.
The ’402 patent claim charts likewise do not impliedly
assert contributory infringement against Microsoft. For
example, they do not imply or suggest that Microsoft’s
ADO.NET is not “a staple article or commodity of com-
merce suitable for substantial noninfringing use.” 35
U.S.C. § 271(c) (2012). Indeed, our review of the record
does not uncover any evidence that Microsoft’s ADO.NET
is not suitable for substantial noninfringing uses, or that
Microsoft knew that it was “especially made or adapted
for use in an infringement” of DataTern’s patents. Id.In concluding that jurisdiction existed in this case, the
district court relied heavily on DataTern’s conditional
2 For example, no claim chart cites to Microsoft-
provided documentation for the “defining” and “forming”
steps, which are at the center of the parties’ dispute over
infringement. J.A. in appeal no. 2013-1184, at 758–63,
777–82, 817–26, 848–57, 861–65, 890–901, 925–29, 940–
49, 964–73.
MICROSOFT CORPORATION v. DATATERN, INC. 11
counterclaims, its reference to “infringement” in the
scheduling order, and its refusal to grant Appellees a
covenant not to sue—all post-complaint facts. A declara-
tory judgment plaintiff must plead facts sufficient to
establish jurisdiction at the time of the complaint, and
post-complaint facts cannot create jurisdiction where none
existed at the time of filing. Innovative Therapies, Inc. v.
Kinetic Concepts, Inc., 599 F.3d 1377, 1383–84 (Fed. Cir.
2010); Spectronics Corp. v. H.B. Fuller Co., Inc., 940 F.2d
631, 634–35 (Fed. Cir. 1991).
Even if these post-complaint facts could be considered,
these three circumstances, considered in view of the rest
of the evidence on record, do not establish an actual
controversy. The district court reasoned that DataTern’s
conditional counterclaims weighed in favor of jurisdiction
because DataTern was required to make them in compli-
ance with Rule 11 of the Federal Rules of Civil Procedure.
This analysis is logically flawed because DataTern’s
counterclaims were conditioned on the court’s denying
DataTern’s motion to dismiss, i.e., on the court’s deter-
mining that there was a substantial controversy of suffi-
cient immediacy and reality regarding Appellees’
infringement. Thus, by virtue of their conditional nature,
DataTern’s counterclaims could only become a part of the
case after the court made a de facto determination that
they passed Rule 11 muster. The same is true for
DataTern’s discussion of infringement in its proposed
scheduling order, which was made in the context of its
conditional counterclaims. Likewise, refusal to grant a
covenant not to sue “is not sufficient to create an actual
controversy” because “a patentee has no obligation . . . to
make a definitive determination, at the time and place of
the competitors’ choosing, that it will never bring an
infringement suit.” Prasco, 537 F.3d at 1341.
Moreover, other circumstances that may have other-
wise supported jurisdiction over Microsoft’s declaratory
12 MICROSOFT CORPORATION v. DATATERN, INC.
judgment challenge of the ’402 patent are not present in
this case. For example, in Arris the patentee and the
declaratory judgment plaintiff engaged in a “protracted
negotiation process” before the declaratory judgment
plaintiff finally brought suit. Arris, 639 F.3d at 1381.
Here, however, the only time DataTern and Microsoft
communicated, DataTern assured Microsoft that it did
not intend to sue Microsoft. Similarly, a patentee’s ag-
gressive enforcement strategy, even in the absence of
direct threats against the declaratory plaintiff, may also
support jurisdiction. See Arrowhead Indus. Water, Inc. v.
Ecolochem, Inc., 846 F.2d 731, 737–38 (Fed. Cir. 1988).
We are sympathetic to Microsoft’s arguments that
DataTern’s litigiousness supports the existence of a
controversy between Microsoft and DataTern. 3 However,
we also note that DataTern’s litigation strategy appears
to involve suing software users, not software suppliers.
And there is no record evidence that Microsoft encouraged
the acts that DataTern argues amount to direct infringe-
ment by its customers in the Texas actions. This cuts
against Microsoft’s arguments that they might somehow
be next or that litigiousness against direct infringers
alone ought to create a substantial controversy regarding
inducement.
3 That it would be more efficient to confront all the
questions at one time and in one place might support the
district court’s decision to exercise declaratory judgment
jurisdiction after such jurisdiction has been established,
but it does not create such jurisdiction when none exists.
See Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995)
(“[D]istrict courts possess discretion in determining
whether and when to entertain an action under the De-
claratory Judgment Act, even when the suit otherwise
satisfies subject matter jurisdictional prerequisites.”).
MICROSOFT CORPORATION v. DATATERN, INC. 13
Under the totality of the circumstances and viewing
the evidence of record, we hold that the district court
possessed declaratory judgment jurisdiction over the ’402
and ’502 patents with respect to SAP and over the ’502
patent with respect to Microsoft, but not over the ’402
patent with respect to Microsoft. Microsoft had the bur-
den of establishing the court’s jurisdiction. Under the
totality of the circumstances, we conclude that Microsoft
failed to establish that a substantial controversy existed
regarding Microsoft’s infringement of the ’402 patent at
the time the complaint was filed. We affirm-in-part and
reverse-in-part the district court’s jurisdictional decision
and remand with orders to the district court to dismiss
Microsoft’s declaratory judgment challenge of the ’402
patent.
II. Summary Judgment of Noninfringement—’502 Patent
We review the district court’s grant of summary
judgment under the law of the regional circuit. Mi-
croStrategy Inc. v. Bus. Objects, SA, 429 F.3d 1344, 1349
(Fed. Cir. 2005). The Second Circuit reviews the district
court’s summary judgment decisions de novo. McBride v.
BIC Consumer Prods. Mfg. Co., 583 F.3d 92, 96 (2d Cir.
2009). We review the district court’s claim construction
de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448,
1455–56 (Fed. Cir. 1998) (en banc).
A. Background
The ’502 patent is directed to interfacing an object-
oriented application with a relational database. ’502
patent col. 1 ll. 22–24. An object-oriented application
cannot easily interface with a relational database because
of the structural differences between the objects in the
application and the tables in the database. Id. col. 1 ll.
25–49. To solve this problem, the ’502 patent discloses
creating “interface objects” that act as intermediaries
between the object-oriented application and the relational
14 MICROSOFT CORPORATION v. DATATERN, INC.
database. Id. col. 2 ll. 34–38. To create the interface
objects, the ’502 patent discloses selecting an “object
model,” generating a mapping between the database
schema and the object model, and creating the interface
object from that mapping. Id. col. 2 ll. 28–34, 40–44. A
“runtime engine” then accesses data in the relational
database using the interface object. Id. col. 2 ll. 34–38;
Fig. 1.
Claim 1 is representative (emphases added):
A method for interfacing an object oriented soft-
ware application with a relational database, com-
prising the steps of:
selecting an object model;
generating a map of at least some relationships
between schema in the database and the selected
object model;
employing the map to create at least one interface
object associated with an object corresponding to a
class associated with the object oriented software
application; and
utilizing a runtime engine which invokes said at
least one interface object with the object oriented
application to access data from the relational da-
tabase.
B. “object model”
The district court construed “object model” as “[a]
template with a predetermined standardized structure
both relating to an object-oriented software application
and including object classes and inheritance relationships
among classes.” DataTern agreed that SAP’s BusinessOb-
MICROSOFT CORPORATION v. DATATERN, INC. 15
jects does not infringe the asserted claims if “object mod-
el” requires “object classes,” and the district court entered
summary judgment accordingly. 4
On appeal, DataTern asserts that the district court
erred by requiring the object model to include “classes.” 5
It contends that the specification broadly defines “object
model” as “a template with a predetermined standardized
structure.” See ’502 patent col. 2 ll. 40–42. DataTern
asserts that the court’s construction improperly excludes
the preferred embodiment of an object model shown in
Figure 3 of the ’502 patent. In particular, DataTern
points out that Figure 3 depicts an object model having
class attributes, such as “CPerson.name,” but not having
class behaviors. DataTern argues that because the par-
ties also stipulated to a construction of “class” that re-
quires attributes and behaviors, an “object model” that
does not include class behaviors cannot be construed to
require classes.
4 DataTern also agreed that BusinessObjects does
not infringe the asserted claims of the ’502 patent based
on the district court’s claim construction of two other
terms, “to create at least one interface object” and
“runtime engine.” Because our construction of “object
model” is sufficient to affirm the judgment of nonin-
fringement of the ’502 patent, we do not reach the con-
struction of these other terms.
5 DataTern also challenges the district court’s de-
termination that object model requires inheritance rela-
tionships among classes and that the object model be
related to the object-oriented software application. Be-
cause the requirement of classes is dispositive, we do not
address the other aspects of the court’s claim construction
of object model.
16 MICROSOFT CORPORATION v. DATATERN, INC.
We agree with SAP that the district court properly
construed “object model” to require classes. The plain and
ordinary meaning of “object model” requires classes. All
of the evidence on record supports this understanding of
the plain and ordinary meaning. SAP’s expert opined
that the “object model” was a well-known term of art and
was understood to include a “collection of classes.” J.A. in
appeal no. 2013-1185 (J.A. (SAP)), at 1091–93, 1125.
Even the inventor of the ’502 patent testified, contrary to
DataTern’s assertions, that an object model, in general
and in the context of the ’502 patent, includes a “set of
classes.” J.A. (SAP) 6333–34. While DataTern’s expert
submitted a claim construction declaration, he never
proposed a construction for “object model” or otherwise
challenged the definitions set forth by SAP’s expert and
the ’502 patent inventor. J.A. (SAP) 1048–59. DataTern’s
predecessor, FireStar, also previously argued that object
model of the ’502 patent should be construed to require “a
set of classes.” 6 J.A. (SAP) 4529.
The specification confirms that the inventors of the
’502 patent did not deviate from the plain and ordinary
meaning of object model, which includes classes. The only
depicted object model, shown in Figure 3 (reproduced
below) includes classes “CPerson,” “CProject,” “CEmploy-
ee,” and “CDepartment.”
6 We agree with DataTern that it is not bound by
the previous claim construction positions of the prior ’502
patent owner that were never litigated to final judgment.
Nonetheless, this position is consistent with all of the
other evidence on record that supports the requirement of
classes in the construction of object model.
MICROSOFT CORPORATION v. DATATERN, INC. 17
’502 patent Fig. 3. The ’502 patent unambiguously identi-
fies these components as classes: “[f]or example, assume
that a class, CPerson, has four attributes: Id, Name, Zip,
and Photo . . . .” ’502 patent col. 7 ll. 22–23 (emphasis
added). Further confirming that the inventors of the ’502
patent did not deviate from the plain and ordinary mean-
ing, the ’502 patent makes clear that the object model
must include classes in order to practice the claimed
invention. For example, each asserted claim requires
mapping an object model to relational database schema.
The process described in the ’502 patent for mapping the
object model to the relational database schema makes
clear that the object model must include “classes” in order
to be mapped. ’502 patent col. 2 l. 66 – col. 4 l. 15.
Although the patent and all of the record evidence
supports the construction of “object model” to require a set
of classes, DataTern argues that we ought to reject that
plain and ordinary meaning because of a stipulation it
entered regarding the meaning of the term classes. The
parties stipulated that classes include both attributes and
behaviors. DataTern argues that the sole embodiment of
18 MICROSOFT CORPORATION v. DATATERN, INC.
an object model in the patent only uses attributes, not
behaviors. See ’502 patent Fig. 3. Therefore, DataTern
argues that “object model” should not be construed to
require classes. We disagree. As discussed, the plain and
ordinary meaning of object model requires a set of classes.
The only embodiment in the patent discloses an object
model with classes and attributes of those classes. While
DataTern agreed to, and is bound by virtue of its stipula-
tion to, a narrower construction of classes than that
required by the ’502 patent, that does not change the
correct construction of object model. The tail can’t wag
the dog.
Because DataTern stipulated that SAP does not in-
fringe based on the district court’s determination that an
object model must include classes, we affirm summary
judgment of SAP’s noninfringement of the ’502 patent.
C. Summary Judgment of Noninfringement to Microsoft
DataTern also conceded that Microsoft does not in-
fringe the asserted ’502 patent claims if “object model”
must include classes. On appeal, however, Microsoft does
not make any of its own claim construction arguments
regarding the ’502 patent. It instead purports to incorpo-
rate by reference SAP’s claim construction arguments.
Microsoft Br. 19. DataTern asserts that this is improper
and that Microsoft has waived its claim construction
challenges.
Because the Microsoft and SAP appeals are not con-
solidated, this case does not fall under Fed. R. App. P.
28(i), which authorizes incorporation of co-party briefing
only in the case of consolidated appeals. We also note
that incorporating SAP’s arguments, as Microsoft at-
tempts to do, would allow the Microsoft brief to exceed our
court’s allowable word count by 3,025 words. It would be
fundamentally unfair to allow a party to use incorporation
to exceed word count. We hold that incorporation of co-
MICROSOFT CORPORATION v. DATATERN, INC. 19
party briefing is only allowed in consolidated cases as
explained in Fed. R. App. P. 28(i) and that such incorpora-
tion cannot be used to exceed word count. The incorpo-
rated material counts against the litigants’ word count in
exactly the same manner as if it had been expressly
included in the brief. In this case, however, because we
are affirming the district court’s determination that an
“object model” must include “classes,” and because
DataTern conceded Microsoft’s noninfringement based on
the requirement of “classes,” we affirm the district court’s
grant of summary judgment of noninfringement of the
’502 patent to Microsoft.
III. Scope of Summary Judgment to SAP
SAP’s declaratory judgment complaint sought broad
declarations that “[n]either SAP nor its products have
infringed” either the ’402 or ’502 patent. DataTern’s
counterclaims were equally broad, alleging that SAP
indirectly infringed the ’402 and ’502 patents based on
“certain software programs and programming tools . . .
including, inter alia, BusinessObjects . . . .” J.A. (SAP)
625. DataTern, however, never served infringement
contentions on SAP that alleged infringement of the ’402
patent. And the infringement contentions alleging in-
fringement of the ’502 patent relied solely on BusinessOb-
jects, not any other SAP software. Nonetheless, based on
the parties’ broad pleadings, the district court’s order
granting summary judgment of noninfringement to SAP
encompassed the ’402 patent and all SAP products “that
were or could have been accused of infringing the ’402
patent.” SAP AG v. DataTern, Inc., C.A. No. 11-cv-02648-
KBF (S.D.N.Y. Dec. 19, 2012), ECF No. 211.
DataTern argues that the scope of summary judgment
should only include BusinessObjects and the ’502 patent,
not all SAP products or the ’402 patent. It contends that
BusinessObjects was the only product asserted by SAP as
20 MICROSOFT CORPORATION v. DATATERN, INC.
a basis for the court’s jurisdiction in its declaratory judg-
ment complaint and the only product identified in
DataTern’s infringement contentions. While DataTern
admits that it alleged that SAP infringed the ’402 patent
in its counterclaims, it asserts that it never served in-
fringement contentions regarding the ’402 patent. It
argues that the infringement contentions, not the com-
plaint, should determine the scope of the judgment.
SAP responds that the scope of summary judgment
properly included both patents and all SAP products. It
asserts that SAP’s and DataTern’s broad pleadings con-
firm the breadth of their dispute. It contends that allow-
ing DataTern to unilaterally remove the ’402 patent from
this case by failing to file infringement contentions would
give opportunistic patentees too much control over the
scope of declaratory judgment actions initiated by the
alleged infringers.
We hold that the district court correctly included the
’402 patent in its summary judgment order. The court
had declaratory judgment jurisdiction over SAP’s nonin-
fringement challenge to the ’402 patent based, in part, on
DataTern’s implied assertions of SAP’s indirect infringe-
ment of the ’402 patent evidenced in the claim charts
provided in the customer suits. That DataTern later
failed to file infringement contentions for the ’402 patent
did not remove the ’402 patent from the case. SAP never
abandoned its claim that the ’402 patent was not in-
fringed, and DataTern did not covenant not to sue SAP on
the ’402 patent after failing to file infringement conten-
MICROSOFT CORPORATION v. DATATERN, INC. 21
tions. Thus, the district court properly entered summary
judgment of noninfringement of the ’402 patent to SAP. 7
However, we also hold that the district court erred in
granting summary judgment of noninfringement to SAP
for products other than BusinessObjects. Declaratory
judgment jurisdiction must be determined on a product-
by-product basis. Sierra Applied Sci., Inc. v. Advanced
Energy Indus., Inc., 363 F.3d 1361, 1373–74 (Fed. Cir.
2004). The claim charts from the customer suits implied-
ly asserted indirect infringement based on the use of
BusinessObjects, not any other SAP product. While SAP’s
complaint and DataTern’s counterclaims invoked SAP
products generally, broad pleadings alone do not define
the scope of judgment when only a subset of those issues
were litigated. Tol-O-Matic, Inc. v. Proma Produkt-Und
Mktg. Gesellschaft, 945 F.2d 1546, 1554–55 (Fed. Cir.
1991). Here, only BusinessObjects was fairly at issue,
and the district court’s judgment could not have extended
beyond BusinessObjects. We thus affirm-in-part and
reverse-in-part the grant of summary judgment to SAP,
and remand with orders that the district court modify the
summary judgment order to cover only BusinessObjects.
CONCLUSION
We affirm the district court’s denial of DataTern’s mo-
tion to dismiss Microsoft’s declaratory judgment challenge
of the ’502 patent and affirm the grant of summary judg-
7 Because we deny Microsoft’s declaratory judgment
challenge to the ’402 patent on jurisdictional grounds and
because our grant of summary judgment of noninfringe-
ment to SAP with regard to the ’402 patent does not
require consideration of any claim construction issues, we
do not reach any of the ’402 patent claim construction
issues in the Microsoft appeal.
22 MICROSOFT CORPORATION v. DATATERN, INC.
ment to Microsoft with regard to the ’502 patent. We
reverse the court’s denial of DataTern’s motion to dismiss
Microsoft’s declaratory judgment challenge of the ’402
patent and remand with orders that the district court
dismiss Microsoft’s declaratory judgment challenge of the
’402 patent. We affirm the court’s denial of DataTern’s
motion to dismiss for lack of jurisdiction SAP’s challenges
to both the ’402 and ’502 patents. We also affirm-in-part
and reverse-in-part the grant of summary judgment to
SAP, and remand with orders that the district court
modify the summary judgment order to cover only Busi-
nessObjects.
AFFIRMED-IN-PART, REVERSED-IN-PART,
REMANDED
COSTS
No costs to either party.
United States Court of Appeals
for the Federal Circuit
______________________
MICROSOFT CORPORATION,
Plaintiff-Appellee,
v.
DATATERN, INC.,
Defendant-Appellant.
______________________
2013–1184
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 11–CV–2365, Judge
Katherine B. Forrest.
------------------------
SAP AG, AND SAP AMERICA, INC.,
Plaintiffs-Appellees,
v.
DATATERN, INC.,
Defendant-Appellant.
______________________
2013–1185
______________________
2 MICROSOFT CORPORATION v. DATATERN, INC.
Appeal from the United States District Court for the
Southern District of New York in No. 11–CV–2648, Judge
Katherine B. Forrest.
______________________
RADER, Chief Judge, dissenting-in-part.
Declaratory judgment jurisdiction considers “whether
the facts alleged, under all the circumstances, show that
there is a substantial controversy.” MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 127 (2007) (emphasis
added). In my view, the court in this case discounts the
totality of circumstances in favor of each alleged fact in
isolation. The unfortunate consequence of this decision
creates a roadmap to avoid declaratory judgment when it
may be most valuable to resolve disputes early and effi-
ciently. Therefore, while I join the court almost across the
board, I must respectfully dissent-in-part on the majori-
ty’s dismissal of Microsoft’s action against DataTern on
the ’402 patent.
When DataTern began threatening its customers, Mi-
crosoft willingly stepped up to resolve this dispute in the
most efficient manner. Instead of lingering threats to
numerous smaller commercial entities, Microsoft offered
to resolve the issues in a single focused lawsuit. Instead
of ongoing strategies to grant licenses to multiple entities
at less than the cost of defending a major lawsuit, Mi-
crosoft sought to efficiently confront the questions all at
one time in one place.
Of course, DataTern and other potential patent liti-
gants would like to find a way to keep Microsoft or other
major corporations on the sidelines while seeking numer-
ous settlements with their customers who cannot afford
the cost of a major lawsuit. Thus, this decision takes on
special importance because it shows DataTern and its
successors a way to achieve that lucrative objective.
MICROSOFT CORPORATION v. DATATERN, INC. 3
The court determines in this case that jurisdiction is
not available over Microsoft’s action on the ’402 patent
because DataTern “cite[d] exclusively to third party—not
Microsoft-provided—documentation for several key claim
limitations” in its charts. Majority Op. at 10. For this
reason alone, the court denies Microsoft declaratory
judgment jurisdiction to resolve these issues in a single
focused lawsuit. This lone detail, within the control of the
patent owner, should not defeat an otherwise valid de-
claratory judgment action. The practical effect of this
holding creates a roadmap to allow DataTern and its
successors to keep Microsoft on the sidelines while run-
ning up wins against customers, who are often smaller
and less-equipped to defend themselves.
To my eyes, this unfortunate consequence is easy to
avoid in this case. The test for proper declaratory judg-
ment jurisdiction under Article III is not a rigid, inflexible
test that requires a one-by-one evaluation of each fact
alleged. Rather, “‘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 judg-
ment.’” MedImmune, 549 U.S. at 127 (quoting Md. Cas.
Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)).
Moreover, in cases such as this involving many customers,
this court has held that a supplier has standing to sue if
“there is a controversy between the patentee and the
supplier as to the supplier’s liability for induced or con-
tributory infringement based on the alleged acts of direct
infringement by its customers.” Arris Grp., Inc. v. British
Telecomms. PLC, 639 F.3d 1368, 1375 (Fed. Cir. 2011).
In this case, “all the circumstances” common among
each of the four actions are sufficient to show standing for
all of them—not just three out of four. First, DataTern
initiated customer suits involving the use of Microsoft and
SAP products. Second, DataTern provided claim charts to
4 MICROSOFT CORPORATION v. DATATERN, INC.
these customers that explicitly and repeatedly identified
Microsoft and SAP products as allegedly meeting each
and every asserted claim limitation. This record includes
“generic” charts that identified only Microsoft or SAP
(rather than the customer DataTern had sued). Third,
Microsoft and SAP received many indemnification de-
mands from customers related to DataTern’s suits.
Fourth, DataTern has an extensive history of litigiousness
(especially against Microsoft and SAP customers). Fifth,
DataTern offered no covenant-not-to-sue prior to, or
during, the suits.
The court’s analysis considers each of these above
facts one-by-one in isolation, when a faithful application
of the totality of circumstances test might produce more
efficient results. See Majority Op. at 7–12. Thus, to my
eyes, a lone distinction on one factor (the source of the
documents cited in the claim charts) should not defeat
Microsoft’s worthy effort to defend its customers. Indeed,
all else being equal, a patentee should not enjoy the
ability to insulate itself from a supplier suit by ensuring
its claim charts implicating the supplier’s product refer-
ence only third-party information—particularly if that
information is only relevant to a single claim limitation
(or one that is not “key”). See id. at 10.
Furthermore, whether DataTern cited to Microsoft
documentation for “key” limitations in its claim charts
does not have a meaningful bearing on whether this
record contains a substantial controversy. See id. The
test requires a substantial controversy, not proof that
DataTern has effectively alleged indirect infringement for
every limitation (or “key” limitations) solely through its
claim charts (i.e., by citing to Microsoft instruction manu-
als). Moreover, a focus on “key” limitations only distracts
from the totality of circumstances test. In fact, given that
the law treats all limitations as significant, it is unclear
what constitutes a “key” limitation.
MICROSOFT CORPORATION v. DATATERN, INC. 5
The practical and problematic effect of the court’s
holding today is that it gives aggressive parties a
roadmap to avoid supplier suits. Instead, they can just go
after small customers who are much more likely to settle
to avoid the costs of defense. Microsoft’s and SAP’s will-
ingness to step into this case as suppliers defending their
customers should be encouraged, not discouraged. A
supplier suit is much more likely to address issues that
would be dispositive to all customers efficiently and
effectively without multiplying unnecessarily customer
suits.
Therefore, because I believe the district court had de-
claratory judgment jurisdiction over Microsoft’s action on
the ’402 patent, I respectfully dissent on that issue.