Arris Group, Inc. v. British Telecommunications Plc ( 2011 )

United States Court of Appeals
for the Federal Circuit
__________________________
ARRIS GROUP, INC.,
Plaintiff-Appellant,
v.
BRITISH TELECOMMUNICATIONS PLC,
Defendant-Appellee.
__________________________
2010-1292
__________________________
Appeal from the United States District Court for the
Northern District of Georgia in case no. 09-CV-0671,
Judge Charles A. Pannell, Jr.
___________________________
Decided: May 19, 2011
___________________________
JOHN M. DIMATTEO, Willkie Farr & Gallagher, LLP, of
New York, New York, argued for plaintiff-appellant. With
him on the brief were EUGENE L. CHANG and MARC E.
MONTGOMERY.
JAMES H. SHALEK, Proskauer Rose, LLP, of New York,
New York, argued for defendant-appellee. With him on
the brief were NOLAN M. GOLDBERG and THEODORE K.
CHENG.
__________________________
ARRIS GROUP v. BRITISH TELECOMM 2
Before RADER, Chief Judge, NEWMAN and DYK, Circuit
Judges.
DYK, Circuit Judge.
Arris Group, Inc. (“Arris”) brought suit against Brit-
ish Telecommunications, PLC (“BT”) seeking a declara-
tory judgment that claims in BT’s patents—U.S. Patent
Nos. 5,142,532 (“’532 patent”); 5,526,350 (“’350 patent”);
6,538,989 (“’989 patent”); and 6,665,264 (“’264 patent”)
(collectively the “patents-in-suit”)—are invalid and not
infringed by Arris. Arris also sought an injunction pre-
venting BT from suing Arris or its customers for in-
fringement of the patents-in-suit. The United States
District Court for the Northern District of Georgia dis-
missed for lack of subject matter jurisdiction, finding that
there was no Article III case or controversy between the
parties. Arris Group, Inc. v. British Telecomm., PLC, No.
1:09-CV-671-CAP, slip op. at 5–8 (N.D. Ga. Feb. 18, 2010).
Because we conclude that an actual controversy existed
between Arris and BT, we reverse the district court’s
decision and remand for further proceedings.
BACKGROUND
The patents-in-suit claim systems and methods that
relate in particular to cable networks that offer Voice over
Internet Protocol (“VoIP”) telephone services. Plaintiff-
Appellant Arris develops and manufactures cable teleph-
ony and data products for cable system operators for use
in VoIP systems. This declaratory judgment action stems
from BT’s allegations that Cable One, Arris’ customer,
has infringed the patents-in-suit by using equipment
purchased from Arris to implement VoIP services on
Cable One’s network.
3 ARRIS GROUP v. BRITISH TELECOMM
VoIP is a communications protocol under which voice
data is transmitted over a packet-switched network such
as the internet, rather than over the traditional Public
Switched Telephone Network (“PSTN”). To originate a
VoIP telephone call, the analog voice signal must first be
digitized and encoded into packets. In Cable One’s net-
work, this essential function is performed by devices sold
by Arris known as Embedded Multimedia Terminal
Adapters (“E-MTAs”). An E-MTA is a user-end device
that combines a Cable Modem (“CM”) and a Multimedia
Terminal Adapter (“MTA”) to allow for the connectivity of
both Ethernet-compatible devices and traditional analog
telephones. The MTA converts the telephone’s analog
voice signal into digital IP packets, delivers a dial tone,
and manages other essential call functions.
In addition to E-MTAs, Cable One’s VoIP network
uses other Arris products known as Cable Modem Termi-
nation Systems (“CMTSs”). A CMTS is an electronic
device, typically used at a cable company’s head-end or
hub-site, which communicates with multiple subscribers’
cable modems and routes traffic to and from the internet.
The use of CMTSs in Cable One’s network is essential to
the functionality of its VoIP services. Cable One’s net-
work and Arris’ CMTS and E-MTA products all operate in
accordance with the industry standards of (1) Data Over
Cable Service Interface Specification (“DOCSIS”), which
defines interface standards for cable modems and sup-
porting equipment; and (2) PacketCable, which is an
extension of DOCSIS used for VoIP.
On July 17, 2007, BT sent a letter to Cable One that
accused Cable One’s VoIP network of infringing various
claims of the patents-in-suit and sought to begin licensing
ARRIS GROUP v. BRITISH TELECOMM 4
negotiations. 1 The specified claims included both system
and method claims. In response to BT’s letter, Cable One
requested on August 15, 2007, that it be provided a “spe-
cific comparison of the claims of [the patents-in-suit] to
our cable systems or operations.” J.A. 159. On August
23, 2007, BT sent Cable One a 118-page presentation
showing “the applicability of selected claim elements in
the four BT patents to Cable One’s services.” J.A. 177;
178–295. The presentation specifically and repeatedly
identified Arris’ CMTSs and E-MTAs used in Cable One’s
network as embodying numerous elements and perform-
ing numerous method steps of the asserted claims. BT
and Cable One subsequently met on October 23, 2007, at
Cable One’s offices in Phoenix, Arizona, where BT re-
viewed the 118-page presentation and further explained
its infringement contentions.
Following the October 23 meeting, Cable One sent a
letter to Arris in November 2007 notifying Arris of BT’s
infringement accusations. Cable One additionally de-
manded in the letter that Arris “defend, indemnify and
hold harmless Cable One from these assertions of in-
fringement.” J.A. 588.
On January 18, 2008, BT “proposed . . . a face-to-face
meeting with Cable One and its vendors . . . to determine
if we have a basis for further licensing discussions.” J.A.
301. In late February 2008, Cable One requested that
Arris be included in the next meeting. The meeting was
1 BT’s letter additionally indicated that IPValue, an
independent contractor licensing firm, would act as BT’s
agent to conduct its licensing negotiations with Cable
One. Subsequent meetings and negotiations with Cable
One and Arris were conducted by IPValue on BT’s behalf.
For convenience, we refer in this opinion to the actions
and communications of IPValue and its agents as having
been conducted by BT.
5 ARRIS GROUP v. BRITISH TELECOMM
held on March 14, 2008, at Arris’ office in Suwanee,
Georgia. During the meeting, BT presented the same
118-page presentation of BT’s infringement contentions
that it had presented to Cable One at the Phoenix meet-
ing.
The parties—including Arris—met again at Arris’
Suwanee office on August 29, 2008, where they discussed
potential licensing for Cable One. At the meeting, Arris
presented a response to BT’s infringement contentions.
Arris contended that certain relevant claim limitations
were not met by Arris’ CMTS or E-MTA products used in
Cable One’s network. See J.A. 730, 740–41, 749, 751,
760–61.
Following the August meeting, BT requested that Ar-
ris send “formal rebuttal information” regarding its
infringement contentions, J.A. 590, and it further re-
quested a telephone conference with the parties’ “techni-
cal people,” J.A. 592. On September 17, 2008, Arris sent
BT further materials containing its non-infringement
arguments, seeking to absolve Cable One of infringement
by demonstrating how components within Cable One’s
network did not meet one or more of the limitations in the
claims-at-issue. Two conference calls took place thereaf-
ter on September 24, 2008, and November 13, 2008,
during which Arris presented its non-infringement argu-
ments and BT responded to them.
On November 24, 2008, BT requested that both Arris
and Cable One agree to receive a specific licensing pro-
posal under the terms of a nondisclosure agreement BT
had entered into with Cable One. Arris and Cable One
agreed, and on December 15, 2008, BT sent copies of its
licensing proposal to both parties. The proposed licensing
agreement explicitly stated that the license would be
ARRIS GROUP v. BRITISH TELECOMM 6
“granted to Cable One only.” J.A. 336. No license agree-
ment was consummated.
On March 31, 2009, Arris filed this declaratory judg-
ment action in the United States District Court for the
Northern District of Georgia, seeking: (1) a declaration
that Arris does not infringe the patents-in-suit; (2) an
injunction preventing BT from instituting infringement
actions against Arris or its customers; and (3) a declara-
tion that the patents-in-suit are invalid. The district
court found that there was no Article III case or contro-
versy between Arris and BT, because throughout the
parties’ meetings and conversations, BT “only discussed
Cable One’s infringement and did not discuss any in-
fringement by Arris.” Arris, slip op. at 3; see also id. at 2,
4, 6–7. In the district court’s view, “the defendant’s
actions [were] directed [solely] toward Cable One, Arris’
customer, rather than Arris itself,” which the court found
“[did] not constitute a real and immediate injury for
Article III jurisdiction.” Id. at 7–8. The court accordingly
dismissed Arris’ declaratory judgment action for lack of
subject matter jurisdiction. Id.
Arris appealed the district court’s decision to this
court. We have jurisdiction pursuant to 28 U.S.C. §
1295(a)(1).
DISCUSSION
We review the district court’s dismissal for lack of
subject matter jurisdiction de novo. Air Measurement
Techs. Inc. v. Akin Gump Strauss Hauer & Feld, LLP, 504
F.3d 1262, 1267 (Fed. Cir. 2007). A party has standing to
bring an action under the Declaratory Judgment Act if an
“actual controversy” exists, 28 U.S.C. § 2201(a), which “is
the same as an Article III case or controversy.” Teva
Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d
1330, 1338 (Fed. Cir. 2007) (citing Aetna Life Ins. Co. v.
7 ARRIS GROUP v. BRITISH TELECOMM
Haworth, 300 U.S. 227, 239–41 (1937)). The burden is on
the party claiming declaratory judgment jurisdiction to
establish that an Article III case or controversy existed at
the time the claim for declaratory relief was filed. King
Pharm., Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1282 (Fed.
Cir. 2010); Benitec Austl., Ltd. v. Nucleonics, Inc., 495
F.3d 1340, 1344 (Fed. Cir. 2007).
I
This case again presents a question of standing to
bring a declaratory judgment action for a determination of
non-infringement and invalidity. In MedImmune, Inc. v.
Genentech, Inc., the Supreme Court rejected our prior,
more stringent standard for declaratory judgment stand-
ing insofar as it required a “reasonable apprehension of
imminent suit.” 549 U.S. 118, 132 n.11 (2007); see also
ABB Inc. v. Cooper Indus., LLC, No. 2010-1227, 2011 WL
553603, at *2 (Fed. Cir. Feb. 17, 2011) (recognizing
MedImmune’s rejection of the reasonable apprehension
test); Teva Pharm., 482 F.3d at 1338–39 (same); SanDisk
Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1378–79
(Fed. Cir. 2007) (same). Under the Court’s new standard,
an Article III case or controversy exists when “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, 549 U.S. at 127 (internal quotation marks
and citation omitted). The dispute must be “definite and
concrete, touching the legal relations of parties having
adverse legal interests,” such that the dispute is “real and
substantial” and “admi[ts] of specific relief through a
decree of a conclusive character, as distinguished from an
opinion advising what the law would be upon a hypotheti-
cal state of facts.” Id. (internal quotation marks and
citation omitted).
ARRIS GROUP v. BRITISH TELECOMM 8
Arris contends that it has standing and that there is
an Article III case or controversy simply because it has
suffered economic injury as a result of infringement
threats made by BT against Arris’ customer Cable One.
This, says Arris, creates a risk that Cable One will cease
purchasing Arris’ CMTS and E-MTA products for its VoIP
operations. While economic injury may confer standing in
cases challenging government action, 2 we have not held
that economic injury alone is sufficient to confer standing
in patent cases seeking a declaratory judgment. Indeed,
in patent cases before the Supreme Court’s decision in
MedImmune, the regional circuits and our court held that
economic injury is not alone sufficient to confer standing. 3
2 See Craig v. Boren, 429 U.S. 190, 194–95 (1976)
(allowing beer vendor to raise equal protection rights of
its male customers to buy beer at same age as females,
because discriminatory law caused economic injury to
vendor by constricting its market); see also, e.g., Gen.
Motors Corp. v. Tracy, 519 U.S. 278, 286–87 (1997) (in-
state natural gas consumer who suffered economic injury
from state tax that allegedly discriminated against out-of-
state sellers had standing to bring Commerce Clause
challenge); Carey v. Population Servs. Int’l, 431 U.S. 678,
681–83 (1977) (corporate seller of contraceptives had
standing to challenge statute prohibiting sale of contra-
ceptives to persons under 16 years of age); Totes-Isotoner
Corp. v. United States, 594 F.3d 1346, 1352 (Fed. Cir.
2010) (importer of leather gloves had standing to chal-
lenge government’s imposition of different tariff rates for
men’s and women’s gloves; though importer was not the
subject of the alleged discrimination, its economic injury
was sufficient to confer standing).
3 See, e.g., Microchip Tech. Inc. v. Chamberlain
Grp., Inc., 441 F.3d 936, 943 (Fed. Cir. 2006) (holding
that, where sole injury alleged was economic harm to
declaratory plaintiff caused by patentee’s purported
threatening of its customers, “[s]uch an economic interest
alone . . . cannot form the basis of an ‘actual controversy’
under the Declaratory Judgment Act.”); Aralac, Inc. v.
9 ARRIS GROUP v. BRITISH TELECOMM
MedImmune did not abandon this rule. To the contrary,
MedImmune adopted an “adverse legal interest” require-
ment. See MedImmune, 549 U.S. at 126–27 (requiring the
dispute to “touch[ ] the legal relations of parties having
adverse legal interests” and summarizing the question of
declaratory judgment jurisdiction as “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”) (empha-
ses added). An “adverse legal interest” requires a dispute
as to a legal right—for example, an underlying legal cause
of action that the declaratory defendant could have
brought or threatened to bring. 4 In the absence of a
controversy as to a legal right, a mere adverse economic
interest is insufficient to create declaratory judgment
jurisdiction. Although economic injury alone is insuffi-
cient to create standing, we nonetheless conclude that
Arris has standing based on other well-established stan-
dards.
Hat Corp. of Am., 166 F.2d 286, 295 (3d Cir. 1948)
(“Where a person is not engaged in possible infringing
conduct . . . he lacks an interest in a controversy to sup-
port an action for declaratory judgment relief to test the
validity of a patent. . . . An economic interest is not
enough to create justiciability.”).
4 A controversy as to a legal right may also arise in
some cases where the declaratory defendant has no cause
of action. See Caraco Pharm. Labs., Ltd. v. Forest Labs.,
Inc., 527 F.3d 1278, 1291–94 (Fed. Cir. 2008) (finding a
controversy as to a legal right where, despite patentee’s
covenant not to sue, the Hatch-Waxman Act’s framework
deprived generic drug maker of the legal right to market
its drug absent a judicial finding that the listed patent
was invalid or not infringed); see also Teva Pharm. USA,
Inc. v. Eisai Co., Ltd., 620 F.3d 1341, 1346–48 (Fed. Cir.
2010) (same).
ARRIS GROUP v. BRITISH TELECOMM 10
We have recognized that, where a patent holder ac-
cuses customers of direct infringement based on the sale
or use of a supplier’s equipment, the supplier has stand-
ing to commence a declaratory judgment action if (a) the
supplier is obligated to indemnify its customers from
infringement liability, or (b) there is a controversy be-
tween 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.5
Though there was no express indemnification agreement
here, Arris contends it risks being held liable to Cable
One for indemnification under Georgia’s Uniform Com-
mercial Code (“UCC”). See Ga. Code § 11-2-312(3); see
also WS Packaging Grp., Inc. v. Global Commerce Grp.,
LLC, 505 F. Supp. 2d 561, 566 (E.D. Wis. 2007) (holding
that, under Wisconsin’s UCC, Wis. Stat. § 402.312(3), a
customer without an indemnity contract may nonetheless
seek indemnification from a seller if sued for infringement
5 See, e.g., ABB Inc., 2011 WL 553603, at *3 (hold-
ing that, where licensee contracted with a third party to
manufacture patented material, patentee’s threats that
third party’s activity was not covered by the license
created an Article III case or controversy because the
licensee “had an interest in determining whether it would
incur liability for induced infringement, and it had an
interest in determining whether it would be liable for
indemnification, which turned on whether [the third
party] would be liable for infringement”); Arrowhead
Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 733,
736–37 (Fed. Cir. 1988), overruled on other grounds by
MedImmune, 549 U.S. at 127; see also Microchip Tech.,
441 F.3d at 944 (patentee’s threats against supplier’s
customers did not create an Article III case or controversy
because, inter alia, there was “nothing in the record to
indicate that [the supplier] ha[d] induced or contributed
to infringement,” and the supplier “ha[d] not produced
any agreement indemnifying a customer against in-
fringement”).
11 ARRIS GROUP v. BRITISH TELECOMM
based on its use of the seller’s product). We need not
reach the indemnification issue, for we conclude that,
applying the standard articulated by the Supreme Court
in MedImmune, there is an actual controversy between
Arris and BT concerning Arris’ liability for, at least,
contributory infringement.
II
Here, BT has accused Cable One of infringing system
and method claims of the patents-in-suit. When the
holder of a patent with system claims accuses a customer
of direct infringement based on the customer’s making,
using, or selling of an allegedly infringing system in
which a supplier’s product functions as a material compo-
nent, there may be an implicit assertion that the supplier
has indirectly infringed the patent. 6 Likewise, when the
holder of a patent with method claims accuses the sup-
plier’s customers of direct infringement based on their use
of the supplier’s product in the performance of the claimed
6 See, e.g., Nat’l Coupling Co. v. Press-Seal Gasket
Corp., 323 F.2d 629, 630, 632–33 (7th Cir. 1963) (actual
controversy existed regarding indirect infringement
where defendant “charged contributory infringement” by
sending plaintiff’s customer a letter alleging that plain-
tiff’s gasket product, when installed on concrete pipe,
infringed defendant’s claimed “Gasket and Pipe End
Construction for Bell and Spigot Pipe” device); Nippon
Elec. Glass Co., Ltd. v. Sheldon, 489 F. Supp. 119, 122
(S.D.N.Y. 1980) (“Once defendant accused Sony and
Panasonic of direct infringement due to their use of
plaintiff’s product, plaintiff had reason to fear that it
could be sued as a contributory infringer. It, therefore,
was entitled to seek declaratory relief, even though de-
fendant ha[d] not yet directly charged plaintiff with
contributory infringement.”) (internal citation omitted).
ARRIS GROUP v. BRITISH TELECOMM 12
method, an implicit assertion of indirect infringement by
a supplier may arise. 7
Pursuant to § 271(c) of the Patent Act, an act of con-
tributory infringement may include either the sale of a
“component of a patented machine, manufacture, combi-
nation or composition” (including a component used in a
claimed system), or the sale of a “material or apparatus
for use in practicing a patented process.” 35 U.S.C. §
271(c). This covers both contributory infringement of
system claims 8 and method claims. 9 To hold a component
7 See, e.g., Sticker Indus. Supply Corp. v. Blaw-
Knox Co., 367 F.2d 744, 747 (7th Cir. 1966) (where de-
claratory plaintiff’s product allegedly was not a staple
item of commerce and patentee had informed plaintiff’s
customers that unlicensed use of plaintiff’s product would
infringe its method patent, Article III case or controversy
existed because plaintiff “had good reason to fear that it
might be liable for contributory infringement”).
8 Claims which recite a “system,” “apparatus,”
“combination,” or the like are all analytically similar in
the sense that their claim limitations include elements
rather than method steps. All such claims can be con-
tributorily infringed by a component supplier. See, e.g.,
Spansion, Inc. v. Int’l Trade Comm’n, 629 F.3d 1331,
1337, 1353–54 (Fed. Cir. 2010) (upholding ITC’s decision
that defendant contributorily infringed patent claim for a
“semiconductor assembly” by importing and selling semi-
conductor chips that its customers incorporated into their
infringing products); Golden Blount, Inc. v. Robert H.
Peterson Co., 438 F.3d 1354, 1359, 1361–65 (Fed. Cir.
2006) (upholding district court’s finding that defendant
contributorily infringed patent claim for a “fireplace
assembly” by supplying a component of the assembly).
9 See, e.g., i4i Ltd. P’ship v. Microsoft Corp., 598
F.3d 831, 850 (Fed. Cir. 2010) (“A party is liable for con-
tributory infringement if that party sells, or offers to sell,
a material or apparatus for use in practicing a patented
process.”), cert. granted on other grounds, 131 S. Ct. 647(2010); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d
13 ARRIS GROUP v. BRITISH TELECOMM
supplier liable for contributory infringement, a patent
holder must show, inter alia, that (a) the supplier’s prod-
uct was used to commit acts of direct infringement; (b) the
product’s use constituted “a material part of the inven-
tion”; (c) the supplier knew its product was “especially
made or especially adapted for use in an infringement” of
the patent; and (d) the product is “not a staple article or
commodity of commerce suitable for substantial nonin-
fringing use.” Id.; Wordtech Sys., Inc. v. Integrated Net-
works Solutions, Inc., 609 F.3d 1308, 1316–17 (Fed. Cir.
2010).
There is no question here that BT accused Arris’ cus-
tomer Cable One of direct infringement of various system
and method claims, including claims 1–15 of the ’350
patent; claims 19–20 of the ’989 patent; claim 23 of the
’264 patent; and claims 1, 8–12, 15, 18, 20–21, 26–28, 30,
37–40, 42, 44, and 46–48 of the ’532 patent. According to
BT, the parties’ discussions were limited solely to in-
fringement by Cable One’s network and the licensing of
Cable One; BT contends “[t]here was no discussion of any
potential infringement of the Patents-in-Suit, either
directly or indirectly (i.e., inducing or contributing to
infringement), by Arris.” Appellee’s Br. 7. The 118-page
presentation of BT’s infringement contentions, however,
paints a different picture. While the presentation did not
expressly accuse Arris of contributory infringement, BT
1301, 1320–21 (Fed. Cir. 2009) (upholding jury’s finding of
contributory infringement where defendant’s software
product was used for practicing claimed method of enter-
ing data without a keyboard); AquaTex Indus., Inc. v.
Techniche Solutions, 419 F.3d 1374, 1379 (Fed. Cir. 2005)
(“Although not directly infringing, a party may still be
liable for inducement or contributory infringement of a
method claim if it sells infringing devices to customers
who use them in a way that directly infringes the method
claim.”).
ARRIS GROUP v. BRITISH TELECOMM 14
explicitly and repeatedly singled out Arris’ products used
in Cable One’s network to support its infringement con-
tentions. BT clearly identified Arris’ CMTS and E-MTA
products as embodying numerous elements and perform-
ing numerous method steps of the asserted claims. Before
presenting any claim tables, BT laid the foundation for its
allegations, stating:
Subsequent to July 2005, Cable One used Ar-
ris Cadant C4 CMTS and Touchtone Telephony
Modems TM402 (E-MTA) for its VoIP deployment.
We assume that all VoIP customers are provided
with data-over-cable services via Arris CMTS’s.
The VoIP solution is certified against PacketCable
and DOCSIS standards.
J.A. 184. The 118-page presentation then proceeded to
discuss Arris’ CMTS and E-MTA products on at least 77
pages, including in multiple claim tables purporting to
match components of Cable One’s network to elements of
the system claims and method steps of the method claims
of the patents-in-suit. 10 On at least 26 pages, Arris was
specifically referenced by name, Arris’ products were
identified by brand name and model number (e.g., Arris
Cadent® C4 CMTS), or Arris’ product literature was
copied from its website for illustrative effect. 11 The
presentation made it clear that Cable One’s use of Arris’
CMTSs and E-MTAs was central to BT’s infringement
contentions. For many of the asserted claims, BT con-
tended that virtually all of the claimed system’s elements
10 See J.A. 184, 190–91, 195, 201, 203–05, 208–09,
211–33, 235–43, 245–52, 256–61, 263–65, 268–69, 273–74,
276–86, 291, 294–95.
11 See J.A. 184, 190–91, 195, 201, 211–12, 214, 223,
235–41, 243, 245–48, 257, 263, 273, 276, 285.
15 ARRIS GROUP v. BRITISH TELECOMM
or method steps were practiced by Arris’ CMTSs or E-
MTAs when used in Cable One’s network.
For example, with respect to the ’989 patent, BT’s
presentation purported to “present two claims tables:
Independent Claim 19—Reading on the operation of E-
MTAs” and “Dependent Claim 20—Reading on the opera-
tion of CMTSs.” J.A. 208. Claim 19 claims “[a] packet
network comprising one or more packet network elements,
each packet network element comprising” a number of
claimed limitations. ’989 Patent col.21 ll.48–54 (empha-
ses added). BT’s analysis of claim 19 stated that the “one
or more packet network elements is the E-MTA.” J.A. 212
(providing a picture of Arris’ E-MTA and a link to Arris’
website) (emphasis in original). BT’s claim table then
purported to match every limitation of claim 19’s “packet
network element” to the functionality of Arris’ E-MTA
within Cable One’s network. See J.A. 210–32. Similarly,
claim 20 recites “[a] network as claimed in claim 19
further comprising one or more host elements . . . , each
said host element comprising” a number of limitations.
’989 Patent col.22 ll.15–30 (emphases added). BT’s pres-
entation asserted that “[t]he CMTS is a Host Element in
accordance with claim 20,” J.A. 233 (emphasis added),
and its claim table matched every limitation of claim 20’s
“host element” to the functionality of the “Arris Cadant®
C4 CMTS” used in Cable One’s network, J.A. 236. See
J.A. 234–51. This section of BT’s presentation concluded:
“[A]s shown in the first claim table, Cable One’s configu-
ration and use of the CM component within E-MTAs
infringes claim 19. In addition, Cable One’s configuration
and use of CMTSs with E-MTAs infringes claim 20.” J.A.
252.
BT’s presentation gave similar treatment to many of
the asserted claims of the other patents-in-suit. Claim 23
of the ’264 patent recites “[a] method for controlling
ARRIS GROUP v. BRITISH TELECOMM 16
acceptance of a call for a node in a communications net-
work,” ’264 Patent col.18 ll.38–48, and BT’s presentation
argued that Arris’ Cadant® C4 “CMTS equipment imple-
mented according to DOCSIS 1.1 and PacketCable 1 or
later version standards provides a method of controlling
acceptance of a call as recited in the [’264] patent,” J.A.
256–57. BT’s claim table matched the functionality of
Arris’ CMTSs within Cable One’s network to the perform-
ance of every method step of claim 23. J.A. 255–69.
Similarly, claim 30 of the ’532 patent recites “[a] method
of controlling a bidirectional broadband and telephone
network from an end of the network,” ’532 Patent col.13
ll.22–36, and BT’s claim tables again linked the function-
ality of Arris’ E-MTAs or CMTSs within Cable One’s
network to the performance of every method step, J.A.
272–88.
At a minimum, BT identified Arris’ CMTSs or E-
MTAs (or the CM or MTA sub-components of the E-MTA)
as satisfying at least one essential element or method step
for every asserted claim analyzed in its presentation.
BT’s extensive focus on Arris’ CMTS and E-MTA products
in its infringement contentions implies that Arris’ prod-
ucts are being used as a “material part” of the allegedly
infringed invention—one of the required elements of
contributory infringement under 35 U.S.C. § 271(c).
Moreover, BT alleges that Arris’ CMTSs and E-MTAs
were designed specifically for use under the DOCSIS and
PacketCable standards for VoIP, 12 suggesting that they
12 See, e.g., J.A. 181 (“Cable One has implemented
on its cable networks high-speed data service to its cus-
tomers based on DOCSIS technology.”); J.A. 184 (explain-
ing that the “VoIP solution” provided by Arris’ E-MTAs
and CMTSs “is certified against PacketCable and
DOCSIS standards”); J.A. 203 (citing, in a claim compari-
son chart, the fact that “[t]he E-MTA and CMTS operate
in accordance with the DOCSIS 1.1 and PacketCable v1.0
17 ARRIS GROUP v. BRITISH TELECOMM
are “especially made or especially adapted” for a use that
infringes the patents-in-suit and are “not . . . staple
article[s] or commodit[ies] of commerce suitable for sub-
stantial noninfringing use.” 35 U.S.C. § 271(c).
In addition to the content of BT’s infringement accu-
sations against Cable One, we find it relevant that Arris
was directly and substantially involved in BT’s infringe-
ment and licensing negotiations. While direct communi-
cation between a patentee and a declaratory plaintiff is
not necessary to confer standing, see Arrowhead, 846 F.2d
at 736 (“[I]f the circumstances warrant,” an actual contro-
versy “may be found in the absence of any communication
from the defendant to the plaintiff.”), the nature and
extent of any communications between the declaratory
plaintiff and the patentee are certainly relevant factors to
consider when evaluating whether there is an Article III
case or controversy between the parties. Here, the com-
munication to Arris of BT’s infringement contentions was
direct and repetitive. Arris was included in the latter two
of the three meetings between BT and Cable One—both of
which were held at Arris’ office in Suwanee, Georgia. At
the second meeting, BT presented the same 118-page
presentation of infringement contentions that it had
previously presented solely to Cable One at the first
meeting in Phoenix. This activity shows that Arris was
within BT’s primary intended audience at the second
meeting. At the third meeting, Arris presented its re-
sponses to BT’s infringement contentions, and BT thereaf-
Specifications”); J.A. 256 (“CMTS equipment implemented
according to DOCSIS 1.1 and PacketCable 1 or later
version standards provides a method of controlling accep-
tance of a call as recited in the [’264] patent.”); J.A. 258
(“The recited method of controlling acceptance of a call for
a node in a communications network operated by Cable
One involves the inter-operation of any CMTS equipment
in conformance to the PacketCable DQoS Specification.”).
ARRIS GROUP v. BRITISH TELECOMM 18
ter requested that Arris send it “formal rebuttal informa-
tion.” J.A. 590. After Arris sent the materials, two con-
ference calls took place between Arris and BT during
which Arris presented its non-infringement arguments
and BT responded. This protracted process between Arris
and BT supports the conclusion that there was an Article
III case or controversy regarding whether Arris was
contributorily infringing the patents-in-suit. 13
BT makes several arguments as to why there is no
Article III case or controversy between it and Arris. None
of them is convincing. First, BT argues the district court
properly held that no case or controversy existed between
it and Arris because BT did not explicitly accuse Arris
itself of direct or indirect infringement. But such an
express accusation is unnecessary. As we have repeatedly
held, “a specific threat of infringement litigation by the
patentee is not required to establish jurisdiction, and a
‘declaratory judgment action cannot be defeated simply by
the stratagem of a correspondence that avoids magic
words such as “litigation” or “infringement.”’” ABB Inc.,
13 There is also a possible issue as to induced in-
fringement. Section 271(b) covers active inducement of
infringement, which typically includes acts that inten-
tionally cause, urge, encourage, or aid another to directly
infringe a patent. 35 U.S.C. § 271(b). “[I]nducement
requires that the alleged infringer knowingly induced
infringement and possessed specific intent to encourage
another’s infringement.” DSU Med. Corp. v. JMS Co.,
471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc) (internal
quotations and citations omitted). The Supreme Court is
currently considering the scope of the specific intent
requirement for induced infringement in Global-Tech
Appliances, Inc. v. SEB S.A., 131 S. Ct. 458 (2010) (cert
granted). Because we conclude there is a sufficient con-
troversy regarding contributory infringement, we need
not address whether there was an Article III case or
controversy in this case regarding induced infringement.
19 ARRIS GROUP v. BRITISH TELECOMM
2011 WL 553603, at *2 (quoting Hewlett-Packard Co. v.
Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)
(holding that actual controversy as to infringement ex-
isted where patent owner sent plaintiff two letters seek-
ing “to discuss” the patent)). Here, even in the absence of
an express accusation against Arris, we think the circum-
stances indicate there is a dispute between Arris and BT
concerning Arris’ liability for contributory infringement
that is sufficient to constitute an Article III case or con-
troversy.
Second, BT argues that its allegations against Cable
One should not be construed as including any implicit
assertions of indirect infringement by Arris because BT
included an express disclaimer of such in its infringement
contentions. BT’s 118-page presentation repeatedly
included the following statement:
These assertions are based around the combi-
nation of supplier equipment deployed in a way
that is unique to cable companies. Nothing in this
assertion is meant to accuse any particular sup-
plier [of] equipment of patent infringement.
J.A. 178, 192, 206, 253, 270 (emphasis added). We are not
persuaded by BT’s disclaimer. Far from suggesting that
BT did not have a claim against Arris, the disclaimer’s
use of the word “particular” appears to suggest that some
supplier or suppliers are accused. It is clear that the
accused supplier is Arris. BT’s infringement contentions
focused primarily on Arris’ equipment, and BT expressly
excluded the equipment of Arris’ main competitor Cisco
from its allegations. Arris and Cisco are direct competi-
ARRIS GROUP v. BRITISH TELECOMM 20
tors who sell similar CMTS and E-MTA products, 14 but
BT drew a distinction between Arris and Cisco (and
Cisco’s subsidiary Scientific Atlanta) by notifying Cable
One that “BT wishes to make it clear that this assertion
[of infringement] does not relate to Cisco or Cisco prod-
ucts” because “Cisco has secured a license in all of these
patents being asserted against Cable One.” J.A. 179
(emphases added). BT further noted that the “products”
of Cisco’s subsidiary Scientific Atlanta “are covered by the
Cisco license from BT.” Id. (emphases added). By ex-
pressly noting that its “assertion” of infringement does
not apply to Cisco’s licensed “products” and that Scientific
Atlanta’s products “are covered by” the license, BT im-
plied that the “assertion” of infringement was applicable
to Arris’ unlicensed products and that Arris was liable for
infringement. BT’s disclaimer that nothing in its asser-
tion is meant to accuse any particular supplier of in-
fringement is at best a transparent attempt to defeat
Arris’ standing to bring this declaratory judgment action.
The actual controversy with Arris that BT has created by
its accusations cannot be so easily avoided.
Third, BT surprisingly appears to contend that Arris’
burden as the declaratory judgment plaintiff includes the
burden of presenting evidence that Arris’ actions indi-
rectly infringe the patents-in-suit. Ironically, BT over-
looks the fact that the very purpose for an accused
14 See Declaration of Armando Rois-Méndez in Sup-
port of Opposition of Arris Group, Inc. to Motion to Dis-
miss, ¶ 16, at J.A. 565 (“Cisco Systems, Inc. and
Scientific-Atlanta, Inc. are and have been Arris’s competi-
tors, and sell products which compete with Arris products
including, in particular, the Arris products accused by
BT.”); BT Licensing Proposal (Dec. 15, 2008), at J.A. 328
(acknowledging that “9 CISCO CMTS’s & 48 ARRIS
CMTS’s” were operating together in Cable One’s net-
work).
21 ARRIS GROUP v. BRITISH TELECOMM
infringer to bring a declaratory judgment action is to seek
a judicial determination that a coercive claim by the
patent holder would not succeed on the merits. While a
declaratory plaintiff indeed has the burden of “demon-
strating [that] an actual case or controversy” exists, King
Pharm., 616 F.3d at 1282, that burden does not extend to
showing that the defendant holds meritorious positions on
the issues in controversy. As we have stated, “[i]t [would
be] incongruous to require that one seeking a declaration
of noninfringement prove its process or product is the
‘same as’ or ‘identical’ to the patented process or product.”
Arrowhead, 846 F.2d at 738. “To require declaratory
judgment plaintiffs to allege or show that their products
or processes are infringements . . . would limit the judg-
ments they seek to declarations of invalidity or unen-
forceability.” Id. at 738 n.10. The Declaratory Judgment
Act is not so limited.
Finally, BT suggests that it has agreed not to sue Ar-
ris for infringement. In a line of cases beginning with
Super Sack Manufacturing Corp. v. Chase Packaging
Corp., 57 F.3d 1054, 1059–60 (Fed. Cir. 1995), we have
held that a patentee’s grant of a covenant not to sue a
supplier for infringement can eliminate the supplier’s
standing to bring a declaratory judgment action. 15 At oral
15 See, e.g., Dow Jones & Co., Inc. v. Ablaise Ltd.,
606 F.3d 1338, 1348 (Fed. Cir. 2010); Benitec Aust., Ltd. v.
Nucleonics, Inc., 495 F.3d 1340, 1346–48 (Fed. Cir. 2007);
Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370
F.3d 1354, 1369 (Fed. Cir. 2004); Amana Refrigeration,
Inc. v. Quadlux, Inc., 172 F.3d 852, 855–56 (Fed. Cir.
1999); Spectronics Corp. v. H.B. Fuller Co., Inc., 940 F.2d
631, 637–38 (Fed. Cir. 1991). More recently, we have held
that “whether a covenant not to sue will divest the trial
court of jurisdiction depends on what is covered by the
covenant.” Revolution Eyewear, Inc. v. Aspex Eyewear,
Inc., 556 F.3d 1294, 1297 (Fed. Cir. 2009); see also Fort
ARRIS GROUP v. BRITISH TELECOMM 22
argument in our court, BT represented that it “do[es] not
assert that [Arris’ products] directly infringe . . . [or] that
[Arris] contributorily infringe[s]” the patents-in-suit by
selling its products to Cable One. Oral Arg. at 14:25–
14:45, available at http://www.cafc.uscourts.gov/oral-
argument-recordings/2010-1292/all. However, BT has not
provided any covenant that would protect Arris from
liability for indirect infringement. When questioned as to
why, given its professed position on Arris’ infringement
liability, BT did not simply grant Arris a covenant not to
sue, BT replied: “Why should BT give them a covenant not
to sue, when for all BT knows maybe they are out there
inducing infringement unbeknownst to BT? . . . BT
doesn’t need to forfeit a potential future right . . . to dispel
[a suit for declaratory judgment].” Id. at 19:25–19:55.
These statements fall far short of a covenant not to sue.
Indeed, we have recognized that “a patentee’s refusal to
give assurances that it will not enforce its patent is rele-
vant to the determination [of declaratory judgment stand-
ing].” Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d
1329, 1341 (Fed. Cir. 2008) (quoting BP Chems. v. Union
Carbide Corp., 4 F.3d 975, 980 (Fed. Cir. 1993)). Under
these circumstances, BT’s refusal to grant Arris a cove-
nant not to sue provides a level of additional support for
our finding that an actual controversy exists between
Arris and BT regarding contributory infringement.
Accordingly, we find that BT’s infringement accusa-
tions against Cable One carried the implied assertion that
James Corp. v. Solo Cup Co., 412 F.3d 1340, 1348–49
(Fed. Cir. 2005) (finding declaratory judgment standing
for counterclaim of invalidity where patentee offered
covenant not to sue only after a jury finding of non-
infringement); Teva Pharm., 620 F.3d at 1346–48 (finding
declaratory judgment standing in the Hatch-Waxman
context in spite of a covenant not to sue); Caraco Pharm.,
527 F.3d at 1291–94 (same).
23 ARRIS GROUP v. BRITISH TELECOMM
Arris was committing contributory infringement, and BT
repeatedly communicated this implicit accusation directly
to Arris during the course of a protracted negotiation
process. Arris certainly “had good reason to fear that it
might be liable for contributory infringement.” Sticker
Indus., 367 F.2d at 747; see also ABB Inc., 2011 WL
553603, at *3. From our consideration of “all the circum-
stances,” MedImmune, 549 U.S. at 127, there is an Article
III case or controversy between Arris and BT regarding
Arris’ potential liability for contributory infringement.
We reverse the district court’s dismissal of this case
for lack of subject matter jurisdiction and remand for
further proceedings consistent with this opinion.
REVERSED and REMANDED