Applied Materials, Inc. v. Demaray LLC

Background

Applied Materials, Inc. brought a declaratory-judgment action against Demaray LLC concerning two Demaray patents. Applied sought declarations that its products did not infringe those patents for several reasons, including that patent rights had been assigned to Applied or its affiliate and that Applied held a license. Applied also moved for a preliminary injunction, asking the court to prevent Demaray from continuing patent-infringement lawsuits against Applied’s customers, Intel Corporation and Samsung Electronics Co. Ltd., in the Western District of Texas.

Demaray’s Texas lawsuits accused Intel and Samsung of directly infringing patent claims involving configurations of Applied’s Endura reactors and methods for depositing thin films during semiconductor manufacturing. The Texas lawsuits did not name Applied as a defendant.

Jurisdictional Standard

Because Applied sought relief under the Patent Act and the Declaratory Judgment Act, the court applied Federal Circuit law. The Declaratory Judgment Act permits a potential patent infringer to seek a declaration of non-infringement only when there is an actual controversy—a substantial dispute between parties with opposing legal interests that is sufficiently immediate and real.

The court explained that a declaratory-judgment plaintiff generally must show both an affirmative act by the patent owner related to enforcing patent rights and meaningful preparation to engage in potentially infringing activity. An explicit infringement allegation can establish the required controversy, but merely identifying a patent or product generally is not enough.

Analysis

The court found that Demaray’s 2015 email offering Applied a license to the patents and other technology did not establish an actual controversy. Demaray did not set a response deadline, suggest that Applied’s products infringed, identify the patents as relevant to specific Applied products, or otherwise assert its patent rights against Applied. The record also did not show further licensing discussions or other enforcement efforts directed at Applied.

The court also rejected Applied’s argument that Demaray’s Texas lawsuits created a controversy over Applied’s potential direct infringement. Although Demaray referred to Applied’s Endura reactors and publicly available Applied materials, those materials contained general information about the reactors and did not discuss the specific patented configuration or method. Demaray did not allege that Applied itself configured the reactors or promoted the patented configuration and method. The court therefore found no actual controversy concerning Applied’s possible direct infringement.

The court separately considered possible indirect infringement. It noted that a supplier may have standing to seek a declaration when it must indemnify customers or when there is a controversy about the supplier’s potential induced or contributory infringement. The court found no evidence that Applied had an obligation to indemnify Intel or Samsung. It also found that the Texas complaints and other evidence did not show a reasonable potential for Demaray to assert an indirect-infringement claim against Applied. The references to Applied’s reactors and application-specific process kits did not establish that the reactors had no substantial non-infringing uses or that Applied had the knowledge and intent required for indirect infringement.

Ruling

The court held that Applied had not shown a substantial controversy between Applied and Demaray that was sufficiently immediate and real. It concluded that it lacked subject-matter jurisdiction over Applied’s declaratory-relief action and DENIED Applied’s motion to enjoin the Western District of Texas actions. Judge Edward J. Davila did not decide whether Applied’s products actually infringed Demaray’s patents.