Ebates Performance Marketing, Inc v. MyMail, Ltd.

Background

Ebates Performance Marketing, Inc., doing business as Rakuten Rewards, and Cartera Commerce, Inc. sued MyMail, Ltd. under the Declaratory Judgment Act. They sought declarations that their products did not infringe four MyMail patents: U.S. Patent Nos. 10,228,838, 9,021,070, 9,141,263, and 8,275,863.

Rakuten Rewards developed a Google Chrome extension called “Rakuten: Get Cash Back for Shopping.” Cartera developed and operated the SkyMiles Shopping Button and licensed that product to Delta Airlines and other partners. The opinion states that MyMail is the assignee of the four patents.

On June 12, 2020, an attorney representing MyMail sent letters concerning the Rakuten Rewards and SkyMiles Shopping Button products. The letters said that MyMail had reviewed the products, downloaded relevant source files, and determined that the products infringed the four patents. Each letter included source-code printouts, a claim chart, and a proposed license agreement. One claim chart was 22 pages and the other was 23 pages. The letters set a June 24, 2020 response deadline and stated that the attorney would turn the files over to litigation counsel if no response was received.

The plaintiffs responded on July 2, 2020, raising issues concerning the validity of some patent claims and stating that their products did not infringe the patents. MyMail did not respond to those issues. The plaintiffs filed this action on July 16, 2020.

Other motions

MyMail filed its motion to dismiss on August 14, 2020. The plaintiffs moved to strike MyMail’s reply as late, and MyMail moved for an extension of time to file the reply. The court found that the seven-day delay resulted from counsel’s serious illness, did not affect other proceedings, and did not appear to involve bad faith. The court therefore denied the plaintiffs’ motion to strike and granted MyMail’s motion for an extension of time to file the reply.

Subject-matter jurisdiction

MyMail argued that the court lacked subject-matter jurisdiction over the plaintiffs’ requests for declarations of non-infringement. For a declaratory judgment, the court explained, there must be an “actual controversy”: a substantial and immediate dispute between parties with opposing legal interests.

In patent cases, the court said that an actual controversy requires both meaningful preparation by the alleged infringer to conduct potentially infringing activity and an affirmative act by the patent owner related to enforcing its patent rights. The parties did not dispute the first requirement because the plaintiffs marketed the products at issue.

The court found the affirmative-act requirement satisfied based on the overall circumstances. MyMail’s letters used threatening language, identified specific patents and products, included detailed infringement analyses, imposed a short deadline, referred to MyMail’s history of patent litigation, and threatened to turn the matter over to litigation counsel. The court also noted that MyMail had refused to assure the plaintiffs that it would not enforce the patents.

The court rejected MyMail’s argument that the case should be dismissed because the parties were engaged in licensing negotiations. The court concluded that negotiations had not begun because the plaintiffs’ letter said they wanted MyMail to address several issues before deciding whether and to what extent to engage in licensing discussions. The court also rejected the argument that the case was an anticipatory suit, explaining that this issue generally concerns multiple cases involving the same claims filed in different jurisdictions, and MyMail had not filed a lawsuit against the plaintiffs.

Personal jurisdiction

MyMail also argued that the court lacked personal jurisdiction, meaning authority over MyMail itself. The court considered specific jurisdiction because the plaintiffs did not argue that MyMail was subject to general jurisdiction in California.

The court found that MyMail purposefully directed its patent-enforcement activities toward California. MyMail had litigated two earlier related patent-infringement lawsuits in the Northern District of California without contesting personal jurisdiction there. MyMail also sent an enforcement letter to Rakuten Rewards at its headquarters in the district. The court determined that the plaintiffs’ claims arose out of or related to those activities because the earlier lawsuits involved two of the patents at issue and the letter concerned all four patents.

The court also found that exercising jurisdiction was reasonable and fair. It reasoned that litigating in the district would not be unduly burdensome for MyMail because MyMail had previously prosecuted two patent cases there. California had an interest in protecting its residents from unwarranted infringement claims, Rakuten Rewards had an interest in obtaining relief in the district, and the district could resolve the dispute efficiently because the court had already handled related patent litigation and interpreted a key patent term. The court found no conflict between California’s interests and those of another state.

Ruling

The court concluded that it had both subject-matter jurisdiction over the declaratory-judgment claims and personal jurisdiction over MyMail. Judge Lucy H. Koh denied MyMail’s motion to dismiss the plaintiffs’ complaint. The order did not decide whether the plaintiffs actually infringed any of the patents.