Splunk Inc. v. Deutsche Telekom AG

Background

Splunk sought a declaration under the federal Declaratory Judgment Act that it had not infringed Deutsche Telekom AG’s trademark rights. The dispute involved promotional materials using a coral, magenta, and orange color gradient. Splunk alleged that Deutsche Telekom had aggressively asserted trademark rights in the color magenta and had tried to prevent companies from using the color or similar shades.

Deutsche Telekom had sent Splunk a cease-and-desist letter under German and European Union law concerning Splunk’s conduct in Europe. Deutsche Telekom also filed a trademark action against Splunk in Germany concerning that European conduct. The letter reserved Deutsche Telekom’s right to take legal action under U.S. trademark law, but it did not identify specific U.S. claims or damages. Deutsche Telekom represented at the hearing that it did not plan to sue Splunk in the United States.

Motion and jurisdictional standard

Deutsche Telekom moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal when the federal court lacks jurisdiction. The court explained that the Constitution and the Declaratory Judgment Act require an actual dispute, not an abstract disagreement. In trademark cases, a plaintiff generally must show a real and reasonable apprehension that the trademark holder will seek to impose liability.

The court considered the plaintiff’s perceptions and the defendant’s actions, viewed in light of their likely effect on competition and the risks to the plaintiff. The question was whether the alleged facts showed a sufficiently immediate and real controversy between parties with opposing legal interests.

Court’s analysis

The court concluded that Splunk had not shown a reasonable apprehension that Deutsche Telekom would sue it in the United States. The court identified four undisputed facts: Deutsche Telekom sent a demand under German and European Union law concerning conduct in Europe; it filed a German trademark action concerning that conduct; it reserved its trademark rights under U.S. law; and it had not sued Splunk in the United States or opposed Splunk’s trademark proceedings before the Trademark Trial and Appeal Board.

The court held that the reservation of rights was not enough. It reasoned that reserving a right ordinarily means refraining from exercising it, and the letter did not assert a particular U.S. claim or seek particular U.S. damages. The court also stated that a trademark has a separate legal existence in each country, and Splunk had not shown that the German proceedings would extend to the United States. Deutsche Telekom’s reported enforcement of its rights against other companies likewise did not establish a U.S. controversy, particularly because Splunk did not allege bad faith or U.S. litigation arising from those practices.

Disposition

The court granted Deutsche Telekom’s motion to dismiss the complaint for lack of jurisdiction. It did not reach the separate question of whether it should exercise jurisdiction because it found no qualifying case or controversy. The court allowed Splunk to file an amended complaint by August 16, 2021, addressing the jurisdictional issues discussed in the order. It prohibited adding new claims or parties without prior court approval and stated that failure to meet the deadline or otherwise comply would result in dismissal under Rule 41(b).