IP Law Daily, PATENT—N.D. Cal.: Declaratory judgment action over software application dismissed for lack of subject matter jurisdiction, (Apr 22, 2025)

By Linda O’Brien, J.D., LL.M.

Although the patent holder had filed suit against other parties for other products, no case or controversy existed because the patent holder did not take any affirmative actions against the declaratory judgment plaintiff or its products.

An American software company failed to establish a case or controversy in a declaratory judgment action against a Canadian software developer in order to establish subject matter jurisdiction, the federal district court in San Jose, California, has ruled. Although the developer had initiated litigation against other companies, it had not made any direct or indirect affirmative acts suggesting that it would enforce its patents against the plaintiff. Thus, the patent owner’s motion to dismiss for lack of subject matter jurisdiction was granted (Red Hat, Inc. v. VirtaMove, Corp., No. 5:24-cv-04740-PCP (N.D. Cal. Apr. 21, 2025)).

Canadian software company VirtaMove, Corp. owns two patents, U.S. Patent Nos. 7,519,814 (“the '814 patent”) and 7,784,058 (“the '058 patent”). In 2024, VirtaMove filed suit in Texas against IBM, Hewlett Packard Enterprise, Google, and Amazon, alleging the companies’ products infringed its rights under the '814 and '058 patents. Headquartered in Raleigh, North Carolina, Red Hat, Inc. is a subsidiary of IBM and provides open-source software products to business enterprises. Red Hat developed OpenShift, a hybrid cloud application platform, which incorporates the third-party containerization technologies Docker and Kubernetes.

In August 2024, Red Hat brought an action against VirtaMove seeking a declaratory judgment that its technology did not infringe on VirtaMove’s patents. Red Hat contended that the infringement claims against the four companies was based on their products incorporation of the Docker and Kubernetes technologies in the same manner that Red Hat incorporated those technologies into its own software products. Before the court was VirtaMove’s motion to dismiss for lack of subject matter jurisdiction and for lack of personal jurisdiction.

Subject matter jurisdiction. The court found that Red Hat’s complaint failed to state a “case” or “controversy” sufficient to establish Article III subject matter jurisdiction over a declaratory judgment action. In order to establish an actual controversy based on enforcement activity by a patentee, the complaint must show that the patentee engaged in affirmative acts directed specifically at the party seeking the declaratory judgment. Red Hat contended that its OpenShift technology uses the same Docker and Kubernetes technologies that were at issue in the litigation against the other defendants and that created a justiciable controversy between Red Hat and VirtaMove. However, VirtaMove has not contacted Red Hat concerning any of VirtaMove’s patents or otherwise suggested that OpenShift or any other Red Hat product infringed its patents. In fact, VirtaMove has taken no affirmative act against Red Hat or OpenShift either directly or indirectly. Thus, those allegations were insufficient to establish subject matter jurisdiction, the court explained.

Although the theory pursued by VirtaMove in its lawsuits against IBM, Hewlett Packard Enterprise, Google, and Amazon could also be pursued against Red Hat, VirtaMove has not yet initiated infringement litigation against Red Hat or made any other affirmative acts directed at Red Hat or its products suggesting it would enforce its patents against Red Hat. In an action seeking a declaratory judgment of noninfringement, a declaratory judgment defendant is required to have engaged in some form of affirmative conduct directed toward the declaratory judgment plaintiff or its products showing an intent to enforce its patent against the plaintiff or its products before a court can find an Article III case or controversy. Since the motion to dismiss for lack of subject matter jurisdiction is granted, there was no need to address the motion to dismiss for lack of personal jurisdiction, the court noted.

Finally, Red Hat’s motions to amend its complaint and for contingent jurisdictional discovery were denied as futile. Red Hat had sought leave to amend its complaint to allege that VirtaMove filed two additional patent infringement suits in December 2024 against Microsoft and Oracle based on the same two patents. Its argument that both Microsoft and Oracle were customers that use Red Hat’s OpenShift and therefore its product was directly implicated in both complaints was rejected as the two new lawsuits, even if considered, did not give rise to an actual case or controversy. Also, the request for jurisdictional discovery would not reveal sufficient facts to establish the court’s subject matter jurisdiction, the court concluded.

The Case is No. 5:24-cv-04740-PCP.

Judge: Pitts, P.

Attorneys: Brandon Hugh Brown (Kirkland and Ellis LLP) for Red Hat, Inc. Reza Mirzaie (Russ August & Kabat) for VirtaMove, Corp.

Companies: Red Hat, Inc.; VirtaMove, Corp.

Cases: Patent CaliforniaNews