from the United States District Court for the Eastern
District of Virginia in No. 1:14-cv-01293-LO-TCB, Judge Liam
C. Aitken, Aitken Law Offices, Wheaton, MD, and Cameron H.
Tousi, IP Law Leaders PLLC, Washington, DC, argued for
plaintiff-appellant. Also represented by Raymond Ho.
F. McCauley, Finnegan, Henderson, Fara-bow, Garrett &
Dunner, LLP, Palo Alto, CA, argued for defendant-appellee.
Also represented by C. Brandon Rash, Washington, DC.
Prost, Chief Judge, Linn and Taranto, Circuit Judges.
Vital Components Co., Ltd. ("AVC") filed a
declaratory judgment action against Asetek Danmark A/S
("Asetek") seeking a declaration that AVC did not
infringe U.S. Patent Nos. 8, 240, 362 ("'362
patent") and 8, 245, 764 ("'764 patent")
(collectively, "the asserted patents") and that
those patents are invalid. The United States District Court
for the Eastern District of Virginia dismissed the case for
lack of subject matter jurisdiction, concluding that
AVC's complaint did not plead sufficient facts to show
that there is a substantial controversy between the parties.
For the reasons stated below, we reverse the district
court's ruling and remand for further proceedings.
a Taiwanese corporation that manufactures cooling systems for
integrated circuits. Asetek is the assignee of the '362
and '764 patents, which are generally directed toward
liquid cooling systems that are used in connection with
computers to cool integrated circuits.
in 2012, Asetek brought lawsuits against other competitors
that make and sell liquid cooling systems, alleging
infringement of the '362 and '764 patents. In April
2014, Asetek sent AVC a letter accusing AVC of infringing the
'362 and '764 patents. That letter, however, was
based on Asetek's mistaken belief that AVC manufactured a
particular product, the Liqmax 120s. In the letter, Asetek
specifically referenced the Liqmax 120s product and provided
an exemplary infringement claim chart for that product.
response, AVC told Asetek that it did not manufacture the
Liqmax 120s. Nonetheless, AVC requested a meeting with Asetek
"to discuss various related matters, " which AVC
considered "of importance concerning future
cooperation" with Asetek. J.A. 105. Asetek responded in
an email dated August 2, 2014, that if AVC was not making the
Liqmax 120s then there did not appear to be a reason to meet.
Also in the email, Asetek referenced the fact that it had
tried to cooperate with AVC previously "and the
experience went very poorly and sowed distrust in Asetek for
AVC." J.A. 207. Asetek further noted that it does not
license its patents and said that "although that option
may have previously been available to AVC when it was
manufacturing Asetek's products, that option is no longer
available to AVC (based in large part on AVC's prior
behavior toward Asetek)." Id. Finally, Asetek
Please be advised that Asetek believes that AVC is likely
selling other infringing products in the United States. We
are sure you are aware that Asetek enforced its IP, as it has
in pending litigations against CoolIT and Cooler Master.
Asetek has also been allowed a patent in the European Union
with claims similar to the U.S. '362 and '764
patents, with priority in 2003, and also has similar claims
pending in China.
meeting did ultimately take place between AVC and Asetek in
August 2014. At the meeting, AVC expressed a desire to
license the asserted patents, and Asetek initially declined.
After further discussion, Asetek did offer AVC a license at a
royalty rate of 16% or at a reduced rate if AVC would provide
preferential pricing on components. AVC representatives at
the meeting said they would consider that possibility and
bring it to the attention of AVC management. There was no
specific discussion of AVC products potentially infringing
the asserted patents at the meeting.
September 30, 2014, AVC filed a complaint against Asetek
alleging that AVC had designed and built liquid cooling
products, identified as the K7 and K9 products, and seeking a
declaration that its products did not infringe the '362
and '764 patents and that those patents are invalid. AVC
contends that it had completed prototype products of the K7
and K9 products and that those products have a number of
similarities to the CoolIT and Cooler Master products that
Asetek did accuse of infringement. Asetek responds that it
never accused the K7 or K9 products of infringement, and, in
fact, contends it did not even know that those products
existed before AVC's complaint.
district court agreed with Asetek and dismissed the complaint
for lack of subject matter jurisdiction. The district court
held that the "complaint does not plead sufficient facts
to show that there is a substantial controversy under the
totality of the circumstances." J.A. 2. The district
court did not explain its reasons in the written decision,
but instead referred to the reasons stated during a hearing
the court held on the question of jurisdiction. At the
hearing, the district court emphasized that there was never
any discussion between the parties as to whether AVC's
products were infringing and credited ...