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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

RENAISSANCE LEARNING, INC., Plaintiff, v. DOE NO. 1, Defendant. MEMORANDUM AND DECISION 11-cv-166-slc

Plaintiff Renaissance Learning, Inc. filed this civil action for declaratory judgment of noninfringement after receiving a letter from a company called IP Navigation Group ("IP Nav"), in which IP Nav invited Renaissance to engage in licensing discussions regarding the patent or patents of IP Nav's "client," an alleged patent holder that IP Nav has refused to name. On March 15, 2011, after being granted permission to do so by this court, Renaissance served IP Nav with a subpoena duces tecum that asked IP Nav to identify the patent holder and the registration numbers of the patents referenced in the IP Nav letter. IP Nav responded by filing a motion to quash in the United States District Court for the Eastern District of Texas, asserting that this court's order permitting the subpoena is void for lack of subject matter jurisdiction. In a memorandum opinion and order issued November 1, 2011, the district court in Texas found that IP Nav had raised "substantial questions" regarding this court's jurisdiction, but that it was more appropriate fo this court to answer those questions. Mem. Opinion and Order, dkt. 16, Exh. 1, at p. 5-6. Accordingly, that court stayed a decision on the motion to quash and directed Renaissance to provide this court with a copy of its memorandum and order and copies of the parties' briefs on the motion to quash, which addressed the question of subject matter jurisdiction. Id.

Thus, the purpose of this memorandum is to determine whether this court has subject matter jurisdiction over Renaissance's suit for declaratory judgment. As explained below, I conclude that it does.

ALLEGATIONS OF THE COMPLAINT Plaintiff Renaissance Learning, Inc. [Renaissance] is a corporation organized and existing under the laws of the State of Wisconsin with a principal place of business in Wisconsin Rapids, Wisconsin. It is a leading provider of technology-based school improvement and student assessment programs for K-12 schools. Renaissance makes, uses, offers for sale and sells online testing and evaluation programs, including a program called STAR. The STAR

assessments--including STAR Reading, STAR Math, and STAR Early Literacy--are the most widely used computer-adaptive tests in K12 schools. Nearly 19 million STAR assessments were taken in school year 2009-2010 alone. The identity of defendant Doe No. 1 [Doe] is unknown to Renaissance and unknown to this court. Renaissance is aware of Doe's existence only by virtue of the acts of IP Nav, Doe's agent. Renaissance received a letter from IP Nav dated February 22, 2011, titled "Proposal to Negotiate Patent License." Complaint, dkt. 1, Exh. A. In the letter, IP Nav identified itself as a "global intellectual property advisory firm" and claimed that it was retained by an unnamed holder [Doe] of "valuable patents and related intellectual property directed to the fields of online testing and evaluation." IP Nav asserted that "[a]n analysis of [Renaissance Learning's] products shows that your company makes, uses, or sells products or services that would benefit from a license to certain of our client's patents." IP Nav continued:

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We would very much welcome the opportunity to enter into constructive discussions with your company to determine whether we can agree to a mutually acceptable patent license agreement or determine that you are not using our client's patents. We are focused on addressing these issues without the need for costly and protracted litigation. Of course, if our discussions result in the conclusion that the patents do not read on your products, no license would be necessary and we would immediately conclude licensing discussions. We are prepared to commence discussions with you or your representative at your earliest convenience. At our first meeting, we intend to identify specific patents and provide information outlining the basis for the infringement claims against your products or services. We would also welcome any information or analysis that you may wish to provide rebutting the claims. We are also prepared to set forth our client's basic licensing structure for your consideration at that initial meeting. In order to proceed, we request that you agree to confidentiality and not to institute litigation against our client on the basis of our client's request to seek amicable licensing discussions. We have enclosed a one page proposed form of agreement addressing these issues. As we stated above, our client's preferred approach is to conclude licensing discussions without resorting to litigation. We hope you share this objective. The letter advised that IP Nav's client had agreed to keep this offer open for ten days. Enclosed with the letter was a one-page "Confidentiality and Forbearance Agreement." The Agreement provided that the parties would keep confidential any information disclosed by the other during patent license negotiations. It also contained a "Forbearance" provision providing that each party agreed that "neither the request to engage in licensing discussions, nor the existence of licensing discussions under this Agreement, nor information disclosed during the course of those discussions under this Agreement" would be the basis for the institution of legal

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proceedings against the other party and further, that Renaissance agreed that it would not bring an action for Declaratory Judgment against IP Nav during the term of the agreement. Renaissance did not sign the agreement. Instead, on March 4, 2011, it filed the instant suit for declaratory relief against the unidentified patent holder, asking for a declaration that Renaissance has not infringed and is not infringing any valid claims of the defendant's patents.

ADDITIONAL BACKGROUND FACTS According to IP Nav's website, the firm specializes in "monetizing" patents through licensing, sale, transfer or litigation. http://ipnav.com/Our-Solutions/solutions. The website touts its founder and CEO, Erich Spangenberg, for his "aggressive pursuit of patent infringers." Id. Before filing the instant lawsuit, counsel for Renaissance called the author of the letter, Matthew DelGiorno, and asked him to identify the name of the patent owner and the patents referenced in the letter. DelGiorno declined to do so.

MEMORANDUM "The Duck Test holds that if it walks like a duck, swims like a duck and quacks like a duck, it's a duck." Lake v. Neal, 585 F.3d 1059, 1059 (7th Cir. 2009)

The Declaratory Judgment Act provides: "In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration,

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whether or not further relief is or could be sought." 28 U.S.C.

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