Free Answering Brief in Opposition - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE INOVIS, INC., Plaintiff, v. DISTANCE DIGITAL CO., LLC and CLASSIFIED INFORMATION, INC., Defendant. ) ) ) ) ) ) ) ) ) )

C.A. No. 07-459 (GMS)

PLAINTIFF INOVIS' ANSWERING BRIEF IN OPPOSITION TO CLASSIFIED INFORMATION'S MOTION TO DISMISS COUNT I OF THE FIRST AMENDED COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION, AND COUNTS II AND III IN FAVOR OF PLAINTIFF'S FIRST-FILED ACTION IN THE NORTHERN DISTRICT OF GEORGIA MORRIS, NICHOLS, ARSHT & TUNNELL LLP Jack B. Blumenfeld (#1014) Julia Heaney (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 [email protected] Attorneys for Plaintiff Inovis, Inc.

OF COUNSEL: David J. Wolfsohn Lynn B. Morreale Jordan L. Jonas WOODCOCK WASHBURN LLP Cira Centre, 12th Floor 2929 Arch Street Philadelphia, PA 19104 (215) 568-3100 October 9, 2007

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TABLE OF CONTENTS I. II. III. SUMMARY OF ARGUMENT ...............................................................................1 STATEMENT OF FACTS ......................................................................................1 ARGUMENT...........................................................................................................4 A. Classified's Covenant Not to Sue Did Not Divest the Court of Jurisdiction Over Count I of Inovis' Amended Complaint.....................................................................................................4 1. Plaintiff Should Be Granted Leave to Conduct Limited Discovery Relating to Subject Matter Jurisdiction.......................................................................................4 Even if Classified's Proposed Covenant not to Sue Is Legitimate, It Does not Divest the Court of Subject Matter Jurisdiction Over Count I Because It Fails to Include Inovis' Customers ..................................................6

2.

B. IV.

Classified's Motion to Dismiss Counts II and III of Inovis' First Amended Complaint Is Moot ............................................................10

CONCLUSION......................................................................................................11

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TABLE OF AUTHORITIES CASES Adkins v. Rumsfeld, 450 F. Supp. 2d 440 (D. Del. 2006)...........................................................................................6 Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574 (Fed. Cir. 1991)..................................................................................................6 BIS Advanced Software Sys., Ltd. v. Red Bend Software, Inc., No. 04-11960, 2006 U.S. Dist. LEXIS 12223 (D. Mass. Mar. 22, 2006)..................................7 Cognex Corp. v. VCode Holdings, Inc., No. 06-1040, 2006 U.S. Dist. LEXIS 81242, at *15 (D. Minn. Sept. 13, 2006) .....................10 Dow Chem. Co. v. Exxon Chem. Patents, Inc., No. 94-572-SLR, 1996 U.S. Dist. LEXIS 14741 (D. Del. Sept. 20, 1996) ...............................8 Ensign-Bickford Co. v. ICI Explosives USA Inc., 817 F. Supp. 1018 (D. Conn. 1993)...........................................................................................6 FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568 (Fed. Cir. 1991)..................................................................................................6 Financial Fusion, Inc. v. Ablaise, Ltd., No. C-06-2451 PVT, 2006 U.S. Dist. LEXIS 73574 (N.D. Cal. Sept. 27, 2006) ...................10 Imatec, Ltd. v. Apple Computer, Inc., 81 F. Supp. 2d 471 (S.D.N.Y. 2000)..........................................................................................5 Intellectual Property Development, Inc. v. TCI Cablevision of California, Inc., 248 F.3d 1333 (Fed. Cir. 2001)..................................................................................................9 Matsushita Battery Indus. Co. v. Energy Conversion Devices, Inc., No. 96-101-SLR, 1997 U.S. Dist. LEXIS 21016, 1997 WL 811563 (D. Del. Dec. 23, 1997) ........................................................................................................................................10 MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007)......................................................................................................... 10-11 MetroPSC Commc'n, Inc. v. Leap Wireless Int'l, Inc., No. 3:06-CV-1399-D, 2007 U.S. Dist. LEXIS 4981 (N.D. Tex. Jan. 23, 2007) .......................8 Microchip Tech. Inc. v. Chamberlain Group, Inc., 441 F.3d 936 (Fed. Cir. 2006)............................................................................................ 10-11

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Saudi v. Acomarit Maritimes Servs., S.A., 245 F. Supp. 2d 662 (E.D. Pa. 2003) .......................................................................................11 Synopsys, Inc. v. Ricoh Co., 343 F. Supp. 2d 883 (N.D. Cal. 2003) .......................................................................................8 WS Packaging Group, Inc., v. Global Commerce Group, No. 06-C-674, 2007 U.S. Dist. LEXIS 34880 (E.D. Wisc. May 10, 2007)........................... 7-8 STATUTES DEL. CODE ANN. tit. 6, § 2-312(3) .............................................................................................9, 11 Rule 41(a)(1)..............................................................................................................................2, 11 UCC .................................................................................................................................................8 Wis. Stat. § 402.312(3)................................................................................................................. 8-9

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I.

SUMMARY OF ARGUMENT Defendant Classified Information, Inc. ("Classified") argues that Count I of the

complaint, which seeks a declaratory judgment of noninfringement, should be dismissed for lack of subject matter jurisdiction because Classified has offered Inovis USA, Inc. ("Inovis") a covenant not to sue. There is reason to doubt, however, that Classified owns the patent in suit -Classified represented to Inovis before filing this motion that the patent had already been conveyed to co-defendant Distance Digital Co., LLC ("Distance Digital"), and has made contradictory representations since then. Because of Classified's contradictory representations about its patent rights, and because the dealings between Classified and Distance Digital are suspicious, Inovis needs discovery to determine who owns the patent and whether or not Classified is authorized to enter into a covenant not to sue. Moreover, the proposed covenant does not cover Inovis' customers. Because Classified has threatened Inovis' customers, it is well-established that, to eliminate the controversy between Inovis and Classified, Classified must agree not to sue Classified's customers. In its motion, Classified also requests that Counts II and III be dismissed because similar allegations were made in a lawsuit filed by Inovis against Classified in the United States District Court for the District of Georgia ("the Georgia Suit"). That suit, however, has been dismissed, so there is no basis for dismissing Counts II or III. II. STATEMENT OF FACTS Classified is a competitor of Inovis and is in the business of selling e-business encryption software. (See D.I. 12 at ¶¶ 9-11; Ex. 1, Templar Software Products at http://www.templarsoftware.com/products.asp ("Classified Information, Inc is the developer and distributor of Templar 5, the latest, Java-based version of the industry-leading e-business encryption software, Templar.")). This lawsuit arises out of Classified's written campaign of

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threats against Inovis' customers, falsely accusing them of infringement of U.S. Patent No. 5,812,669 ("the 669 patent") by virtue of their use of Inovis' BizManager product. (D.I. 12 at ¶¶ 18-22, 35-36 and Exhibit B). An example of one such letter accusing an Inovis customer of infringing the 669 Patent is attached to the Amended Complaint at Exhibit B. (Id. at Exhibit B). As alleged in the Amended Complaint, Classified has sent at least three such letters to Inovis' customers. (Id. at ¶ 18). As attested to in the attached Declaration of Kenneth Williams, Inovis' Chief Financial Officer and Senior Vice President, Inovis is subject to indemnification agreements with its customers and in fact indemnifies its customers for patent infringement claims against the customers attributable to the customers' use of Inovis' products. (Decl. of Kenneth Williams, Ex. 2 at ¶¶ 3, 4). On February 20, 2007, Inovis filed a Complaint against Classified in the United States District Court for the Northern District of Georgia ("the Georgia Suit") asserting one claim under the Lanham Act and one for tortious interference with business relationships under state law. (D.I. 15 at Tab 1). Classified filed a motion to dismiss for lack of personal jurisdiction in Georgia (Ex. 3) but, before that motion was decided by the court, Inovis dismissed the lawsuit pursuant to Rule 41(a)(1). (Ex. 4). On July 12, 2007, while the Georgia Suit was still pending, Christian Putnam, who purports to be the president of Classified, sent an email to one of Inovis' counsel in which he claimed that he had no right, title or interest in the 669 patent because he had "sold" it: I've sold the patent (US 5,812,669) to a third party company that is well known for buying patents. I've assigned 100% of the title and have no influence of the direction they may take to sell or license the patent. Classified, myself or any affiliate is [sic] no longer able [to] license the patent. (Ex. 5). The email, which repeatedly employed the past tense, was unequivocal that Classified no longer had any interest in the 669 patent. This position was later reiterated by Classified's

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outside counsel in the Georgia Suit, when, on July 19, 2007, he forwarded to Inovis' counsel a purported "Assignment of Patent Rights" from Classified to a supposed limited liability company called "Distance Digital Co., L.L.C." (Ex. 6; D.I. 12 at Exhibit C). The Assignment of Patent Rights lists the "Assignor" as "Christian Putnam," and purports to contain a notary public's stamp. (Id.). The Assignment of Patent Rights is dated the same day as Mr. Putnam's email to Inovis' counsel--July 12, 2007. (Id.; Ex. 5). It states that it "does hereby sell, assign, transfer, and convey unto Distance Digital Co., L.L.C. . . . all right, title, and interest" in, among other things, the 669 Patent. (Ex. 6; D.I. 12 at Exhibit C). The address for Distance Digital is that of its agent for service of process in Wilmington, and no trace of the entity can be found in any public filings or in Internet searches. (Ex. 7). On July 23, 2007, Inovis filed suit in this Court against both Classified and Distance Digital.1 (D.I. 1). Inovis' Delaware Complaint includes one count of declaratory judgment of non-infringement, invalidity, and/or unenforceability of the 669 patent, one count of unfair competition under the Lanham Act and one count of tortious interference with business relationships. (D.I. 12). Before either Classified or Distance Digital had answered Inovis' Delaware Complaint, on August 22, 2007, Classified's counsel sent Inovis' counsel a proposed, unsigned covenant not to sue. (D.I. 15 at Tab 3). While Mr. Putnam's July 12 email stated unequivocally that Classified no longer owned any interest in the 669 Patent, and although the purported Assignment of Patent Rights was to the same effect, now Classified had turned 180 degrees: the proposed covenant not to sue states: "WHEREAS, Classified Information Inc. [sic] . . . owns all right, title and interest in and to United States Patent No. 5,812,669 . . . " (D.I. 15 at Tabs 3, 6).
1

Inovis filed its First Amended Complaint on August 17, 2007. (D.I. 12).

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Obviously, Mr. Putnam's inconsistent representations regarding the 669 Patent cannot be taken at face value. In response to the Amended Complaint, Classified filed the instant motion. Attached to that motion, is a letter from one Cathy Regan, whose title is not stated, but whom the letter describes as Distance Digital's "Authorized Person." (D.I. 15 at Tab 2). The letter is dated September 4, three days before Classified filed its motion and after defendants had requested two extensions to respond to the amended complaint. (Id.; D.I. 8, 11, 13-14 ). Ms. Regan's letter is written on stationery that uses as the company's address that of its Delaware agent for service of process, 2711 Centerville Rd., Suite 400 in Wilmington. (D.I. 15 at Tab 2; Ex. 7). The September 4 letter refers to something called a "Patent Purchase Agreement," but that agreement, if it ever existed, is not attached to the letter or to the moving papers of Classified. According to Ms. Regan's letter, the "Patent Purchase Agreement" is "terminated" and Distance Digital "has no rights under the Assignment of Patent Rights." (D.I. 15 at Tab 2). Classified states that Distance Digital advised Classified that it had decided to terminate the purported assignment after Inovis filed the Delaware complaint. (D.I. 15 at 3). Yet the letter from Distance Digital to Classified "officially" terminating the purported assignment was dated September 4, 2007, after Classified had first offered Inovis the proposed covenant not to sue. (Compare D.I. 15 at Tab 2 to Tab 3). III. ARGUMENT A. Classified's Covenant Not to Sue Did Not Divest the Court of Jurisdiction Over Count I of Inovis' Amended Complaint 1. Plaintiff Should Be Granted Leave to Conduct Limited Discovery Relating to Subject Matter Jurisdiction

Classified's purported president, Mr. Putnam, has made conflicting representations regarding who owns the 669 Patent and therefore who may have the authority to

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execute a covenant not to sue. As noted, on July 12, 2007, Mr. Putnam sent Inovis an email stating that he had "sold the patent" and that he and Classified were "no longer able to license the patent." (Ex. 5). Then defense counsel in the Georgia Suit sent plaintiff's counsel a purported assignment, which contains language considered effective in conveying an interest in intellectual property. (Ex. 6; D.I. 12 at Ex. C). Yet the proposed covenant not to sue attached to Classified's motion to dismiss claims that "Classified Information Inc. (Classified) owns all right, title and interest in and to United States Patent No. 5,812,669." (D.I. 15 at Tabs 3, 6). At least one of these representations must be false. Classified's brief attempts to reconcile these puzzling events by referencing the strange September 4 letter signed by "Its Authorized Person," but this letter raises more questions than it answers. The letter refers to a certain "Patent Purchase Agreement with an Effective Date July 11, 2007," yet that document has never been produced. (D.I. 15 at Tab 2). Ms. Regan's letter further states that the "Patent Purchase Agreement" is "terminated," but it is not clear what effect, if any, such a "termination" might have on the conveyance language contained in the "Assignment of Patent Rights, i.e., "Classified . . . does hereby sell, assign, transfer, and convey unto Distance Digital . . ." Cf. Imatec, Ltd. v. Apple Computer, Inc., 81 F. Supp. 2d 471, 481 (S.D.N.Y. 2000) (words of conveyance such as "I hereby assign" effectuate conveyance) (citing FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1573 (Fed. Cir. 1991) (where contract grants rights in any future inventions to assignee, "ordinarily, no further act would be required once an invention came into being" because "the transfer of title would occur by operation of law"); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1580-81 (Fed. Cir. 1991) (distinguishing between present assignment of expectant interest in future invention and mere promise to assign rights in future invention)). Ms. Regan's letter also states that Distance

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Digital "never received an executed original of the [Patent Purchase Agreement], an executed original of the Assignment of Patent Rights, or any Deliverables under the PPA," but it is again not clear why those things, if true, would make false Mr. Putnam's claim on July 12 that all "right, title and interest" to the 669 patent had already been conveyed. Given Mr. Putnam's inconsistent representations, the curious letter from Distance Digital's "Authorized Person" using the address of its agent for service, the timing of the letter, and the shadowy relationship between Classified and Distance Digital, the facts underlying Classified's motion are uncertain at best. Under such circumstances, limited discovery relating to subject matter jurisdiction is appropriate. See Adkins v. Rumsfeld, 450 F. Supp. 2d 440, 447 (D. Del. 2006) (granting plaintiff leave to conduct limited discovery related to issues raised by defendant in motion to dismiss for lack of subject-matter jurisdiction); Ensign-Bickford Co. v. ICI Explosives USA Inc., 817 F. Supp. 1018, 1021 (D. Conn. 1993) (parties permitted to conduct discovery on jurisdictional matters after defendant filed motion to dismiss for lack of subject matter jurisdiction and personal jurisdiction). 2. Even if Classified's Proposed Covenant Not to Sue Is Legitimate, It Does not Divest the Court of Subject Matter Jurisdiction Over Count I Because It Fails to Include Inovis' Customers

Aside from the uncertainty about who owns which interests in the 669 patent and who might have the authority to enter into a covenant not to sue, the proposed covenant not to sue does not divest the Court of subject matter jurisdiction over Count I because it expressly exempts Inovis' customers, providing that it does "not extend to any third parties, including any

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third parties acting in concert with Inovis or using products or services provided by Inovis."2 (D.I. 15 at Tab 6 at ¶ 5). Of course, this lawsuit arose out of Classified's threats against Inovis' customers. (D.I 12 at ¶¶ 18-22, 35-36 and Exhibit B). Where a patentee has asserted that a customer of a declaratory judgment plaintiff has infringed the patentee's patent, a covenant not to sue does not divest the court of subject matter jurisdiction unless it expressly covers the plaintiff's customers. WS Packaging Group, Inc., v. Global Commerce Group, No. 06-C-674, 2007 U.S. Dist. LEXIS 34880, at *11-12 (E.D. Wisc. May 10, 2007) (waiver of suit did not relieve court of subject matter jurisdiction where it did not apply to customers without express indemnification contracts but who, under the UCC and state law, could hold declaratory judgment plaintiff liable); BIS Advanced Software Sys., Ltd. v. Red Bend Software, Inc., No. 0411960, 2006 U.S. Dist. LEXIS 12223 (D. Mass. Mar. 22, 2006) (where patentee's promise not to sue extended only to defendant and patentee had "throughout the litigation shown a desire to sue defendant's customers for infringement as well," actual case or controversy remained over defendant's counterclaim for invalidity); Synopsys, Inc. v. Ricoh Co., 343 F. Supp. 2d 883, 88889 (N.D. Cal. 2003) (case or controversy remained over plaintiff's declaratory judgment claims despite agreement not to sue plaintiff for infringement where patentee had previously sued plaintiff's customers); see also MetroPSC Commc'n, Inc. v. Leap Wireless Int'l, Inc., No. 3:06CV-1399-D, 2007 U.S. Dist. LEXIS 4981, at *9-12 (N.D. Tex. Jan. 23, 2007) (covenant not to sue alone did not divest court of jurisdiction where covenant did not insulate the declaratory judgment plaintiff from suits arising out of possible infringement of the patent by an agent,
2

Plaintiff's counsel pointed out this fact to defense counsel after receipt of this motion, and defense counsel agreed to provide Inovis with a covenant that would include Inovis customers. After plaintiff's counsel provided proposed language to defense counsel, however, defense counsel abruptly terminated the discussions, and refused to give any reason why.

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dealer, customer, or indemnitee, but ultimately finding no reasonable apprehension of suit because the plaintiff had not demonstrated that the patentee had threatened plaintiff or any other entity such as plaintiff's customers); Dow Chem. Co. v. Exxon Chem. Patents, Inc., No. 94-572SLR, 1996 U.S. Dist. LEXIS 14741, at *9 (D. Del. Sept. 20, 1996) (statement of nonliability sufficient to protect plaintiff against any reasonable apprehension of suit where patentee asserted that the statement covered any party indemnified by plaintiff). For example, in WS Packaging Group, Inc., v. Global Commerce Group, the court rejected the patentee's waiver of the right to sue even though the waiver expressly applied to customers who plaintiff had contracted with to indemnify from suit by the patentee because the waiver did not include plaintiff's customers without indemnity agreements. WS Packaging Group, 2007 U.S. Dist. LEXIS 34880, at *11-12. The patentee had bragged about threatening customers of allegedly infringing vendors or manufacturers. Id. at *11. The court also noted that "[b]y virtue of Wisconsin's adoption of the UCC, [plaintiff's] customer without an indemnification contract could nevertheless hold [plaintiff] liable for infringement if [the patentee] decided to bring suit against that customer." Id. at *11-12 (citing Wis. Stat. § 402.312(3)).3 The Delaware Code contains an identical provision. DEL. CODE ANN. tit. 6, § 2312(3). 4 In addition, Inovis is subject to indemnification agreements with its customers. (Williams Decl., Ex. 2 at ¶¶ 3, 4.)

3

"Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any 3rd person by way of infringement or the like. . . ." Wis. Stat. § 402.312(3). "Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications." DEL. CODE ANN. tit. 6, § 2-312(3).

4

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Classified's covenant not to sue specifically excludes Inovis' customers and states that it "does not extend to any third parties, including any third parties acting in concert with Inovis or using products or services provided by Inovis." (D.I. 15 at Tab 6 at ¶ 5). Moreover, Classified has specifically threatened that Inovis' customers infringe the 669 patent by using Inovis' BizManager products. (D.I 12 at ¶¶ 18, 35 and Exhibit B). Because Classified's proposed covenant not to sue does not include Inovis' customers using Inovis' products, it does not divest this Court of its subject matter jurisdiction over Inovis' declaratory judgment claim. Classified's cited authorities are not to the contrary. Intellectual Property Development, Inc. v. TCI Cablevision of California, Inc., 248 F.3d 1333, 1341-42 (Fed. Cir. 2001) applied the pre-MedImmune standard in holding that there was no subject matter jurisdiction over a declaratory judgment count because "[a] suit filed against a different party, even if [plaintiff] could potentially be required to indemnify that party, is not a suit that [plaintiff] itself faces." Under MedImmune's "all the circumstances" test, the issue here is no longer whether Inovis has a reasonable apprehension of suit against itself, but rather whether Classified's threats against Inovis' customers and Inovis' duty to indemnify them creates a substantial controversy. See MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764, 771 (2007). Matsushita Battery Indus. Co. v. Energy Conversion Devices, Inc., No. 96-101SLR, 1997 U.S. Dist. LEXIS 21016, 1997 WL 811563 (D. Del. Dec. 23, 1997), supports Inovis' position and undermines Classified's. In Matsushita, the declaratory-judgment plaintiff argued that the patentee's covenant was deficient because it did not protect parties that may have been indemnified by the plaintiff. Matsushita, 1997 U.S. Dist. LEXIS 21016, at *13. In response, the patentee asserted in its brief that the patentee "expressly releases any of [plaintiff's] indemnities from liability for any infringement . . . ." Id. at *15. The court stated that, "[t]aking [the

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patentee] at its word, the covenant of nonliability releases [plaintiff], and any of its indemnitees, from any claims of infringement . . . ." Id. at *19. Given the release of the indemnitees, the court held it lacked subject matter jurisdiction over the action. Id. at *21. The clear negative implication of that holding, therefore, is that, but for such a release, there would have been subject matter jurisdiction over a declaratory judgment claim. Classified's remaining authorities are all irrelevant, since none involves situations where the patentee threatened the declaratory judgment plaintiff's customers and then executed a covenant not to sue that excluded those customers.5 B. Classified's Motion to Dismiss Counts II and III of Inovis' First Amended Complaint Is Moot On October 5, 2007, Inovis filed a Notice of Dismissal of its action in Georgia pursuant to Federal Rule of Civil Procedure 41(a)(1). (Ex. 4). Therefore, there is no longer a

5

In Microchip Tech. Inc. v. Chamberlain Group, Inc., 441 F.3d 936, 942-43 (Fed. Cir. 2006), a case not cited by Classified, the Federal Circuit held that the district court lacked subject matter jurisdiction over a declaratory judgment claim where the covenant not to sue did not apply to the plaintiff's customers. In Microchip, however, the court noted that the declaratory-judgment plaintiff had not "established a legal relationship between it and a customer that had a legal interest adverse to [the patentee], such as the existence of an indemnity agreement between [plaintiff] and its customer." Id. at 943. Accordingly, Microchip teaches that where a customer is threatened with patent litigation and the vendor has agreed to indemnify that client for infringement, the pre-MedImmune standard of "reasonable apprehension of suit" is satisfied. See Cognex Corp. v. VCode Holdings, Inc., No. 06-1040 (JNE-JJG), 2006 U.S. Dist. LEXIS 81242, at *15 (D. Minn. Sept. 13, 2006); see also Financial Fusion, Inc. v. Ablaise, Ltd., No. C-06-2451 PVT, 2006 U.S. Dist. LEXIS 73574, at *8-9 (N.D. Cal. Sept. 27, 2006). Here, as noted, Inovis has both express indemnification agreements with its customers, and Delaware law provides for such a "legal relationship between it and a customer." See DEL. CODE ANN. tit. 6, § 2312(3) and Williams Decl., Ex. 2 at ¶¶ 3-4. In any event, Microchip applied the preMedImmune standard of "reasonable apprehension of suit," which is no longer the law. See MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764, 771 (2007).

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"first-filed" action in the Northern District of Georgia and Classified's motion to dismiss counts II and III is moot.6 IV. CONCLUSION For the reasons stated above, Inovis should be permitted to engage in limited discovery related to subject matter jurisdiction and Classified's Motion to Dismiss should be denied.

6

Additionally, the first-filed rule does not apply when personal jurisdiction has not been established in the first forum. See Saudi v. Acomarit Maritimes Servs., S.A., 245 F. Supp. 2d 662, 667 n.3 (E.D. Pa. 2003) "(The [first-filed] rule does not apply in the sntant case because personal jurisdiction has not been established in the Southern District of Texas, where Plaintiff first filed his action, or in any other district."). At the time Inovis dismissed the action in Georgia, Classified was contesting personal jurisdiction in Georgia. (See Ex. 3).

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MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Julia Heaney (#3052)
Jack B. Blumenfeld (#1014) Julia Heaney (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 [email protected] Attorneys for Plaintiff Inovis, Inc. OF COUNSEL: David J. Wolfsohn Lynn B. Morreale Jordan L. Jonas WOODCOCK WASHBURN LLP Cira Centre, 12th Floor 2929 Arch Street Philadelphia, PA 19104 (215) 568-3100 October 9, 2007
1257638

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CERTIFICATE OF SERVICE I, the undersigned, hereby certify that on October 9, 2007, I electronically filed the foregoing with the Clerk of the Court using CM/ECF which will send notification of such filing to the following: Steven J. Balick John G. Day Tiffany Geyer Lydon ASHBY & GEDDES Arthur G. Connolly, III CONNOLLY BOVE LODGE & HUTZ LLP and that copies were caused to be served upon the following individuals in the manner indicated: ELECTRONIC MAIL Steven J. Balick John G. Day Tiffany Geyer Lydon ASHBY & GEDDES 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, DE 19899 Arthur G. Connolly, III CONNOLLY BOVE LODGE & HUTZ LLP 1007 N. Orange Street P.O. Box 2207 Wilmington, DE 19899

/s/ Julia Heaney (#3052)
Julia Heaney (#3052) [email protected]

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE INOVIS USA, INC., Plaintiff, v. CLASSIFIED INFORMATION, INC. and DISTANCE DIGITAL LLC, Defendants. C.A. No. 07-459-GMS JURY TRIAL DEMANDED

DECLARATION OF KENNETH WILLIAMS I, Kenneth Williams, based on personal knowledge hereby declare: 1. ("Inovis"). 2. Inovis markets and sells "BizManager," inclusive of BizLink, BizConnect, I am the Chief Financial Officer and Senior Vice President of Inovis USA, Inc.

Bizmanager400, and other products (collectively "Inovis Products"). 3. It is Inovis' practice to indemnify its customers for any patent infringement claim

against the customer attributable to the customer's use of Inovis Products. For example, Inovis' agreement with Aspen Pet Products includes an indemnification clause. 4. Inovis has agreed to indemnify its customers against any claim for patent

infringement of U.S. Patent No. 5,812,669 attributable to the customer's use of Inovis Products. I hereby declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.

Executed on:

/o//? y0?L0

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EXHIBIT 7

Division of Corporations - Online Services Case 1:07-cv-00459-GMS Document 19-2

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Visit the Governor | General Assembly | Courts | Other Elected Officials | Federal, State & Lo
State Directory | Help | Search Delaware :
Department of State: Division of Corporations

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HOME About Agency Secretary's Letter Newsroom Frequent Questions Related Links Contact Us Office Location SERVICES Pay Taxes File UCC's Delaware Laws Online Name Reservation General Information Status Validate Certificate INFORMATION Corporate Forms Corporate Fees UCC Forms and Fees UCC Searches Taxes Expedited Services Service of Process Registered Agents Get Corporate Status Submitting a Request

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Entity Details

THIS IS NOT A STATEMENT OF GOOD STANDING File Number: Entity Name: 4334402 Incorporation Date / Formation Date: 04/13/2007 (mm/dd/yyyy)

DISTANCE DIGITAL CO., L.L.C. LIMITED LIABILITY COMPANY (LLC) DOMESTIC

Entity Kind:

Entity Type:

GENERAL

Residency:

State:

DE

REGISTERED AGENT INFORMATION Name: Address: City: State: Phone: CORPORATION SERVICE COMPANY 2711 CENTERVILLE ROAD SUITE 400 WILMINGTON DE (302)636-5401 County: Postal Code: NEW CASTLE 19808

Additional Information is available for a fee. You can retrieve Status for a fee of $10.00 or more detailed information including current franchise tax assessment, current filing history and more for a fee of $20.00. Would you like Status Status,Tax & History Information Submit

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10/9/2007