It Is Not Controversial: Factual and Legal Specificity Needed in Standing Dismissals

MITEK SYS., INC. V. UNITED SERVS. AUTO. ASS’N

Before Dyk, Taranto, and Cunningham.  Appeal from the U.S. District Court for the Eastern District of Texas.

Summary:  Declaratory judgment plaintiffs must identify particular facts supporting standing and defendants must clearly state whether Rule 12(b)(1) motions to dismiss are facial or factual challenges.

Mitek Systems, Inc. (“Mitek”) sued United Services Automobile Association (“USAA”) for declaratory judgment of non-infringement of four patents related to photographing checks.  Following transfer, the District Court for the Eastern District of Texas dismissed the case in a nine-page order for lack of subject matter jurisdiction or in the alternative pursuant to its discretion to dismiss declaratory judgment actions.  Mitek appealed.

The Federal Circuit vacated the dismissal and remanded the case for further proceedings, noting several issues that required additional analysis.  The Federal Circuit explained that a declaratory judgment claim satisfies the case-or-controversy requirement when “the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”  The Federal Circuit further explained that parties can proceed under two “procedural routes” when challenging the case-or-controversy requirement—facial challenges or factual challenges supported by affidavits, testimony, or other evidence.  The Federal Circuit noted that “clarity about which route is used is important.”  The Federal Circuit found that “the parties [] debated the case-or-controversy issue at too high a level of generality,” the issues “require[d] finer parsing . . . and more particularized determinations . . . both from the parties and from the district court,” and neither the parties nor the district court clearly stated whether the challenge was facial or factual.  The Federal Circuit also vacated the discretionary dismissal for the same reasons.

Editor: Paul Stewart

Written by: Ben K. Shiroma & Daniel P. Hughes