EMC Corp. v. Norand Corp.

EMC Corp. (plaintiff) manufactured computer-storage systems. Norand Corp. (defendant) held several patents related to computer-storage technology but did not produce or sell devices made from those patents. A consultant for Norand contacted EMC to suggest that EMC and Norand enter negotiations for the patents held by Norand. Outside patent counsel for Norand met several times with EMC representatives to discuss the sale or license of Norand’s patents. Norand informed EMC that Norand had approached several other companies to negotiate regarding the patents. During the series of meetings between Norand and EMC, EMC filed an action for declaratory judgment in federal court. EMC told Norand that the action was a defensive measure and that EMC intended to continue negotiations. Norand filed a motion to dismiss the complaint, arguing that the court lacked jurisdiction because EMC did not establish that an actual case or controversy existed between the parties. The district court declined to consider the case pursuant to the Declaratory Judgment Act. The court found that Norand and EMC were still in active negotiations, that Norand and EMC were not direct competitors, and that Norand was considering negotiating about the same patents with other companies. The court explained that permitting EMC’s declaratory-judgment action to proceed would lead to results inconsistent with the principles of the Declaratory Judgment Act. If the action survived, EMC’s bargaining power would be increased, and negotiations between Norand and other companies would be hindered. EMC appealed, arguing that the district court abused its discretion.