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United Services Automobile Association (“USAA”) holds patents relating to a mobile check depositing application. Mitek licenses its own mobile check depositing application, called MiSnapTM, to customers that include banks and financial institutions. In November 2019, Mitek sued USAA in the Northern District of California, seeking a declaratory judgment that Mitek does not infringe USAA’s patents. The case was transferred to the Eastern District of Texas, where the court dismissed the complaint on the basis that Mitek lacks standing to bring this declaratory judgment action.
On appeal, Mitek argues it has standing to bring the declaratory judgment action. Under the 5thCircuit case Choice Inc. of Texas v. Greenstein, it argues, the district court must accept as true the allegations in Mitek’s complaint. According to Mitek, accepting these allegations as true, Mitek’s complaint established standing for its declaratory judgment action. In particular, Mitek asserts that its complaint alleged facts sufficient to establish a supplier’s standing for declaratory judgment under the standard set forth in Arris Grp., Inc. v. British Telecommunications, PLC.
USAA responds that Mitek relies on the incorrect legal standard. Under Dow Jones & Co. v. Ablasie Ltd, USAA argues that Mitek bears the burden of proving the existence of a substantial controversy between the parties, and that the district court is not required to accept the allegations in Mitek’s complaint as true. Rather, USAA asserts the 5thCircuit held in Montez v Department of Navy that “where subject matter jurisdiction is being challenged, the trial court is free to weigh the evidence and resolve factual disputes in order to satisfy itself that it has the power to hear the case.” It argues that where the defendant challenges the facts alleged in the complaint, as USAA did here, the burden shifts to the plaintiff to prove the existence of subject matter jurisdiction by a preponderance of the evidence by submitting facts through some evidentiary method, citing Superior MRI Services v. Alliance Healthcare Services. According to USAA, Mitek cannot rely on the presumptive truthfulness of its allegations on appeal. Rather, it argues that Mitek must demonstrate clear error in the district court’s finding that no standing exists, citing In re Recycling, L.L.C.
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