Mitek Systems, Inc. v. United Services Automobile Association

United States Court of Appeals
for the Federal Circuit
______________________
MITEK SYSTEMS, INC.,
Plaintiff-Appellant
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION,
Defendant-Appellee
______________________
2023-1687
______________________
Appeal from the United States District Court for the
Eastern District of Texas in No. 2:20-cv-00115-JRG, Chief
Judge J. Rodney Gilstrap.
______________________
Decided: June 12, 2025
______________________
BRIAN M ACK, Quinn Emanuel Urquhart & Sullivan,
LLP, San Francisco, CA, argued for plaintiff-appellant.
Also represented by DAVID E ISEMAN, IV, J ONATHAN T SE.
L ISA G LASSER , Irell & Manella LLP, Newport Beach,
CA, argued for defendant-appellee. Also represented by
MICHAEL D AVID HARBOUR , J ASON SHEASBY , Los Angeles,
CA.
______________________
Before T ARANTO, SCHALL , and CHEN, Circuit Judges.
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CHEN, Circuit Judge.
Mitek Systems, Inc. (Mitek) appeals the decision of the
United States District Court for the Eastern District of
Texas, which dismissed Mitek’s declaratory judgment ac-
tion of non-infringement against United Services Automo-
bile Association (USAA) concerning U.S. Patent Nos.
8,699,779 (’779 patent), 9,336,517 (’517 patent), 9,818,090
(’090 patent), and 8,977,571 (’571 patent) (collectively, pa-
tents-in-suit). Mitek Sys., Inc. v. United Servs. Auto. Ass’n,
No. 20-CV-00115, 2023 WL 2734372 (E.D. Tex. Feb. 23,
2023) (Decision).
This case returns to us for the second time, now with
an expanded record. In the first appeal, in relevant part,
we vacated the district court’s original dismissal for lack of
subject-matter jurisdiction, as well as its alternative dis-
cretionary dismissal, and remanded for further proceed-
ings. See Mitek Sys., Inc. v. United Servs. Auto. Ass’n, 34
F.4th 1334, 1349 (Fed. Cir. 2022) (Mitek I). On remand,
the district court again determined that it lacked subject-
matter jurisdiction over Mitek’s action, and, even if juris-
diction existed, it would exercise its discretion to decline to
accept jurisdiction. See Decision, 2023 WL 2734372, at *28.
For the reasons explained below, we affirm.
BACKGROUND
Our previous decision introduces the parties, the pa-
tents-in-suit, and discusses the facts leading up to Mitek’s
first appeal. Mitek I, 34 F.4th at 1337–40. We assume fa-
miliarity with those facts and therefore provide additional
details only as relevant to this appeal.
I
Throughout this case, Mitek has asserted two jurisdic-
tional bases for its declaratory judgment action concerning
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its software product MiSnap1: “(a) its potential liability for
infringement; and (b) the alleged demands for indemnity
made by many of its licensees after USAA sent them letters
seeking to sell them licenses to USAA patents.” Id. at
1341–42. The district court originally dismissed Mitek’s
complaint by analyzing the issues at a high level of gener-
ality, as did the parties. We remanded for “finer parsing of
the issues and more particularized determina-
tions . . . both from the parties and from the district court.”
Id. at 1342. We also instructed the district court to identify
whether it was treating USAA’s Federal Rule of Civil Pro-
cedure 12(b)(1) motion as a facial or factual challenge.2 Id.
at 1342, 1344, 1346.
Regarding Mitek’s potential liability for infringement,
we emphasized that the district court’s “primary task” was
“to ascertain the alleged role of the Mitek technology in the
banks’ applications and the alleged role that the Mitek
technology plays in infringement claims.” Id. at 1344. We
explained that determining whether Mitek faced a
1 MiSnap is a software development kit developed by
Mitek that provides automatic image capture technology.
Mitek licenses MiSnap to financial institutions for incorpo-
ration within their mobile banking applications.
2 The Fifth Circuit has distinguished between “fa-
cial” and “factual” challenges in motions to dismiss for
standing, explaining that a challenge is “factual” rather
than “facial” if the defendant “submits affidavits, testi-
mony, or other evidentiary materials.” Superior MRI
Servs., Inc. v. Alliance Healthcare Servs., Inc., 778 F.3d
502, 504 (5th Cir. 2015) (citation omitted). “To defeat a fac-
tual attack, a plaintiff ‘must prove the existence of subject-
matter jurisdiction by a preponderance of the evidence’ and
is ‘obliged to submit facts through some evidentiary
method to sustain his burden of proof.’” Id. (citation omit-
ted).
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reasonable potential for an infringement suit required
“look[ing] to the elements” of the separate types of infringe-
ment, i.e., direct, induced, and contributory infringement.
Id. at 1343 (alteration in original) (quoting Microsoft Corp.
v. DataTern, Inc., 755 F.3d 899, 903–05 (Fed. Cir. 2014)).
Additionally, we noted that even if a case or controversy
between Mitek and USAA existed at the time the complaint
was filed, post-filing events and evidence may indicate
whether “it ceased to exist later.” Id. at 1344. Regarding
Mitek’s potential for indemnification liability, we recog-
nized that “[t]he character of the indemnity demands re-
ceived and the precise scope of the corresponding
indemnity agreements may bear heavily on the sufficiency
of Mitek’s indemnity-based interest in obtaining the re-
quested declaratory judgment.” Id. at 1346 (citations omit-
ted).
As for the district court’s original decision that it would
decline to exercise jurisdiction even if it existed, we deter-
mined that the district court abused its discretion for fail-
ing to provide “reasons independent of its reasons for its
jurisdictional dismissal.” Id. at 1347. We noted the district
court appeared to “suggest[] that the route of intervention
in one or more USAA suits against Mitek customers is pref-
erable,” but such a determination required “more analysis
of various issues.” Id. at 1347–48; see id. (listing four non-
exhaustive issues for the district court to consider).
II
On remand, the district court ordered briefing on a lit-
any of issues prompted by Mitek I. See Decision, 2023 WL
2734372, at *4–5. The district court initially addressed
whether USAA’s Rule 12(b)(1) motion was a facial or a fac-
tual challenge. It noted various categories of disputed facts
and determined that “USAA mounted a factual attack” as
to both of Mitek’s jurisdictional bases. Id. at *17.
Next, the district court addressed whether Mitek rea-
sonably apprehended an infringement suit. As to direct
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infringement, the district court determined that “Mitek
could not have reasonably apprehended a suit for direct in-
fringement . . . at the time [Mitek’s] [c]omplaint was filed”
based on the record evidence, including “the parties’ own
admissions about how the MiSnap product works, how it is
implemented by end-user banks, and the evidence pre-
sented at trial in the Wells Fargo Case.”3 Id. at *19. As to
induced infringement, the district court found Microsoft
Corp. v. DataTern, Inc., 755 F.3d 899 (Fed. Cir. 2014), par-
ticularly relevant, explaining that, like in DataTern, USAA
has never pointed to Mitek documents or manuals that in-
struct users of MiSnap to perform all the limitations of any
asserted claim. Decision, 2023 WL 2734372, at *21. And
as to contributory infringement, the district court found
that “there has never been a suggestion, in claim charts or
otherwise, that MiSnap is not suitable for substantial non-
infringing uses or that Mitek knew its software was ‘espe-
cially made or adapted for use in an infringement’ of
USAA’s patents.” Id. Overall, the district court deter-
mined that Mitek was unable to establish “a case or contro-
versy between USAA and Mitek as to direct, induced, or
contributory infringement.” Id. Furthermore, the district
court noted that several post-complaint events support its
conclusion “that Mitek’s apprehension of suit in 2019 was
unreasonable and also demonstrate[] that any case or con-
troversy that might have existed at the time of filing was
3 In June 2018, USAA sued Wells Fargo—one of
Mitek’s customers—for patent infringement in the Eastern
District of Texas. See Complaint, United Services Automo-
bile Association v. Wells Fargo Bank, N.A., No. 2:18-cv-
00245 (E.D. Tex. June 7, 2018), ECF No. 1. The case went
to trial in late 2019, during which Mitek filed its declara-
tory judgment complaint against USAA. USAA and Wells
Fargo ultimately settled their suit in early 2021.
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not ongoing, but was extinguished after USAA’s settlement
with Wells Fargo.” Id. at *21–22.
The district court also considered Mitek’s second basis
for jurisdiction—whether there was a reasonable potential
for indemnification liability—and concluded there was not.
Id. at *22–24. The district court reviewed a letter that
USAA sent to Mitek’s customers along with several indem-
nification agreements involving Mitek and found that they
“do not create a ‘reasonable potential’ for Mitek’s indemni-
fication liability.” Id. at *24.
Finally, the district court considered whether it should
accept jurisdiction even if it existed. Id. at *24–28. It de-
termined it would “exercise its discretion in declining to ac-
cept declaratory judgment jurisdiction.” Id. at *28. While
acknowledging that “Mitek is likely in the best position to
defend its own software,” the district court stated the pro-
posed declaratory judgment suit “is not the best way” for
Mitek to do so. Id. at *26. Instead, the district court found
that “the best means by which Mitek can defend its soft-
ware as that software is used by banks is to intervene, ei-
ther as of right or permissively, in the next litigation, if
any, brought by USAA against a Mitek customer which as-
serts the [patents-in-suit].” Id. The district court also
noted practical concerns, explaining that it saw “no path by
which Mitek can litigate this case without extensive in-
volvement by end-user banks, either through third-party
discovery or through joining additional parties.” Id. at *27.
Additionally, the district court expressed uncertainty as to
whether any determinations in Mitek’s declaratory judg-
ment action case “would have any applicability or estoppel
effect upon the end-users.” Id.
Mitek timely appealed. We have jurisdiction pursuant
to 28 U.S.C. § 1295(a)(1).
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D ISCUSSION
“Federal Circuit law governs our review as to whether
an actual controversy exists under the Declaratory Judg-
ment Act when the underlying merits of an action involve
patent infringement and/or validity.” Microchip Tech. Inc.
v. Chamberlain Grp., Inc., 441 F.3d 936, 940 (Fed. Cir.
2006). However, for non-patent issues, such as whether a
Rule 12(b)(1) motion should be treated as a facial or a fac-
tual challenge, we apply the law of the regional circuit.
Mitek I, 34 F.4th at 1341. Here, the regional circuit to
which appeal would ordinarily lie is the Fifth Circuit.
“Whether the district court had subject matter jurisdic-
tion is a question we review de novo.” DataTern, 755 F.3d
at 903. As we explained in Mitek I, that determination is
based on the particular facts, and “[d]ifferent procedural
routes are available to identify the facts.” 34 F.4th at 1340.
In particular, a district court may dismiss a case under
Rule 12(b)(1) based on “(1) the complaint alone; (2) the
complaint supplemented by undisputed facts evidenced in
the record; or (3) the complaint supplemented by undis-
puted facts plus the court’s resolution of disputed facts.”
Id. at 1341 (quoting Choice Inc. of Texas v. Greenstein, 691
F.3d 710, 714 (5th Cir. 2012)). When a “district court has
expressly relied on its resolution of disputed jurisdictional
facts, ‘those findings are reviewed for clear error.’” In re S.
Recycling, L.L.C., 982 F.3d 374, 379 (5th Cir. 2020) (cita-
tion omitted).
We review a district court’s decision to decline jurisdic-
tion over a declaratory judgment action for an abuse of dis-
cretion. Commc’ns Test Design, Inc. v. Contec, LLC, 952
F.3d 1356, 1361 (Fed. Cir. 2020) (citing Wilton v. Seven
Falls Co., 515 U.S. 277, 289–90 (1995)).
I
The Declaratory Judgment Act provides that “[i]n a
case of actual controversy within its jurisdiction . . . any
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court of the United States . . . may declare the rights and
other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be
sought.” 28 U.S.C. § 2201(a). The Declaratory Judgment
Act does not expand a federal court’s subject matter juris-
diction. Rather, the phrase “case of actual controversy” in
the Act “refers to the type of ‘Cases’ and ‘Controversies’
that are justiciable under Article III” of the Constitution.
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126–27
(2007) (citation omitted).
“The threshold question for declaratory judgment juris-
diction is ‘whether the facts alleged, under all the circum-
stances, show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declar-
atory judgment.’” DataTern, 755 F.3d at 903 (quoting
MedImmune, 549 U.S. at 127). We have explained that,
following MedImmune, “jurisdiction generally will not
arise merely on the basis that a party learns of the exist-
ence of a patent owned by another or even perceives such a
patent to pose a risk of infringement, without some affirm-
ative act by the patentee.” Prasco, LLC v. Medicis Pharm.
Corp., 537 F.3d 1329, 1339 (Fed. Cir. 2008) (citation omit-
ted).
“The case-or-controversy inquiry has a dual temporal
focus.” Mitek I, 34 F.4th at 1340. First, a “declaratory
judgment plaintiff must plead facts sufficient to establish
jurisdiction at the time of the complaint, and post-com-
plaint facts cannot create jurisdiction where none existed
at the time of filing.” Id. (quoting DataTern, 755 F.3d at
906). Second, a “case or controversy must remain present
throughout the course of the suit.” Id. (citing Preiser v.
Newkirk, 422 U.S. 395, 401–02 (1975)).
Mitek asserts that it has standing to bring its declara-
tory judgment action because it has established (A) a
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reasonable potential for infringement claims and (B) a rea-
sonable potential for indemnification liability.
A
Beginning with Mitek’s alleged infringement basis for
standing, it contends that it has established a reasonable
potential of suit for direct, induced, and contributory in-
fringement. We address each type of infringement in turn.
1
Under 35 U.S.C. § 271(a), direct infringement can be
found when “each and every limitation set forth in a claim”
is found in an accused product. Centrak, Inc. v. Sonitor
Techs., Inc., 915 F.3d 1360, 1371 (Fed. Cir. 2019) (citation
omitted). “[B]ased on the parties’ own admissions about
how the MiSnap product works, how it is implemented by
end-user banks, and the evidence presented at trial in the
Wells Fargo Case,” the district court determined that
“Mitek could not have reasonably apprehended[4] a suit for
4 As we explained in Mitek I, in establishing jurisdic-
tion, “[t]he Supreme Court in MedImmune rejected a gen-
eral requirement of a reasonable apprehension of suit” in
favor of the all-the-circumstances test. 34 F.4th at 1342
n.3 (citing 549 U.S. at 132 n.11). But we have recognized
that “in the wake of MedImmune, ‘proving a reasonable ap-
prehension of suit is one of multiple ways that a declara-
tory judgment plaintiff can satisfy the more general all-
the-circumstances test’ to establish jurisdiction.” Streck,
Inc. v. Rsch. & Diagnostic Sys., Inc., 665 F.3d 1269, 1282
(Fed. Cir. 2012) (citation omitted). Mitek advanced a rea-
sonable apprehension theory before the district court prior
to Mitek’s first appeal, see Mitek I, 34 F.4th at 1342 n.3,
and continued to pursue this theory on remand, see, e.g.,
J.A. 1618 (“USAA’s Infringement Allegations . . . Support
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direct infringement of the [patents-in-suit] at the time the
[c]omplaint was filed.” Decision, 2023 WL 2734372, at *19.
We agree.
It is undisputed that USAA has never accused the
MiSnap software of satisfying every limitation of any
claim. In Mitek’s post-remand reply brief, it acknowledged
that there is no allegation “that MiSnap alone performs all
the asserted limitations of the patents-in-suit.” J.A. 2223
n.6. Mitek also acknowledges that, during the Wells Fargo
trial, USAA only “alleged that two of the three limitations
of claim 1 of the ’571 [p]atent and four out of seven limita-
tions of claim 1 of the ’090 [p]atent were allegedly per-
formed by MiSnap.” Appellant’s Br. 41. Furthermore, in
proceedings before the Patent Trial and Appeal Board
(PTAB), Mitek stated that USAA “has never accused or
even threatened Mitek of infringement of the challenged
patent[s]” and that “Mitek provides technology to Wells
Fargo that allegedly performs only some (but not all) of the
limitations of any claim of the challenged patent[s].” J.A.
1047.5
The district court also emphasized that MiSnap has
features that can be customized by end-users and “that the
‘unadulterated MiSnap software implemented by third
party banks’ does not meet certain elements of the asserted
claims.” Decision, 2023 WL 2734372, at *18–19 (citation
Mitek’s Reasonable Apprehension of Suit”). Here, as in its
original dismissal, the district court’s references to this
theory are responsive to Mitek’s arguments.
5 Mitek made these statements in an email to the
PTAB requesting a Precedential Opinion Panel review of
the PTAB’s discretionary denial of Mitek’s inter partes re-
view petitions regarding the ’571 and ’779 patents, which
the PTAB had denied “as unfair follow-on petitions to Wells
Fargo’s” earlier petitions. J.A. 1047.
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omitted). The patents-in-suit plainly support this finding.
For example, three out of the four patents require
“provid[ing] the image of the check from the camera to a
depository,” or a substantively similar limitation. ’571 pa-
tent at claim 1; see ’779 patent at claim 1; ’517 patent at
claim 1. This step depends on the end-user’s internal sys-
tem and is unrelated to MiSnap. See Appellee’s Br. 17 (A
Mitek representative testified at the Wells Fargo trial that
after the image is captured, “MiSnap returns it back to the
Wells Fargo app. It’s out of our hands after that.” (quoting
J.A. 1207)). Additionally, claim 1 of the ’090 patent re-
quires “an image capture device,” “a presentation device,”
and “a processor.” ’090 patent at claim 1. MiSnap is a soft-
ware development kit, however, and cannot satisfy these
hardware elements.
Mitek argues that the district court “gave undue
weight to the customizability of MiSnap by Mitek’s custom-
ers.” Appellant’s Br. 18. In Mitek’s view, the district court
should have focused on the “programmed capabilities of
MiSnap.” Id. at 19. Mitek cites to INVT SPE LLC v. Inter-
national Trade Commission, where this court explained
that functional language in software and computer claims
is frequently construed “as not requiring actual perfor-
mance of those operative steps for infringement purposes,”
but rather the “‘capab[ility] of operating’ according to a
claimed limitation.” 46 F.4th 1361, 1371–1373 (Fed. Cir.
2022) (quoting Finjan, Inc. v. Secure Computing Corp., 626
F.3d 1197, 1204 (Fed. Cir. 2010)). For claims directed to
capability, “the claims recite a device with the capability of
performing the recited functions when in operation without
any modification or further programming.” Id. at 1374
(emphasis added). Even assuming, without deciding, that
the asserted claims are drawn to capability, the issue for
Mitek is that MiSnap is a software development kit that is
not capable of satisfying certain computer hardware-re-
lated limitations in the asserted claims, unlike the accused
products in INVT and Finjan. See id. at 1366 (“The accused
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devices are communication devices, including
smartphones, tablets, smart watches, and comput-
ers . . . .”); Finjan, 626 F.3d at 1201 (“Defendants sold three
accused computer security products . . . .”).
Faced with these circumstances, Mitek next argues
that because it “tests the ‘complete mobile deposit system,’”
there is a reasonable potential for its own testing to be ac-
cused of direct infringement. Appellant’s Br. 34 (citation
omitted). The district court considered and correctly re-
jected this theory. First, the district court noted that Mitek
never alleged in its complaint “that any of its own testing
might give rise to an apprehension of suit for direct in-
fringement.” Decision, 2023 WL 2734372, at *19; cf. U.S.
ex rel. Mathews v. HealthSouth Corp., 332 F.3d 293, 296
(5th Cir. 2003) (“The failure to obtain leave results in an
amended complaint having no legal effect.”). Second,
USAA asserts it was unaware of Mitek’s alleged testing un-
til Mitek first raised it on remand, and Mitek fails to iden-
tify any action taken by USAA related to Mitek’s testing.
Accordingly, Mitek could not have had a reasonable appre-
hension of suit based on its testing. See Prasco, 537 F.3d
at 1339 (“[J]urisdiction generally will not arise . . . without
some affirmative act by the patentee.” (citation omitted)).
2
“Whoever actively induces infringement of a patent
shall be liable as an infringer.” 35 U.S.C. § 271(b). A claim
for induced infringement requires that “there has been di-
rect infringement by a third party and that the alleged in-
fringer affirmatively induced that infringement with
knowledge that the induced acts constituted patent in-
fringement.” Amarin Pharma, Inc. v. Hikma Pharms. USA
Inc., 104 F.4th 1370, 1377 (Fed. Cir. 2024). Accordingly,
liability under § 271(b) requires an affirmative act encour-
aging infringement. See Global-Tech Appliances, Inc. v.
SEB S.A., 563 U.S. 754, 760 (2011) (“The addition of the
adverb ‘actively’ suggests that the inducement must
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involve the taking of affirmative steps to bring about the
desired result.” (citation omitted)).
The district court found that “the facts of DataTern are
on point with this case.” Decision, 2023 WL 2734372, at
*21. In DataTern, in relevant part, we reviewed a district
court’s denial of DataTern’s motion to dismiss Microsoft’s
declaratory judgment action. Prior to Microsoft’s declara-
tory judgment action, DataTern sued several Microsoft cus-
tomers for patent infringement and provided them with
claim charts in support of its allegations. DataTern, 755
F.3d at 902. For one patent, these charts cited “to Mi-
crosoft-provided online documentation for each limitation”
of the representative claims, which we determined “sup-
ports Microsoft’s claim that there is a substantial contro-
versy regarding inducement.” Id. at 905 (emphasis added).
For the second patent, however, the claim charts “cite[d]
exclusively to third-party—not Microsoft provided—docu-
mentation for several key claim limitations.” Id. We de-
termined that those charts “do not impliedly assert that
Microsoft induced that infringement” because nothing
“suggests that Microsoft encouraged the acts accused of di-
rect infringement,” despite the fact that those charts “al-
lege the customers’ direct infringement of” the patent
based on the customers’ use of Microsoft’s technology. Id.
Accordingly, we held that Microsoft established jurisdic-
tion for its declaratory judgment action with respect to the
first patent, but not the second. Id. at 907.
Turning back to our case, we agree with the district
court that DataTern’s reasoning applies. Mitek primarily
relies on USAA’s allegations at the Wells Fargo trial to es-
tablish a reasonable potential for inducement claims. As
an initial point, suits against customers do not “automati-
cally give rise to a case or controversy regarding induced
infringement.” Id. at 904. But more importantly, “[l]ike in
DataTern, USAA has never alleged that MiSnap meets
every element of every asserted claim and has never cited
to Mitek documentation in its claim charts as evidence of
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infringement of every element of every asserted claim.” De-
cision, 2023 WL 2734372, at *21. Rather, as Mitek
acknowledges, USAA relied on Mitek’s documentation dur-
ing the Wells Fargo trial for only certain limitations of each
asserted claim. See Appellant’s Br. 41 (“In the first Wells
Fargo trial . . . USAA alleged that two of the three limita-
tions of claim 1 of the ’571 [p]atent and four out of seven
limitations of claim 1 of the ’090 [p]atent were allegedly
performed by MiSnap.”). Mitek has not pointed to any sug-
gestion by USAA or other record evidence—including the
documentation provided with MiSnap—that establishes a
reasonable potential that Mitek encourages performance of
the remaining limitations.
Mitek argues that the district court applied an overly
“strict” test and should have instead considered whether
“the supplier’s product is a ‘material component’ of the cus-
tomer’s alleged direct infringement.” Appellant’s Br. 38
(emphasis omitted) (quoting Arris Grp., Inc. v. Brit. Tele-
comms. PLC, 639 F.3d 1368, 1375–76 (Fed. Cir. 2011)).
However, as Arris makes clear, whether a supplier’s prod-
uct is a “material component” is a matter for contributory
infringement under 35 U.S.C. § 271(c), not induced in-
fringement under § 271(b). Accordingly, the district court
did not err in rejecting this argument.
3
As outlined in the statutory text, a claim for contribu-
tory infringement requires that: “(1) the defendant had
‘knowledge of the patent in suit,’ (2) the defendant had
‘knowledge of patent infringement,’ and (3) the accused
product is not a staple article or commodity of commerce
suitable for a substantial non-infringing use.” Bio-Rad
Lab’ys, Inc. v. ITC, 998 F.3d 1320, 1335 (Fed. Cir. 2021)
(quoting Commil USA, LLC v. Cisco Sys., Inc., 575 U.S.
632, 639 (2015)); see 35 U.S.C. § 271(c). The district court
found that “there has never been a suggestion, in claim
charts or otherwise, that MiSnap is not suitable for
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substantial non-infringing uses.” Decision, 2023 WL
2734372, at *21.
We see no error in this finding and agree that Mitek
has not established a reasonable potential for suit based on
contributory infringement. In fact, “USAA has expressly
said the opposite—i.e., that MiSnap has several substan-
tial non-infringing uses.” Id. For example, USAA told the
district court in its post-remand briefing that “end-users
can customize and use Mitek’s software libraries in many
ways, including non-infringing ways.” Id. at *12 (citation
omitted); see Appellee’s Br. 26 (noting that a Wells Fargo
corporate representative testified at trial that end-users
have “the ability to flip the switch, if you will, and cease
use of the infringing technology,” while still providing mo-
bile deposit (quoting J.A. 1231–32)). Customizing these
features in a non-infringing manner (e.g., using manual
capture instead of auto capture) constitutes a substantial
non-infringing use. See In re Bill of Lading Transmission
& Processing Sys. Pat. Litig., 681 F.3d 1323, 1338 (Fed. Cir.
2012) (“Where the product is equally capable of, and inter-
changeably capable of both infringing and substantial non-
infringing uses, a claim for contributory infringement does
not lie.”).
Mitek argues that it has established a reasonable po-
tential of a contributory infringement claim because
MiSnap was “primarily developed” for “‘touch-free auto-
capture’ functionality for document acquisition.” Appel-
lant’s Br. 46 (emphasis and citation omitted). This misses
the mark. As we have explained, even where “practicing
the patented method may be the most logical or useful pur-
pose for” a product, that “does not render the alternative
uses ‘unusual, far-fetched, illusory, impractical, occasional,
aberrant, or experimental.’” In re Bill of Lading, 681 F.3d
at 1338 (citation omitted). Moreover, even if MiSnap has
no substantial non-infringing uses, the record does not
show that USAA ever suggested that. See DataTern, 755
F.3d at 906 (finding that the “claim charts . . . do not
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impliedly assert contributory infringement against Mi-
crosoft” because “they do not imply or suggest that Mi-
crosoft’s [software] is not ‘a staple article or commodity of
commerce suitable for substantial non-infringing use’” (ci-
tation omitted)).
Ultimately, we agree with the district court’s determi-
nation that the record evidence, including “USAA’s allega-
tions, arguments, and claim charts from the Wells Fargo
Case, which cited to Mitek documentation as evidence of
infringement for only some of many claim limitations, did
not give rise to a case or controversy between USAA and
Mitek as to direct, induced, or contributory infringement.”
Decision, 2023 WL 2734372, at *21.
4
The district court also considered post-complaint evi-
dence and events, because “an actual controversy must be
extant at all stages of review, not merely at the time the
complaint is filed.” Preiser, 422 U.S. at 401. As an initial
matter, during the pendency of this appeal, this court af-
firmed the PTAB’s final written decisions determining that
claims 1–6, 9–10, and 12–13 of the ’571 patent and claims
1–2, 7–10, and 15–17 of the ’779 patent are unpatentable.
United Servs. Auto. Ass’n v. PNC Bank N.A., Nos. 2023-
2124, 2023-2125, 2025 WL 370141 (Fed. Cir. Feb. 3, 2025).
Our mandate for this judgment issued on May 14, 2025.
See Fed. R. App. P. 41. Accordingly, any case or contro-
versy that may have existed between USAA and Mitek re-
garding the enforcement of those claims has been
extinguished. USAA is collaterally estopped from assert-
ing these claims in any further proceeding. See XY, LLC v.
Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018)
(“[A]n affirmance of an invalidity finding, whether from a
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district court or the Board, has a collateral estoppel effect
on all pending or co-pending actions.”).6
Notwithstanding this development, which was not be-
fore the district court at the time of its decision, the district
court found that post-complaint evidence “both supports
[its] determination that Mitek’s apprehension of suit in
2019 was unreasonable and also demonstrates that any
case or controversy that might have existed at the time of
filing was not ongoing.” See Decision, 2023 WL 2734372,
at *21. The Wells Fargo litigation, which was the only law-
suit between USAA and a Mitek customer pending at the
time of Mitek’s complaint, settled in early 2021.
Mitek argues that subsequent lawsuits between USAA
and two of Mitek’s customers—PNC Bank, National Asso-
ciation (PNC)7 and Truist Bank (Truist)8—strengthen
Mitek’s standing to bring a declaratory judgment action.
See Appellant’s Reply Br. 13. We disagree. The suit
against PNC involved only two of the patents-in-suit, the
’571 and ’779 patents, both of which had the relevant
claims invalidated by the PTAB and affirmed as invalid by
this court. The suit against Truist involved only one of the
patents-in-suit, the ’090 patent. As the district court
6 We also note that Mitek’s complaint seeks a deter-
mination that Mitek does not infringe “any valid or enforce-
able claim” of the patents-in-suit. J.A. 80 ¶ 1 (emphasis
added).
7 Amended Complaint, United Servs. Auto. Ass’n v.
PNC Bank N.A., No. 20-cv-00319, (E.D. Tex. Dec. 2, 2020),
ECF No. 12. Mitek also separately refers to a lawsuit
against BBVA USA (BBVA), but BBVA was acquired by
and merged into PNC. See Decision, 2023 WL 2734372, at
*21.8 Complaint, United Servs. Auto. Ass’n v. Truist
Bank, No. 22-cv-00291, (E.D. Tex. July 29, 2022), ECF No.
1.
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recognized, “[i]n each subsequent lawsuit against Mitek
customers, fewer of the [patents-in-suit] have been liti-
gated and use of evidence related to MiSnap has de-
creased.” Decision, 2023 WL 2734372, at *22. Since the
Truist and PNC lawsuits, both of which have settled, there
has been no litigation involving the patents-in-suit. Fur-
thermore, these lawsuits evince “USAA’s own stated strat-
egy of suing competitor banks rather than the supplier.”
Id.; see DataTern, 755 F.3d at 907 (noting “that DataTern’s
litigation strategy appears to involve suing software users,
not software suppliers”).
Our review of post-complaint events and evidence fur-
ther supports the district court’s conclusion that it lacked
subject-matter jurisdiction over Mitek’s non-infringement
claims. See BP Chems. Ltd. v. Union Carbide Corp., 4 F.3d
975, 980 (Fed. Cir. 1993) (“Although it is the situation at
the time suit was filed that establishes the existence vel
non of an actual controversy, subsequent events can rein-
force the correctness of the conclusion.” (citation omitted)).
B
Next, we turn to Mitek’s second basis for stand-
ing: whether it has established a reasonable potential of
indemnification liability. In DataTern, we explained that
a supplier of software does not have the “right to bring [a]
declaratory judgment action solely because [its] customers
have been sued for direct infringement.” 755 F.3d at 904.
However, if the supplier “had an obligation to indemnify
[its] customers, [it] would then have standing to bring
suit.” Id. (citation omitted); see also Arris, 639 F.3d at 1375
(“[W]here a patent holder accuses customers of direct in-
fringement based on the sale or use of a supplier’s equip-
ment, the supplier has standing to commence a declaratory
judgment action if . . . the supplier is obligated to indem-
nify its customers from infringement liability . . . .”). “In
that instance, [the supplier] would stand in the shoes of the
customers and would be representing the interests of [its]
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customers because of [its] legal obligation to indemnify.”
DataTern, 755 F.3d at 904.
To establish standing for indemnification liability,
Mitek had to show both (1) a case or controversy between
USAA and Mitek’s customers and (2) a reasonable poten-
tial for Mitek’s indemnification liability with respect to
those customers. Mitek I, 34 F.4th at 1345–46. In Mitek I,
we determined that that there was “just enough” to estab-
lish the first part, given USAA’s letter campaign and the
Wells Fargo litigation. Id. at 1345. On remand, Mitek
sought to establish the second part—a reasonable potential
for indemnification liability.
After considering the record and the indemnification
agreements Mitek produced on remand,9 we agree with the
district court that “Mitek could not have reasonably be-
lieved it would be subject to indemnification liability.” De-
cision, 2023 WL 2734372, at *22. The district court found
that each agreement contained applicable carve-outs that
precluded a reasonable potential for indemnification liabil-
ity. Appellant’s Br. 48; Appellee’s Br. 40; see Decision, 2023
WL 2734372, at *23. We see no error in this analysis.10
Additionally, most of the agreements Mitek identified in-
volve “third-party financial services provider[s], who in
turn [have] separate indemnification agreements with end-
user banks.” Decision, 2023 WL 2734372, at *24. Mitek
has not established a case or controversy between these
third-party financial service providers—the indemnitees—
9 The agreements have been designated confidential,
so we do not recount their details here.
10 Mitek argues for the first time in its reply brief on
appeal that one agreement includes language that could
plausibly exempt it from the applicable carve-out. See Ap-
pellant’s Reply Br. 18. Mitek failed to raise this argument
both before the district court and in its opening brief on ap-
peal. Accordingly, it is forfeited.
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and USAA. Therefore, Mitek has failed to establish stand-
ing based on these agreements. See BP Chems., 4 F.3d at
981 (explaining that an indemnitor may not “bring a de-
claratory action on its own behalf when there is no actual
controversy involving the indemnitee”); Decision, 2023 WL
2734372, at *24 (“Mitek has not come forward with any
case law to suggest that such a broken chain of indemnifi-
cation can create a reasonable likelihood of indemnification
liability from the end-user to the manufacturer with which
it is not in privity.”).
Mitek argues that the district court improperly adjudi-
cated the merits of the indemnification agreements. Ap-
pellant’s Br. 48. As we explained in Mitek I, “we have never
held that the validity of an indemnity demand, i.e., the ap-
plicability of an indemnity agreement to the demander’s
circumstances, needs to be conceded to establish subject-
matter jurisdiction.” 34 F.4th at 1346. Contrary to Mitek’s
characterization, the district court did not impose such a
requirement. Rather, as per our remand instructions, it
appropriately assessed the “precise scope” of the agree-
ments to determine whether Mitek faced a reasonable po-
tential for indemnification liability. Id. We reject Mitek’s
attempt to establish standing based on the existence of
these agreements alone. See DataTern, 755 F.3d at 904
(“Appellees seek to broaden our precedent quite substan-
tially by arguing that a customer request to indemnify
ought to give rise to standing, without regard, it appears,
to the merit of the customer request. This cannot be.”).
II
Having already concluded Mitek does not have any ba-
sis for jurisdiction, we nonetheless address the district
court’s alternative discretionary dismissal.
The Declaratory Judgment Act provides that a district
court “may declare the rights and other legal relations of
any interested party seeking such declaration.” 28 U.S.C.
§ 2201(a) (emphasis added). The statute’s use of the word
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“may” grants district courts “unique and substantial dis-
cretion in deciding whether to declare the rights of liti-
gants.” Wilton, 515 U.S. at 286. However, this discretion
is not without limits—“[t]here must be well-founded rea-
sons for declining to entertain a declaratory judgment ac-
tion.” Capo, Inc. v. Dioptics Med. Prods., 387 F.3d 1352,
1355 (Fed. Cir. 2004). As we explained in Mitek I, “as long
as a district court ‘acts in accordance with the purposes of
the Declaratory Judgment Act and the principles of sound
judicial administration, [it] has broad discretion to refuse
to entertain a declaratory judgment action.’” Mitek I, 34
F.4th at 1347 (alteration in original) (quoting EMC Corp.
v. Norand Corp., 89 F.3d 807, 813–14 (Fed. Cir. 1996)).
For example, we have recognized that “[w]hile the ex-
istence of another adequate remedy does not necessarily
bar a declaratory judgment, district courts may refuse de-
claratory relief where an alternative remedy is better or
more effective.” Ford Motor Co. v. United States, 811 F.3d
1371, 1379–80 (Fed. Cir. 2016) (citation omitted). Like-
wise, a district court “may decline to exercise declaratory
judgment jurisdiction if it would not afford relief from the
uncertainty, insecurity, and controversy giving rise to the
proceeding.” BP Chems., 4 F.3d at 981 (affirming the dis-
trict court’s decision to decline to exercise jurisdiction
where the “declaratory action would not resolve all of the
issues raised, since none of the licensees [was a] party to
[the] action”).
Here, the district court determined that “[e]ven if [its]
resolution of the disputed facts and issues” related to juris-
diction “is somehow flawed, [it] would still . . . exercise its
discretion in declining to accept declaratory judgment ju-
risdiction in this case.” Decision, 2023 WL 2734372, at *28.
Unlike its original decision, on remand, the district court
provided detailed, independent analysis—separate from its
jurisdictional findings and conclusions—explaining why it
would still decline jurisdiction even if it existed. Id. at *24–
28. We see no abuse of discretion in that determination.
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The district found that the “best” way for Mitek to de-
fend its software would be “to intervene, either as of right
or permissively, in the next litigation, if any, brought by
USAA against a Mitek customer which asserts the [pa-
tents-in-suit].” Id. at *26; see Ford Motor Co., 811 F.3d at
1379–80 (“[D]istrict courts may refuse declaratory relief
where an alternative remedy is better or more effective.”).
In the absence of a federal statute that provides an uncon-
ditional right to intervene, intervention of right requires
that the intervenor “claims an interest relating to the prop-
erty or transaction that is the subject of the action,” and
that resolving the action “may as a practical matter impair
or impede the movant’s ability to protect its interest.” Fed.
R. Civ. P. 24(a). This rule is “liberally construed” to permit
intervention. Texas v. United States, 805 F.3d 653, 656
(5th Cir. 2015). Permissive intervention, by contrast, and
in the absence of a statute that provides a conditional right
to intervene, requires only that the intervenor “has a claim
or defense that shares with the main action a common
question of law or fact.” Fed. R. Civ. P. 24(b)(1).
Mitek argues that the district court failed to address
certain issues raised in Mitek I, namely, “whether Mitek
could intervene in such actions and under what circum-
stances” and “whether intervention would provide Mitek
adequate relief from the harms the Declaratory Judgment
Act recognizes as [a] basis for such relief.” Appellant’s Br.
56–57 (quoting Mitek I, 34 F.4th at 1347). As an initial
point, we did not strictly require the district court to re-
solve each issue. Rather, we stated that “more analysis of
various issues” was required, offering those two (among
two others) as examples, not an exhaustive mandate.
Mitek I, 34 F.4th at 1347–48.
In any event, we disagree that these issues went unex-
plored. Regarding the first issue—“whether Mitek could
intervene in such actions and under what circumstances”—
Mitek itself conceded during the Rule 12(b)(1) motion hear-
ing that it “could have permissibly asked to intervene” in
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the Wells Fargo action but did not, claiming it realized that
MiSnap “was so essential” to that case too close to trial.
Decision, 2023 WL 2734372, at *27 (citation omitted). The
district court rejected this argument, finding it contra-
dicted by the record. For example, the district court noted
that Mitek entered into a common interest agreement with
Wells Fargo nearly 13 months before trial and that Mitek’s
corporate representative was deposed pursuant to that
agreement. Decision, 2023 WL 2734372, at *27. Should a
future lawsuit against a Mitek customer similarly allege
that MiSnap meets certain patent claim limitations, Mitek
will have the opportunity to file a motion to intervene—at
a minimum, on a permissive basis. See Decision, 2023 WL
2734372, at *26 (“It is clear that Mitek has an interest in
any lawsuit that accuses its customers of patent infringe-
ment based, even in part, on use of Mitek’s product.”).
Regarding the second issue—“whether intervention
would provide Mitek adequate relief from the harms the
Declaratory Judgment Act recognizes as a basis for such
relief”—the district court expressly found that “[i]nterven-
tion would provide an avenue for Mitek to obtain the deter-
mination it seeks: whether its unadulterated MiSnap
software, without any customization by the end-user bank,
infringes any element of any asserted claim.” Id. Mitek
further contends that the district court failed to address
numerous disadvantages associated with intervention,
such as being “bound by existing orders and deadlines” and
“inordinate expenses.” Appellant’s Br. 57–58. But all
cases, including the instant declaratory judgment action,
have deadlines and costs. These concerns do not under-
mine the district court’s conclusion that intervention re-
mains the more effective avenue for Mitek to defend its
software—particularly when weighed against the practical
challenges of pursuing this declaratory judgment action.
“As a practical matter,” the district court “s[aw] no path
by which Mitek c[ould] litigate this case without extensive
involvement by end-user banks, either through third-party
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discovery or through joining additional parties.” Decision,
2023 WL 2734372, at *27. Mitek represented to the district
court that it licenses MiSnap to over 6,400 end-users. Id.
at *25. In response, Mitek argues that it has all the neces-
sary evidence “to show its own software does not infringe
the [p]atents-in-[s]uit under any usage by its customers.”
Appellant’s Br. 53. However, Mitek fails to appreciate key
elements of indirect infringement that could not be proven
(or disproven) without third-party involvement.
For example, “there can be no indirect infringement
without direct infringement.” Limelight Networks, Inc. v.
Akamai Techs., Inc., 572 U.S. 915, 920 (2014) (citation
omitted). Therefore, an “investigation would still be re-
quired as to whether the end-user banks or third-party fi-
nancial services providers are direct infringers.” Decision,
2023 WL 2734372, at *27. Furthermore, induced infringe-
ment requires a finding that “the alleged infringer affirm-
atively induced that infringement with knowledge that the
induced acts constituted patent infringement,” Amarin
Pharma, 104 F.4th at 1377, and contributory infringement
similarly requires that alleged infringer “had ‘knowledge of
patent infringement,’” Bio-Rad, 998 F.3d at 1335 (citation
omitted). Accordingly, “investigation” would be necessary
to find what Mitek knew about each customer’s activity and
whether “Mitek directed or encouraged some or all ele-
ments of such infringement” for each customer. Decision,
2023 WL 2734372, at *27.
The district court also raised concerns about whether
“any findings made as to Mitek alone would have any ap-
plicability or estoppel effect upon the end-users.” Id.
Mitek’s complaint seeks not only a declaration of its own
non-infringement but also that its “customers’ use of
Mitek’s . . . technology has not and does not infringe” the
patents-in-suit. J.A. 90 ¶ 37; see also J.A. 90–93. As the
district court recognized, it is undisputed that “banks can,
and indeed do, customize MiSnap to fit their own needs.”
Decision, 2023 WL 2734372, at *26. As a result, “a
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determination of whether a component of Mitek’s software,
sold as-is, infringes the [patents-in-suit] will have no bear-
ing and no estoppel effect on whether a modified version of
the same component is infringing.” Id. We have previously
approved discretionary decisions to decline to exercise de-
claratory judgment jurisdiction where the action “would
not afford relief from the uncertainty, insecurity, and con-
troversy giving rise to the proceeding.” BP Chems., 4 F.3d
at 981.
At bottom, even if the district court erred in concluding
that it does not possess subject-matter jurisdiction over
Mitek’s declaratory judgment action—which we have de-
termined it did not—we cannot say it abused its discretion
in deciding that it would decline to exercise that jurisdic-
tion.
CONCLUSION
We have considered Mitek’s remaining arguments but
find them unpersuasive. For the foregoing reasons, we af-
firm the district court’s dismissal of Mitek’s declaratory
judgment action.
AFFIRMED
COSTS
Costs to Appellee.
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