Wednesday, September 13, 2017

Federal Circuit Affirms Dismissal of Complaint Seeking Declaratory Judgment

The opinion, authored by Judge Moore and joined by Judges Reyna and Stoll, is Allied Mineral Products, Inc. v. Osmi, Inc., Stellar Materials, Inc. and Stellar Materials, LLC  Allied, headquartered in Ohio, sells products to two Mexican companies that distribute those products in Mexico.  Stellar sent letters to the Mexican firms accusing them of infringing Stellar's Mexican patent; it later initiated patent litigation against those firms in Mexico.  Allied then filed an action in U.S. district court for a declaratory judgment that the corresponding U.S. patent is invalid, not infringed, and unenforceable.  The district court dismissed the complaint for lack of jurisdiction, and the Federal Circuit affirms:
The Declaratory Judgment Act requires “a case of actual controversy.” 28 U.S.C. § 2201(a). There is no bright-line rule for whether a dispute satisfies this requirement, Prasco LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1336 (Fed. Cir. 2008), although the Supreme Court has articulated a number of relevant factors: 
Our decisions have required that the dispute be definite and concrete, touching the legal relations of parties having adverse legal interests; and that it be real and substantial and admit of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts . . . . Basically, the question in each case is whether 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.
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quotations and alterations omitted). . . .
The totality of the circumstances in this case does not rise to the level of a case of actual controversy. Declaratory judgment jurisdiction requires some affirmative act by the patentee. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir. 2007). Stellar has not directed any actions towards Allied, nor has it litigated or threatened litigation in the United States or on its ’974 patent. All of Stellar’s conduct has been directed towards Allied’s customers Ferro and Pyrotek, unrelated Mexican entities, and that contact was limited to Stellar’s Mexican Patent and potentially infringing acts in Mexico. Stellar sent notice letters to the customers alone, and although Allied responded on behalf of its customers, Stellar never responded to Allied’s letter. Stellar then sued only the customers, not the manufacturer. Stellar also limited its actions to Mexico. Stellar filed suit in Mexico, suing for infringement of a Mexican patent under Mexican laws. It has not threatened or alleged infringement of the ’974 patent in the United States, much less filed suit. Stellar took no actions directed at Allied, no actions with regard to its ’974 patent, and no actions under U.S. patent laws.
The court goes on to distinguish three other cases:  Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 599 F.3d 1377 (Fed. Cir. 2013), in which the court had found no case or controversy despite some "veiled threats" of litigation and the patent owner's prior history of litigating its patents; Arkema Inc. v. Honeywell International, Inc., 706 F.3d 1351 (Fed. Cir. 2013), in which a combination of German litigation and U.S. litigation, directed against the same defendant and over a related patent, "'create[d] a sufficient affirmative act on the part of the patentee for declaratory judgment purposes'”; and Arris Group v. British Telecommunications PLC, 639 F.3d 1368 (Fed. Cir. 2011), in which the court held that "a manufacturer has standing to bring a declaratory action if: (1) the manufacturer is obligated to indemnify its customers in the event of an infringement suit; or (2) there is a controversy between the patentee and the manufacturer as to the manufacturer’s liability for induced or contributory infringement based on acts of direct infringement by the customers."  Neither condition, the court says, is present here.

No comments:

Post a Comment