Tuesday, June 11, 2013

Federal Circuit Affirms Judgment of No Jurisdiction to Consider Declaratory Judgment Action Against Monsanto

On June 10, the Federal Circuit in Organic Seed Growers and Trade v. Monsanto Co. affirmed a judgment that there was no justiciable "case or controversy" in an action filed by "a coalition of farmers, seed sellers, and agricultural organizations" seeking declaratory judgmentsof non-infringement and invalidity with respect to 23 Monsanto patents relating to technology for genetically modifying seeds.  The plaintiffs expressed concern that they could be accused of inadvertent infringement if their crops "become contaminated with transgenic seed."

For those of you who aren't familiar with the U.S. law of declaratory judgments, here's a little primer.  Article III section 2 of the Constitution states that “The judicial Power shall extend to all Cases, in Law and Equity, arising under . . . the Laws of the United States . . . to Controversies to which the United States shall be a Party . . . [and to Controversies] between Citizens of different States . . . .”  The federal Declaratory Judgment Act, in turn, states that  “In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party."  In determining whether a federal court may entertain a petition for declaratory relief, then, the question “’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).  So you can't just go into court and ask the court to declare a patent invalid, as is the practice in some countries (e.g., the U.K., Germany, Japan, China) in relation to nullification actions (as described in my book at pp. 212, 278-79, 329, 361).  In Organic Seed Growers, Monsanto had refused the appellants' request for a written covenant not to sue, but it had referred them "to a statement posted on its website" stating that "It has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seeds or traits are present in farmer’s fields as a result of inadvertent means."  The  Federal Circuit held that "Because Monsanto has made binding assurances that it will not 'take legal action against growers whose crops might inadvertently contain traces of Monsanto biotech genes (because, for example, some transgenic seed or pollen blew onto the grower’s land),' and appellants have not alleged any circumstances placing them beyond the scope of those assurances," there was no justiciable case or controversy."   

Aside from the interesting questions of substantive law suggested by the facts, the difficult question from the standpoint of remedies/procedure is how difficult should it be to challenge patent validity or request a declaration of noninfringement.  One risk of making it very easy to challenge validity is that it renders patent rights more vulnerable and hence less valuable; there is a cost to defending even a nonmeritorious challenge.  The obvious drawback to making it difficult to challenge validity is that you can wind up with lots of invalid patents never going challenged.  Many other factors, including the error rate in granting patents, the availability (or not) of other avenues for challenging validity (including oppositions and raising invalidity as a defense in infringement litigation), and whether the patent validity defense if available operates to cancel the patent altogether or is merely a personal defense, are also potentially relevant.  Given this complexity and interdependence, I find it difficult to conceptualize what an optimal system for challenging validity would look like, but it is an interesting problem. 

For more on declaratory judgments of noninfringement under U.S. and German law, see my post of May 21.  For an interesting paper discussing, among other things, the now-obsolete common law writ of scire facias, which long ago in the U.K. and the U.S. permitted anyone to mount a patent validity challenge, look for Mark Lemley's forthcoming (not yet publicly available, I don't think) article "Why Do Juries Decide if Patents Are Valid?"


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