Unauthorized Acts in Declaratory Judgment
tory relief based on statements or acts The Supreme Court rejected the Federal not authorized by the patentee may Circuit’s “reasonable apprehension of be dismissed for lack of subject matter suit” test, and held that the requirements jurisdiction, and post-filing events may of a case or controversy are met where not cure the jurisdictional defect of an payment of a claim is demanded as of unripe lawsuit.4
right, the coercive nature of which pre-serves the right to challenge the legality
of the claim.8 The defendant’s affirma-
tive conduct, however, is still required.
In MedImmune, the conduct giving rise
to jurisdiction for the declaratory judg-
Notwithstanding the demise of the ment suit was the defendant patentee’s
Federal Circuit’s “reasonable apprehen-
sion of suit” test, the Supreme Court’s issued patent covered under an exist-MedImmune decision and subsequent ing license between the parties. Such Federal Circuit opinions continue to requirement for the defendant’s affirma-
entee to create an actual controversy that cases after MedImmune.
In SanDisk Corp. v. STMicroelectronics,
ment suit is to allow a party “who is jurisdiction for declaratory judgment Inc., the Federal Circuit stated, “declara-reasonably at legal risk because of an in patent cases. There is nothing in tory judgment jurisdiction generally will unresolved dispute, to obtain judicial MedImmune and its progeny to sug-
not arise merely on the basis that a party
gest that unauthorized statements could learns of the existence of a patent owned
ing to await the commencement of legal create an actual controversy to support by another or even perceives such a action by the other side.”1 Before the declaratory relief.
Supreme Court’s MedImmune decision,
In MedImmune, Inc. v. Genentech, without some affirmative act by the pat-
courts in patent cases looked to whether Inc., after the patentee made a specific entee.”9 Thus, SanDisk confirmed that the conduct by the patentee created a demand for payment under an exist-
reasonable apprehension on the part of ing patent license based on a newly by the patentee in evaluating whether the declaratory judgment plaintiff that it issued patent covered by that license, the there is subject matter jurisdiction for will face a patent infringement suit.2
licensee made the license payment, and declaratory judgment. While SanDisk
then filed suit under the Declaratory did not define the outer boundaries
sion of suit” is no longer required for Judgment Act to challenge the patent.5 of declaratory judgment jurisdiction, initiating a declaratory judgment action The Federal Circuit had previously ruled something more than merely approach-involving a patent, jurisdiction in such that there was no declaratory judgment ing a potential licensee for negotiation cases still requires a “case or contro-
jurisdiction because there was no “rea-
is not enough to establish jurisdiction.10
versy” between parties having adverse sonable apprehension of suit” to sup-
In SanDisk, jurisdiction existed because
legal interests, of sufficient immediacy port declaratory relief since a licensor during the negotiation, the defendant and reality to warrant the issuance of a cannot sue a licensee in good standing patentee presented a detailed claim chart declaratory judgment.”3 Only the defen-
who is making royalty payments.6 The comparing its patents with the plaintiff ’s
dant’ conducts or those authorized by Supreme Court reversed, finding that accused products.11 the defendant may create such case the payments were coerced by the paten-
tee’s demand under the patent license.7 Elecs., Inc., v. Guardian Media Techs., Ltd., the defendant patentee, Guardian, entee’s activities during those four years agreement because it believed the patent sent letters offering a patent license to established a substantial controversy of was invalid.29 American Orthodontics the plaintiff, Sony, in 2004 and 2005 sufficient immediacy and reality to war-
(previously, a “notice of patent infringe-
the agreement, and that it would “pursue
ment” and claim chart had been sent by
In Teva Pharms. USA, Inc. v. Novartis its available legal remedies to protect its
the inventor in 1999 before the patent Pharms. Corp., the patentee Novartis rights.”30 Adenta then filed a declaratory was assigned to Guardian).12 During listed five patents in the Food and Drug judgment action seeking to invalidate the negotiations, Guardian asserted that Administration’s (“FDA”) Orange Book the patent. The Federal Circuit held Sony owed it royalties. Sony, on the in connection with its Famvir® drug.21 that a “substantial controversy” existed other hand, contended that it had the The declaratory plaintiff Teva filed an to support declaratory judgment juris-right to engage in certain activities with-
Abbreviated New Drug Application diction because American Orthodontics
out a license. After the negotiations (“ANDA”), certifying that its drug did “indicated its intent to assert its rights failed, Sony filed a declaratory judgment not infringe any of Novartis’ five pat-
action in September 2005.13 The Federal ents.22 The ANDA and patent statutes that Adenta failed to pay royalties under Circuit held that a case or controversy were amended in 2003 to expressly per-
the terms of the License Agreement.”31
existed between Sony and Guardian at mit a declaratory judgment action chal-
the time of the complaint based on the lenging the patents listed in the Orange mative conduct by the defendant paten-2004 and 2005 letters (without decid-
Book “to obtain patent certainty” if the tee is required to establish subject matter
ing whether the earlier 1999 letter by patentee does not bring an infringe-
ment action within 45 days.23 Although action. That conduct must be by the
ter jurisdiction).14 Because the patentee Novartis filed such an action against Teva defendant or by someone authorized by Guardian asserted that it was owed within the deadline, the action concerned the defendant. royalties during the license negotiations only one of the five patents listed in the in response to Sony’s contention that it Orange Book. Teva sought a declara-
had a right to engage in certain activities tory judgment regarding the remain-
without a license, there was an actual ing four patents listed in the Orange JUDGMENT REGARDLESS OF controversy based on the adverse posi-
Book by Novartis.24 The Federal Circuit POST-FILING EVENTS
held that “Novartis’ selective [patent
pute “manifestly susceptible of judicial law suit created] uncertainty as to Teva’s unless an agent has actual or appar-determination.”15
legal rights under its ANDA.”25In view ent authority to assert claims of patent
More recently, in Micron Tech., Inc. of these circumstances, “Teva’s injuries infringement or to initiate suit on the
v. MOSAID Techs., Inc., MOSAID [were] traceable to Novartis’ conduct,” patentee’s behalf, the agent’s statements sent Micron several letters regarding so there was an actual controversy suf-
are insufficient to create an actual con-
ficient to confer jurisdiction under the troversy.”32 To have apparent author-
ogy. MOSAID then sued other DRAM Declaratory Judgment Act.26
ity, “‘[t]he appearance of authority
In Adenta GmbH v. American must be created by the principal[,]’ not
MOSAID’s public statements and annual Orthodontics Corp., the Federal Circuit the agent.”33 These fundamental legal reports confirmed its intent to continue held that the threat to pursue legal rem-
an aggressive litigation strategy.17 During edies under a patent license in antici-
“reasonable apprehension of suit” test,34
the four years after MOSAID’s last letter pation of a breach was sufficient to and are still being applied in patent to Micron, MOSAID negotiated with support declaratory relief.27 American cases post-MedImmune.35 Below are other DRAM manufacturers.18 Despite Orthodontics had acquired a patent post-MedImmune examples where these the four year lapse in communication that allegedly covered Adenta’s product, rules apply. between MOSAID and Micron, the and the parties thereafter entered into
In Capo, Inc. v. Dioptics Med. Prods.,
an agreement in which Adenta would Inc., declaratory judgment jurisdiction
ment jurisdiction because of MOSAID’s pay a royalty on that product under the was based on statements from Dioptic’s negotiations and lawsuits with other patent.28 Adenta later advised American president cautioning Capo about “racing DRAM manufacturers during that peri-
Orthodontics that it would stop paying forward to infringement” and “charging
the latter royalties under a patent license down a path here that’s going to end up
into a multi-million dollar lawsuit.”36 ating whether a competitor’s product inferred which creates an actual contro-In determining whether a declaratory infringes Raydan’s patents, nor does he versy to support jurisdiction for declara-judgment action is appropriate, “it is have any authority to make claims of tory relief. the objective words and actions of the patent infringement or to initiate suit
patentee that are controlling.”37 There on Raydan’s behalf,” and it was “not force the patentee to make statements was no dispute that the company’s presi-
objectively reasonable” to conclude oth-
dent had the authority to assert claims erwise.43 The suit for declaratory judg-
of patent infringement and initiate suit ment was then dismissed for lack of an ent is invalid, unenforceable, or not against a competitor. However, if a sales actual controversy.
jurisdiction might not be proper because one else unlikely to have the authority to volunteer a statement which may cre-it would not be reasonable to expect assert patent infringement) accuses a ate an actual patent controversy, a wise such a person to have the authority to competitor of infringing a patent, it may patentee would simply decline to take assert patent infringement claims.38
be premature for that competitor to rush a position and say that no one has been
The case of Boler Co. v. Raydan Mfg., to court to file a declaratory judgment authorized to make charges of patent
Inc., is instructive. The declaratory judg-
action without first establishing whether infringement.
ment lawsuit was based on an incident these statements were actually authorized
“A ‘controversy’ cannot be created
at a trade show where Boler alleged that by the company. Otherwise, the com-
Rick Nissen, a marketing manager for petitor may be proceeding on little more opinion and then disputing the defen-Raydan, approached the Boler booth than speculation, and risks dismissal for dant’s conclusions.”45 More would be at the trade show, pointed to one of lack of a concrete case or controversy needed to establish an actual contro-Boler’s products and said, “That’s where for declaratory relief.44 This would also versy to support a declaratory judgment you are violating our patent.”39 When apply to where the competitor receives action, and the competitor may have to Raydan’s President and CEO, Raymond hearsay reports from its customers that take a wait-and-see attitude. English, approached the Boler booth, do not name the person who allegedly
Mr. Nissen allegedly said, “I’d like you to made the statements. Without more, accused actors, the timing of their actions meet your future boss, Ray English. We such anonymous statements should not is also important to the question of juris-are going to own your company.”40 Mr. provide a basis for dragging a patentee diction. If the competitor nonetheless Nissen, the Raydan marketing manager into court for declaratory judgment.
This is not to say that a competitor could be subject to dismissal under
Mr. English stated that he did not hear would have no options to resolve the sit-
Rule 12(b)(1) for lack of subject matter
any of these alleged statements.41 There uation. For example, as suggested by the jurisdiction. Even if subsequent events was no allegation that the Raydan CEO Boler court, a competitor can improve occur which may establish an actual made any threatening statements. The its chances of establishing jurisdiction by controversy, those events cannot serve Court noted that, “after the incident, engaging in a direct dialog with the pat-
to establish the necessary subject matter
no one from Boler contacted Raydan’s entee (whether the company president jurisdiction for declaratory judgment at management to express any concern or another with authority) regarding the the time suit was filed.46 It is well-estab-about the [patent], to discuss any poten-
possible controversy between the parties. lished that “later events may not create
tial conflict between the parties, or to If there was a misunderstanding from jurisdiction where none existed at the express any concern about potential the sales meeting, or if the statement time of filing.”47 Therefore, in addition infringement….
was made but unauthorized, steps could to the authority of the accused actors,
Instead, Boler proceeded to file its be taken by the patentee to avoid a reoc-
the timing of their actions is also impor-
complaint for declaratory judgment currence. In this instance, there would tant to the question of jurisdiction. less than one week later.”42 The Court be no actual controversy for purposes of
then noted that it did not need to declaratory judgment. However, if the of patent infringement from sources resolve the factual dispute regarding patentee refuses to correct its employee’s of questionable authority, one should whether the alleged statements were ever statements or if the employees continue refrain from jumping the gun in a forum-made because “as a marketing manager, to make similar statements, the com-
seeking race to the courthouse. Instead,
Nissen bears no responsibility for evalu-
petitor can argue the authorization is the facts should be investigated, which
may include opening a direct dialog with
Eng’g, Inc., 819 F.2d 746, 750 (7th 18. Id.
Cir. 1987) (“The federal declaratory 19. Id.
of the race to the courthouse.”) (cita-
tion omitted); see alsoWilton v. Seven 21. Teva Pharm. USA, Inc. v. Novartis
a proper jurisdictional foundation under
Falls Co., 515 U.S. 277, 288 (1995)
Pharm. Corp., 482 F.3d 1330, 1334 (Fed. Cir. 2007). By listing its
(district court’s discretion to accept jurisdiction for declaratory judgment
Book, “Novartis represent[ed] that ‘a
James Juo is a partner at the Los Angeles office of Fulwider Patton LLP, which special-izes in intellectual property law including
choose a forum.” Tempco Elec., 819
its listed Famvir® patents.” Id. at 1341 (citing 21 U.S.C. § 355(b)(1)). patents, trademarks and copyrights. Mr. Juo
F.2d at 750 (citations omitted). In the Ninth Circuit, in addition to whether 22. Id. at 1334. works on both patent prosecution and litiga-
the declaratory action is being sought 23. Id. at 1335 (citing 21 U.S.C.
tion matters, including patent litigation at both the trial and appellate level, and can be
ations include the convenience of the parties, and the availability of other 24. Id. at 1343. This is also analogous remedies. Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 n.3 (9th
tee files suit only on a trade secret claim against the same technology.
1. BP Chems. Ltd. v. Union Carbide See Vanguard Research, Inc. v. PEAT, Corp., 4 F.3d 975, 977 (Fed. Cir. 5. MedImmune, 127 S. Ct. at 768.
Inc., 304 F.3d 1249, 1255 (Fed. Cir.
1993); see alsoMinn. Mining & Mfg. 6. MedImmune, Inc. v. Genentech, Inc.,
7. MedImmune, 127 S. Ct. at 773.
able damages from being incurred 9. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1380-1 (Fed.
court.”); Goodyear Tire & Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 956
delayed adjudication.”); Arrowhead 10. Id. at 1382.
Indus. Water Inc. v. Ecolochem, Inc., 11. Id. at 1381.
(Absent declaratory judgment, a party 12. Sony Elec., Inc., v. Guardian Media Techs., Ltd., 497 F.3d 1271, 1274–5
the patent was assigned to Guardian, the inventor sent a “notice of pat-
25. Teva Pharm., 482 F.3d. at 1345.
2. SeeArrowhead, 846 F.2d at 736.
ent infringement” and a claim chart 26. Id. at 1346.
3. MedImmune, Inc. v. Genentech, Inc.,
to the plaintiff. The court, however, 27. Adenta GmbH v. Am. Orthodontics Corp., 501 F.3d 1364, 1370 (Fed. Cir.
ing Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270,
28. Id. at 1366. A wrinkle in this case
(1941)); see alsoCAT Tech. LLC v. 14. Id. at 1285.
TubeMaster, Inc., No. 07-1443, 2008 15. Id. at 1285–6 (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 242
28, 2008) (“MedImmune articulated
a ‘more lenient legal standard’ for the
16. Micron Tech., Inc. v. MOSAID Techs., Inc., 518 F.3d 897, 901 (Fed. Cir.
relief in patent cases.”) (citation omit-
receiving several threats itself, Micron
4. In addition, even if there is subject
matter jurisdiction, a district court has
in a race-to-the-courthouse situation. 17. Id.
Tempco Elec. Heater Corp. v. Omega
Could orphan works be used in Endnotesthese countries as an excuse for per-
1. Notice of Inquiry, U.S. Copyright Unauthorized
2. Pub.L. No. 102–307, 106 Stat. 264 CONTINUED FROM PAGE 16
9. It remains to be seen whether the 3. Pub.L. No. 105–298, 112 Stat. 2827
Treaty (“WCT”). See Agreement on
9.1, Marrakesh Agreement Establishing 29. Id. at 1366.
Uruguay Round vol. 31, 33 I.L.M. 81, 31. Id. at 1370.
87 (1994); WIPO Copyright Treaty, 32. Boler Co. v. Raydan Mfg., Inc., 415
2006); see alsoSherman Treaters, Ltd. v. Ahlbrandt, 607 F. Supp. 939, 943
10. The Copyright Office’s “Statements
tains an express “no formalities” provi-
Convention. See WIPO Performances
Bausch & Lomb Inc. v. CIBA Corp.,
39 F. Supp. 2d 271, 274 (W.D.N.Y. 1999) (no actual controversy where
search for the copyright owner will 6. Kahle v. Gonzales, 487 F.3d 697, 699
33. Boler, 415 F. Supp. 2d at 903 (quoting
Dr. Beck & Co. G.M.B.H. v. Gen. Elec.
both sides of the issue over the pending 8. U.S. Copyright Office, Report On
Co., 210 F. Supp. 86, 90 (S.D.N.Y.
1962), aff ’d, 317 F.2d 538, 539 (2d
gov/orphan/orphan-report-full.pdf ). Andres Quintana, Esq. is the principal at the Quintana Law Group, APC, an intel-
10. U.S. Copyright Office, Report On 34. SeeDr. Beck and Co. G.M.B.H. v. lectual property firm in Woodland Hills, Gen. Elec. Co., 317 F.2d 538, 539
California. He may be reached at [email protected]
gov/orphan/orphan-report-full.pdf ). qlglaw.com. For more information about 11. See generally 471 U.S. 539, 550-555
the Quintana Law Group, APC, please visit
an actual controversy” for declaratory
so appointed was acting as a de facto Endnotesofficer.
1. John F. Duffy, Are Administrative Unauthorized
ity to the Director and would require the
around the same time Professor 35. SeeACCO Brands USA, LLC v. Accentra, Inc., No. 07-1401, slip op.
notable is the law’s creation of a retroac-
tive defense to any challenges to the con-
36. Capo, Inc. v. Dioptics Med. Prods., Inc, 387 F.3d 1352, 1353 (Fed. Cir.
stitutional authority of APJs previously
37. Id. at 1356 (quoting BP Chems. Ltd. v. Union Carbide Corp., 4 F.3d 975,
issue with potentially significant conse-
§ 3(b). Aharonian, et al. v. Gutierrez,
No. 07-1224 (JR) (D.D.C. filed July 38. Boler, 415 F. Supp. 2d at 903 (no
9, 2007). The district court judge dismissed the case, holding that there
the statute for Ms. Peterlin’s removal
Act did not allow for review of the 39. Id. at 899. appointment.
3. In reTranslogic Technology, Inc., 504
4. Translogic Technology, Inc. v. Hitachi, Ltd., __ F.3d __ (Fed. Cir. 2007).
43. Id. at 903. In addition, Mr. English,
the appointment process. However, the 5. In re Translogic Technology, Inc., 2008
U.S. Supreme Court issues a ruling on 6. Marcia Coyle, Patent Board’s Rulings in Doubt, National Law Journal, April
Raydan’s patents or the inferiority of
the constitutionality of the remedy itself,
28, 2008; Adam Liptak, In One Flaw,
a competitor’s product.” Id. at 900.
Questions on Validity of 46 Judges, 44. Cf. Atlanta Gas Light Co. v. Aetna Cas. & Sur. Co., 68 F.3d 409, 415 (11th
ing or potential appeal from a BPAI 7. In the Intellectual Property and
29, 2000) Congress placed the power 45. Int’l Soc. For Krishna Consciousness,
the remedy into law. Regardless, this has
Inc. v. Reber, 454 F. Supp. 1385, 1388
46. Benitec Australia, Ltd. v. Nucleonics Inc., 495 F.3d 1340, 1344 (Fed. Cir.
2007); see alsoSteffel v. Thompson, 415
Matthew J. Spark is an Associate at the
47. Spectronics Corp. v. H.B. Fuller Co.,
Los Angeles office of Venable LLP. Mr. Spark
940 F.2d 631, 635 (Fed. Cir. 1991); see alsoRyobi America Corp. v. Peters,
focuses his practice on patent prosecution, patent counseling, and patent litigation. Mr.
(a party cannot “bootstrap” jurisdic-
Spark can be contacted at [email protected]
tion for declaratory judgment by rely-ing on post-filing activities).
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