Pre-Issuance Conduct May Support Declaratory Judgment Jurisdiction

14 March 2014 Publication
Authors: Jeanne M. Gills

Legal News Alert: Intellectual Property

On March 11, 2014, in Danisco US Inc. v. Novozymes A/S, No. 2013-1214 (Fed. Cir.), the Federal Circuit held that pre-issuance conduct can be considered when determining whether a declaratory judgment defendant has instigated a case of actual controversy. The Court reversed the district court’s order dismissing the Plaintiff’s declaratory judgment action for lack of subject matter jurisdiction finding that the “totality of circumstances” including prior litigation and actions taken before the USPTO, “establishe[d] a justiciable controversy.”

In this case, the parties (or their predecessors) had been litigating other patent disputes since as early as 2001. The instant dispute centered around Novozymes’ U.S. Patent No. 8,252,573 and Danisco’s U.S. Patent No. 8,084,240, which both generally relate to BSG variant polypeptides. Prior to the declaratory judgment suit in question, Novozymes had sought to have an interference declared between one of its and Danisco’s pending patent applications, and subsequently filed a request for continued examination wherein it argued that its application and Danisco’s now-issued ’240 patent contained overlapping subject matter. Novozymes later obtained its ’573 patent, but also submitted public comments to the USPTO regarding its continued belief that the parties’ patents claimed the same subject matter.

Upon issuance of the ’573 patent, Danisco filed suit in the Northern District of California seeking a declaratory judgment of non-infringement of the ’573 patent and invalidity of the ’573 patent (or alternatively that Danisco’s ’240 patent had priority over the ’573 patent). The district court dismissed Danisco’s complaint for lack of subject matter jurisdiction, finding that because Danisco filed suit on the day the ’573 patent issued , it “was filed prior to the time Novozymes took, or even could have taken, any affirmative action to enforce its rights.” (Op. at 5) In so holding, the district court stated that there was no precedent for finding jurisdiction based on pre-issuance events alone. (Id.)

The Federal Circuit disagreed stating, “we have never held that ‘pre-issuance conduct’ cannot constitute an affirmative act, nor have we held that the only affirmative acts sufficient to create justiciable controversies are ‘implied or express enforcement threats.’” (Id. at 10) In reversing the district court’s finding, the Court noted that “Article III does not mandate that the declaratory judgment defendant have threatened litigation or otherwise taken action to enforce its rights before a justiciable controversy can arise.” (Id. at 7) The Court further observed:

The district court’s categorical distinction between pre- and post-issuance conduct is therefore irreconcilable with the Supreme Court’s insistence on applying a flexible totality of the circumstances test, its rejection of technical bright line rules in the context of justiciability, and our own precedent.

(Id. at 10).

Accordingly, the Court held that the only requirement for a case or controversy to exist was that there be a “substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Id. at 8 (citing MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)).

Applying this standard, the Court felt that the totality of the circumstances in the instant case demonstrated that a “definite and concrete” patent dispute existed between the parties based on their prior litigation history and actions taken during the patent process. (Id. at 12-13) As the Court observed: “[w]e see no reason why we should not similarly consider a pattern of administrative challenges in analyzing the totality of the circumstances.” (Id. at 10)

Finally, the Court noted that the Supreme Court had not articulated a bright line test to distinguish cases that satisfy the Article III case or controversy requirement from those that do not, and thus it was not inclined to do so either. Instead, the Court alluded to its previous treatment of cases where a history of patent litigation involving related technologies and patents between the same parties weighed in favor of the existence of subject matter jurisdiction.

In view of this decision, practitioners should be aware that earlier litigations, administrative challenges during the patent process, and the like may impact a plaintiff’s ability to bring a declaratory judgment action.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:

Ellen T. Wong
Boston, Massachusetts

Jeanne M. Gills
Chicago, Illinois

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