The U.S. Court of Appeals for the Federal Circuit recently affirmed a district court dismissal of a pre-emptive suit brought by Innovative Therapies, Inc., seeking a ruling of invalidity for certain patents covering vacuum-assisted technology. Innovative Therapies v. Kinetic Concepts, Inc., Case No. 09-1085 (Fed. Cir., Apr. 1, 2010) (Newman, J.).

The Federal Circuit’s opinion upheld the district court’s denial of declaratory judgment for plaintiff Innovative Therapies, Inc. (ITI), finding that plaintiffs had failed to show that a “controversy of such ‘immediacy and reality’ as to require the district court to accept declaratory jurisdiction” existed.”

ITI initiated the suit in September 2007 to secure a declaratory judgment stating that five patents owned by Kinetic Concepts, Inc. (KCI), are invalid and/or not infringed by a device to be sold by ITI, the “Svedman Wound Treatment System.” ITI argued that three factors demonstrated that sufficient adverse interests existed to entitle ITI to adjudication: KCI had sufficient knowledge of ITI’s Svedman device, given ITI’s representations to the Food and Drug Administration (FDA) that the device had the same “technological characteristics” as KCI’s pre-existing wound therapy device and subsequent FDA approval; phone calls between KCI executives and ITI, during which ITI informed KCI executives of the Svedman device and received a prediction from them that KCI potentially could sue ITI; and KCI’s history of litigation to enforce its patents.

In dismissing ITI’s complaint, the district court had ruled that the factors described above did not establish an actual controversy at the time ITI launched its suit and thus no declaratory jurisdiction existed. In affirming the district court’s opinion, the Federal Circuit noted that representations to a third person about “technological characteristics,” such as the representations made by ITI to the FDA, do not establish a “justiciable controversy with the patentee.” That is to say, even if KCI knew of the FDA approval for the Svedman device, such knowledge in and of itself did not create a controversy for the purposes of declaratory judgment.

Second, the Court agreed with the district court’s finding that phone calls with KCI executives, who had been former colleagues of ITI representatives, produced “impromptu responses,” not an “assertion of patent rights.” The content of the conversations failed to produce a controversy that would require the exercise of declaratory jurisdiction. The Court further noted that KCI’s history of litigation to enforce its patents shows a general propensity toward litigation, but did not establish an actual controversy between KCI and ITI over the Svedman device. The Court noted that prior litigation serves as one of several factors in the “totality of circumstances” assessed before exercising declaratory jurisdiction.

Finally, the Court ruled that subsequent events, such as the fact that KCI did sue ITI for infringement over the Svedman device in January 2008, did not affect the ruling that declaratory judgment would be improper. Acts occurring after the filing of ITI’s original complaint “did not establish that an actual controversy existed at that earlier time.”

Practice Note: Declaratory judgment should be reserved for near-certain or actual controversy and may be denied even if litigation between the parties appears to be inevitable or if litigation has commenced after filing of complaint seeking declaratory judgment.