SanDisk Corp. v. ST Microelectronics, Inc. 480 F.3d 1372 (Fed. Cir. 2007)

In a case in which a competitor sought a declaratory judgment of non-infringement and invalidity against a patent holder, the Federal Circuit held that a patent holder’s promise not to sue for infringement does not eliminate a justiciable controversy.

In this case, the patent holder, ST, and the declaratory judgment plaintiff, SanDisk, were both in the market for flash memory storage products. During license agreement negotiations, ST expressed the need for SanDisk to license certain patents it alleged SanDisk infringed and provided SanDisk with a detailed infringement analysis of SanDisk’s products. Nevertheless, ST told SanDisk that it had no plan to sue for infringement. Subsequently, SanDisk sought a declaratory judgment of noninfringement and invalidity of the ST patents that had been the subject of those negotiations.

The District Court granted ST’s motion to dismiss, finding that no actual controversy existed because SanDisk did not have an objectively reasonable apprehension of suit. The Federal Circuit, however, disagreed.

The test the court had traditionally applied for determining whether an actual case or controversy existed for declaratory judgment jurisdiction considers whether 1) conduct by the patentee creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit; and 2) conduct by the declaratory judgment plaintiff amounts to infringing activity or demonstrates concrete steps taken with the intent to engage in infringing activity. In the U.S. Supreme Court’s recent holding in MedImmune, Inc. v. Genentech, Inc., the Court rejected the “reasonable apprehension of suit” prong of this traditional test. Instead, the Court held that when parties take adverse positions regarding their obligations, each side claiming a specific right, they create a controversy for declaratory judgment purposes even if neither side indicated it would file suit.

Applying MedImmune, the Federal Circuit held that an actual controversy exists for the purpose of declaratory judgment jurisdiction “where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do.” The court held that SanDisk established a case or controversy for declaratory judgment jurisdiction when it maintained that it would continue its course of conduct, without paying royalties, despite ST’s claims of infringement. As a result, the court vacated the dismissal.