Delano Farms Co. v. The Cal. Table Grape Comm'n., No. 2010-1546 (Fed. Cir. Aug. 24, 2011).

Plaintiffs Delano Farms et al brought a declaratory judgment action against the California Table Grape Commission (Commission) seeking to invalidate or render unenforceable three patents on grape varietals.  The patents-in-suit were owned by the United States Department of Agriculture (USDA) but had been licensed to the Commission for the purposes of sublicensing.  Plaintiffs, who were sublicensees, brought suit alleging that all three patents were invalid for prior public use, and that one was unenforceable on the basis of inequitable conduct.  Additionally, the sublicensees raised antitrust allegations. 

The district court ruled that the patent claims against the USDA were barred by sovereign immunity and that the USDA, as owner of the patents-in-suit, was a necessary party to the litigation.  As such, the district court dismissed the patent claims.  The antitrust allegations were dismissed based on the court’s finding that the sublicensees had failed to plead a plausible market. 

On appeal, the Federal Circuit agreed that the USDA was a necessary party as the patent owner, who, under the agreement with the licensees/sublicensors, retained the right to enforce the patent.  However, the appeals court differed with the district court on the question of sovereign immunity, holding that the waiver of sovereign immunity set forth in 5 U.S.C. § 702 applied to the sublicensees’ request for declaratory judgment against the United States on a cause of action arising under the Patent Act. 

The Federal Circuit also held that the sublicensees’ inequitable conduct allegation was properly pled where the complaint alleged that a co-inventor was aware of the facts of a prior public use and the potential consequences to the patentability of the invention.  The dismissal of the antitrust claims was upheld because the sublicensees failed to allege a definition of the relevant market, but rather simply restated the characteristics of the invention as they were listed in the patent.  The court held that such characteristics are “not per se coterminous with the features of the patented product that may lead consumers to select that product over other similar ones.” 

A copy of the opinion can be found here.