An alleged infringer may bring a declaratory judgment action even if no litigation is pending or threatened when a “substantial risk” of litigation exists.
The alleged infringer owned a patent covering a certain active ingredient in its product used to convert corn and other plant-based material into ethanol. Shortly after the PTO issued a Notice of Allowance for the alleged infringer’s patent, the patentee amended the claims to a then-pending application to cover the invention disclosed in the alleged infringer’s patent. Then the patentee challenged the alleged infringer’s patent via an interference request, which the PTO rejected. When the alleged infringer’s patent issued, the patentee requested continued examination to challenge the examiner’s conclusions and again argue for priority over the infringer’s “interfering ‘240 patent” but the PTO also rejected this request. Subsequently, the patentee’s amended application issued as the patent-in-suit. That same day, the alleged infringer filed for declaratory judgments of invalidity and noninfringement, as well as for a priority determination under Section 291. The district court dismissed the action for lack of subject matter jurisdiction because the patentee had not taken an “affirmative act of enforcement.” The alleged infringer appealed.
The Federal Circuit reversed. The Declaratory Judgment Act allows for a party to file for a declaratory judgment when the party can show “a case in actual controversy.” This phrase refers to the case or controversy required by Article III for standing. The court found that the lower court misstated the standard for finding an “actual controversy,” and declared that a party seeking a declaratory judgment need only show a “substantial risk” of harm. The court described its position as consistent with Supreme Court precedent on the issue of standing, which discloses a “totality of the circumstances” test. The court found that the alleged infringer could show a “substantial risk” of harm based on the patentee’s actions. The patentee had challenged the alleged infringer’s patent on numerous prior occasions, and amended its own application with clear intent that it would cover the alleged infringer’s patent once it issued. The court also found it important that the patentee had never withdrawn its allegation of infringement or offered any assurance not to sue in the future. The tumultuous history of patent litigation between the parties was an additional factor showing risk to the alleged infringer. Ultimately, the court held that the alleged infringer only had to show that the patentee “engaged in a course of conduct that shows a preparedness and a willingness to enforce its patent rights,” and that the alleged infringer had done so in this case.
A copy of the opinion can be found here