In Allied Mineral Products, Inc. v. OSMI, Inc., [2016-2641] (September 13, 2017), the Federal Circuit affirmed the dismissal of Allied’s declaratory judgment action seeking a declaration that U.S. Patent No. 7,503,974 belonging to OSMI, Inc., Stellar Materials, Inc., and Stellar Materials, LLC (collectively “Stellar”) is invalid, and that Stellar committed inequitable conduct, for lack of subject matter jurisdiction.
This dispute centered on a Mexican infringement suit between Stellar and two of Allied’s Mexican distributors. Allied manufactured the accused product in the United States, which are then sold in Mexico by Allied’s Mexican distributors. The district court held that Stellar’s decision to enforce its Mexican patent under Mexican law against separate entities cannot, without further affirmative action by Stellar, create an actual controversy with Allied with regard to its U.S. patent.
The Federal Circuit reasoned that the totality of the circumstances in this case does not rise to the level of a case of actual controversy. Declaratory judgment jurisdiction requires some affirmative act by the patentee, and Stellar has not directed any actions towards Allied, nor has it litigated or threatened litigation in the United States on its U.S. patent.
Allied argued that it has been forced into an unwinnable business position; it can either continue to sell products in the United States knowing it may be the target of an infringement suit, or it can cease selling products it believes it has a right to sell. The Federal Circuit said that the fear of a future infringement suit is insufficient to confer jurisdiction. The Federal Circuit concluded that Allied has failed to establish a case or controversy regarding Stellar’s U.S. patent in the United States under Article III.