CPLRG™ 0041 - Innovative Therapies, Inc. v. Kinetic Concepts, Inc. - Apr. 1, 2010

Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 599 F.3d 1377, 2010 U.S. App. LEXIS 6727 (Fed. Cir. 2010) (NEWMAN, Michel & Prost) InnovativeTherapies04012010

MAJOR ISSUES: declaratory judgment jurisdiction; justiciable controversy; subsequent infringement suit by patent owner in another district 

COMMENT.  An accused infringer may wish to file a declaratory judgment suit against a patent owner in order to establish venue in a preferred venue.  Here, the accused infringer sued in Delaware; subsequently the patent owner sued in Texas and North Carolina. The accused infringer can sue only if there is a justiciable controversy  Standards for declaratory judgment actions in patent litigation entered a new era in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), in which the Supreme Court rejected the prior Federal Circuit requirement that there be an imminent threat of an enforcement suit by the patent owner.  But the Federal Circuit continued to require that the patent owner have taken some affirmative action toward enforcing a patent before a potential infringer may sue, as this case illustrates.

1. NEGATIVE PRESSURE WOUND THERAPY.  Five patents concerned negative pressure wound therapy.  U.S. Pat. No. 4,969,880 USPatNo4969880; U.S. Pat. No. 5,645,081 USPatNo5645081; U.S. Pat. No. 5,636,643 USPatNo5636643; U.S. Pat. No. 7,198,046 USPatNo7198046; and U.S. Pat. No. 7,216,651USPatNo7216651 .

2. A company, as declaratory plaintiff, filed suit in the Delaware district court against the patents’ owner, seeking in its original complaint a declaratory judgment that a product, the “Svedman Wound Treatment System,” for which the declaratory plaintiff had obtained FDA approval but had not yet sold, did not infringe the patents. Subsequently, after the patent owner had inspected the product and filed suit in Texas and North Carolina, the declaratory plaintiff filed an amended complaint.  The district court treated the amended complaint as a “supplemental complaint,” because it was based on post-filing events.  The district court found no justiciable controversy as of the original filing date.  It exercised its discretion to dismiss the supplemental complaint in view of the earlier filed Texas and North Carolina suits.

3. The Federal Circuit held that the district court did not err in its finding or abuse its discretion in its dismissal.

4. MEDIMMUNE “LIBERALIZED CRITERIA”; THREE FACTORS ON CONTROVERSY AS OF ORIGINAL COMPLAINT FILING DATE; ACTUAL CONTROVERSY NOT ESTABLISHED.  The declaratory plaintiff relied on three factors as showing a sufficient controversy under the “liberalized criteria” of MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).  The district court did not err in finding that the factors did not show an actual controversy as of the original complaint filing date
     a.  FIRST FACTOR:  REPRESENTATIONS TO FDA.  The first factor was the declaratory plaintiff’s representations to the Food and Drug Administration (FDA) about its Svedman device.
          i. The declaratory plaintiff obtained FDA approval of the device by representing that it had the “same technological characteristics” as the patent owner’s approved device and other FDA-approved devices that the patent owner had charged with infringement.
         ii. The declaratory plaintiff alleged that the patent was aware of its FDA filings.
        iii. The Federal Circuit agreed that “`meaningful preparation’ to take infringing action may suffice for declaratory jurisdiction in some circumstances, see Cat Tech LLC v. Tubemaster, Inc., 528 F.3d 871, 881 (Fed. Cir. 2008) ….  However, it concluded that “representations to a third person about `technological characteristics’ do not establish a justiciable controversy with the patentee.”
     b. SECOND FACTOR:  PHONE CALLS TO PATENT OWNER’S EMPLOYEES; FORMER COLLEAGUES.  The second factor were phone calls made by the declaratory plaintiff’s employees to their former colleagues at the patent owner.
           i. In the calls, the declaratory plaintiff’s employees described the Svedman product and asked for a prediction of the patent owner’s response.
          ii. The patent owner’s employee’s responded that the patent owner would aggressively protect its patents and that a proposed “peaceful coexistence” was not possible.
         iii. IMPROMPTU RESPONSES; DEVICE NOT EVALUATED; NO ASSERTION OF PATENT RIGHTS.  The district court dismissed the calls as “sub rosa” efforts to create jurisdiction.  It found that the “impromptu” responses of former colleagues who had not evaluated the device in question were not assertions of patent rights.
         iv. INDIRECTION IN INFORMAL CONVERSATIONS; CONTROVERSY OF “IMMEDIACY AND REALITY” NOT CREATED; SANDISK (2007). The Federal Circuit concluded that “the indirection reflected in these [informal] conversations did not produce a controversy of such `immediacy and reality’ as to require the district court to accept declaratory jurisdiction.  See SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1378 (Fed. Cir. 2007).”
     c. THIRD FACTOR:  PATENT OWNER’S HISTORY OF ENFORCING PATENTS.  The third factor relied upon by the declaratory plaintiff to show a justiciable controversy was the patent owner’s history of enforcing its patents, including those at issue in this case.
           i. NO EVALUATION OF DEVICE; NO ADMISSION OF INFRINGEMENT BY SUBMISSION TO FDA.  In response, the patent owner agreed that it enforced its patents against allegedly infringing devices but noted that, at the time of the original complaint, it had not seen or evaluated the declaratory plaintiff’s device.  It noted that the declaratory plaintiff’s assertion of similarity to the FDA was not a statement of infringement.  “See CardioVention, Inc. v. Medtronic, Inc., 483 F. Supp. 2d 830, 840 (D. Minn. 2007) (`Courts have repeatedly refused to allow FDA 510(k) notification of substantial equivalence as admission of infringement in patent cases.’).”
            ii. PRIOR LITIGATION: A FACTOR; SUIT AGAINST OTHER PARTIES FOR OTHER PRODUCTS: NOT SUFFICIENT ABSENT ACT DIRECTED TOWARD THE DECLARATORY PLAINTIFF; PRASCO (2008).  The Federal Circuit agreed that “prior litigation is a circumstance to be considered in assessing the totality of circumstances ….”  However, it stressed that a patent owner’s prior suits against other parties for other products did not suffice, even aftaer MedImmune, “in the absence of any act directed toward [the declaratory plaintiff], meet the minimum standard discussed in MedImmune.  See Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008) (noting that `prior litigious conduct is one circumstance to be considered in assessing whether the totality of circumstances creates an actual controversy,’ but concluding that no controversy was shown).”
           iii. MICRO TECH. (2008) DISTINGUISHED.  The Federal Circuit distinguished Micron Tech., Inc. v. MOSAID Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008):  “in Micron the patentee had not only litigated the patents against others, but also had sent several threatening letters to the declaratory plaintiff.”

5. “SUBSEQUENT EVENTS.”  Events after the filing of the original complaint, including the filing of suits by the patent owner in Texas and North Carolina, did not establish a justiciable controversy on the original filing date.
     a. JURISDICTION DETERMINED AS OF TIME OF FILING OF COMPLAINT.  The district court recognized that “the existence of justiciable controversy is determined as of the time of the filing of the complaint.”  See GAF Building Materials Corp. v. Elk Corp. of Dallas, 90 F.3d 479, 483 (Fed. Cir. 1996); Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed. Cir. 2007).
     b. SUPPLEMENTAL COMPLAINT; NO RELATION BACK; RULE 15(c).  The district court properly treated the declaratory plaintiff’s “Amended” complaint as a supplemental complaint that did not relate back to the original filing. Federal Rules of Civil Procedure, Rule 15(c).
     c. The patent owner’s acts of filing suit established an actual controversy but only as of the late date of the filing of the amended (supplemental) complaint.
     d. PRASCO: FOCUS ON CONTROVERSY AS OF AMENDED COMPLAINT DATE, BUT CARRYING DATE BACK.  The declaratory plaintiff cited Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed. Cir. 2008), as holding that a justiciable controversy need exist only at the time of an amended complaint.  Prasco “did not thereby change the rule that unless there was jurisdiction at the filing of the original complaint, jurisdiction could not be carried back to the date of the original pleading.”
     e. PATENT OWNER’S SUITS FILED BEFORE SUPPLEMENTAL (AMENDED) COMPLAINT; PRESUMPTIVE PRIORITY.  The patent owner noted that its suits in North Carolina and Texas were filed before the supplemental complaint and, therefore, have presumptive priority.

6. DISCRETIONARY DISMISSAL; WILTON (1995).  A district court has discretion whether to exercise declaratory judgment jurisdiction, see Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995).  The district court did not abuse its discretion in dismissing this action.
      a. PHONE CALLS AS A PLOY; OBJECTIVES OF DECLARATORY JUDGMENT ACT.  The district found that the declaratory plaintiff’s “informal phone calls to past colleagues” were “a ploy to attempt to generate jurisdiction.”
     b. That “strategy did not comport with the purposes of the Declaratory Judgment Act.”

7. “CONVENIENCE FACTORS”; PLAINTIFF’S CHOICE OF DELAWARE NOT MORE CONVENIENT. The declaratory plaintiff argued that the district court failed to consider forum choice “convenience factors” as required by Micron Tech., Inc. v. MOSAID Techs., Inc., 518 F.3d 897 (Fed. Cir. 2008).  However, here, the convenience factors did not favor the declaratory plaintiff’s choice of Delaware as a forum.
     a. PLAINTIFF: INCORPORATED IN DELAWARE; BUSINESS IN MARYLAND.  The plaintiff was incorporated in Delaware but had its principal business in Maryland.
     b. DEFENDANT PATENT OWNER: TEXAS.  The defendant patent owner and two of its codefendants had their principal businesses in Texas, situs of the Texas suit.
     c. NORTH CAROLINA; INVENTORS; ACT OF INFRINGEMENT.  The North Carolina suit was in the home state of a University that obtained the patents and four of the five inventors.  It was also the situs of the only alleged act of infringement.

CROSS REFERENCES.  On declaratory judgment jurisdiction after the Supreme Court’s MedImmune decision, see Chisum Patent Law Digest 8126.40; Chisum on Patents 21.02[1][d][vi].

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