The CAFC let the dismissal stand in a 2-1 decision. Judges Whyte and Rader formed the majority.

A party seeking to base jurisdiction on the Declaratory Judgment Act bears the burden of proving that the facts alleged, “‘under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’” MedImmune, 127 S. Ct. at 771 (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)).

The burden is on the party claiming declaratory judgment jurisdiction to establish that such jurisdiction existed at the time the claim for declaratory relief was filed and that it has continued since. See Steffel v. Thompson, 415 U.S. 452, 459 n.10 (1974).

“The rule in federal cases is that an actual controversy must be extant at all stages of review, not merely at the time the complaint [was] filed.” Steffel, 415 U.S. at 459 n.10.

The fact that Nucleonics may choose to provoke a justiciable controversy "in a few years does not provide the immediacy and reality required for a declaratory judgment."

Judge DYK dissented, thinking that Nucleonics ought to have its shot at silencing '099 once and for all; the public interest vested in flushing invalid or unenforceable patents.

If this declaratory judgment action were filed today, I would agree with the majority that the required case or controversy had not been established. I also agree that there must be a case or controversy at all stages of the litigation. See Steffel v. Thompson, 415 U.S. 452, 459 n.10 (1974). However, in my view, a different test for determining whether there is a case or controversy applies when the allegation of infringement is withdrawn during the course of litigation. Supreme Court precedent requires that, if a patentee files an infringement lawsuit and the particular claim of infringement is mooted, a counterclaim for invalidity should not be dismissed unless the patentee demonstrates that there is no possibility of a future controversy with respect to invalidity. See Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 98 (1993). In my view, Benitec made no such showing.

There is a strong public interest in permitting accused infringers to challenge invalid or unenforceable patents.

In my view, the majority’s approach erroneously applies the same standard for judging continuing declaratory jurisdiction as for judging original declaratory jurisdiction.

The Supreme Court has clearly established that once declaratory jurisdiction has been established, the burden shifts to the party seeking to divest the court of jurisdiction to prove that there is no longer a current case or controversy... The Court explained that while the initial burden of establishing declaratory judgment jurisdiction rests on the party seeking a declaratory judgment, “once that burden has been met courts are entitled to presume, absent further information, that jurisdiction continues.” Id. at 98.

“[T]here is an important public interest in protecting the legal system against manipulation by parties, especially those prone to involvement in repeat litigation, who might contrive to moot cases that otherwise would be likely to produce unfavorable precedents.” Hart and Wechsler, The Federal Courts and the Federal System 204 (5th ed. 2003); see also Phillips Plastics Corp. v. Kato Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1053 (Fed. Cir. 1995) (“[O]ne who may become liable for infringement should not be subject to manipulation by a patentee who uses careful phrases in order to avoid explicit threats, thus denying recourse to the courts while damages accrue.”).

In my view, the patentee here has not come close to meeting its burden to show that there will be no future controversy. Even if we were to assume that there is no longer any possible controversy concerning Nucleonics’s research on human drugs, there is a possibility that Nucleonics may in the future make human drugs that Benitec would challenge as infringing. Nucleonics has also stated that it intends to pursue animal research. While I agree with the majority that the future controversy would not satisfy the sufficient immediacy and reality test for the filing of a new suit today, Benitec has made no effort to demonstrate that the controversy between the parties will not recur.

The effect of today’s decision is to limit the availability of declaratory jurisdiction to challenge invalid and unenforceable patents by allowing patentees to moot such controversies by dismissing the original infringement action and covenanting not to bring suit on existing products, without any showing that the controversy will not recur in the future.