Innovative Therapies v. Kinetic Concepts (CAFC 2009-1085) precedential

In dismissing the complaint, the district court observed that the mere existence of an adversely held patent does not suffice to establish adverse legal interests, and that the circumstances cited by ITI did not establish declaratory jurisdiction at the time the complaint was filed. On appeal ITI again argues that a confluence of three factors, taken together, established the existence of a controversy of "sufficient immediacy and reality," the words of MedImmune, to warrant declaratory jurisdiction. These factors are (1) ITI's representations to the FDA, (2) ITI's phone calls to KCI executives, and (3) KCI's patent enforcement history.

ITI had nightmares about its piggyback approval from the FDA of a device similar to KCI's.

ITI had obtained expedited pre-marketing approval of the Svedman device based on its representations to the FDA that the Svedman device has the "same technological characteristics" as KCI's previously approved wound therapy device and other FDAapproved devices that KCI has charged with infringement... ITI thus argued that KCI had sufficient knowledge of ITI's Svedman device, even before its introduction to the market, to suggest that KCI might have been preparing to sue ITI for infringement.

The Courts didn't make much of that.

Although "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), representations to a third person about "technological characteristics" do not establish a justiciable controversy with the patentee. Although the parties disputed the extent of knowledge that KCI had about ITI's filings with the FDA, we agree with the district court that even if KCI knew of ITI's representations to the FDA, this knowledge of itself did not create a controversy within the contemplation of the Declaratory Judgment Act.

An ITI employee who used to work at KCI called former colleagues at KCI. He described ITI's new device.

ITI argued that these telephone conversations established that a controversy existed with respect to patent infringement by the devices that ITI intended to market. KCI argued that these phone calls, initiated by ITI in the guise of friendly conversations, did not constitute a threat of legal action by KCI as to products they had not seen and had not reviewed for infringement.

The district court described these phone calls as a "sub rosa" effort to create jurisdiction "by initiating telephone conversations to employees of the patentee who were not in decision-making positions and who were not informed of the real purpose behind the conversations." The court found that these phone calls, made to former colleagues who had not seen and had not evaluated ITI's device, produced impromptu responses, not an assertion of patent rights.

The district court found that these informal conversations did not constitute a threat of suit for patent infringement against a device that had not been seen and evaluated for infringement of any patent. We agree that the indirection reflected in these 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).

"Sub rosa" is Latin for "little weasel."

Finally, ITI got the heebie jeebies because KCI was known for enforcing its intellectual property rights.

The district court found that KCI's history of litigation against others, and general propensity to enforce its legal rights, did not establish an actual controversy between KCI and ITI over a device that KCI had not seen and evaluated. Although MedImmune held that a reasonable apprehension of suit for infringement is not always required to establish declaratory jurisdiction, the particular circumstances must be considered. In MedImmune there was no apprehension of suit for infringement because the challenger was already licensed under the patent and continued to pay royalties, even as the challenger sought to adjudicate the obligation to pay royalties. The Court held that the licensee did not have to terminate or breach the license in order to challenge the licensor's position and that the licensee did not have to risk loss of the license in order to obtain judicial review of its obligations under the license. However, MedImmune did not hold that a patent can always be challenged whenever it appears to pose a risk of infringement. See SanDisk, 480 F.3d at 1380-81 ("In the context of conduct prior to the existence of a license, declaratory judgment jurisdiction generally will not arise merely on the basis that a party learns of the existence of a patent owned by another or even perceives such a patent to pose a risk of infringement, without some affirmative act by the patentee.").

Thus while prior litigation is a circumstance to be considered in assessing the totality of circumstances, the fact that KCI had filed infringement suits against other parties for other products does not, in the absence of any act directed toward ITI, 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). The holding of Micron Tech., Inc. v. MOSAID Techs., Inc., 518 F.3d 897, 901 (Fed. Cir. 2008), is not otherwise, for in Micron the patentee had not only litigated the patents against others, but also had sent several threatening letters to the declaratory plaintiff. The specific facts of each case must be considered, in deciding whether a declaratory action is warranted.

ITI pointed to events after it had filed its DJ.

The district court held that subsequent events could not change the fact that no actual controversy existed at the time the original complaint was filed. The court observed that the existence of justiciable controversy is determined as of the time of the filing of the complaint, citing GAF Building Materials Corp. v. Elk Corp. of Dallas, 90 F.3d 479, 483 (Fed. Cir. 1996) ("[L]ater events may not create jurisdiction where none existed at the time of filing."). See Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1344 (Fed. Cir. 2007) ("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.").

Federal Rule of Civil Procedure 15(c) does not treat events that post-date the original pleading as if they had occurred at an earlier time.

The CAFC agreed.

ITI had other quibbles, including district court abuse of discretion, that were waved away.

Affirmed.