Under Recently Relaxed Standard, Any Dispute About the Right to Act Without a License Provides Declaratory Judgment Jurisdiction

Adenta GMBH v. Orthoarm, Inc., [2006-1571, -1598] (September 19, 2007) [LOURIE, Michel, Robertson] The Federal Circuit affirmed the denial of a motion to dismiss for lack of subject matter jurisdition, and denial of JMOL that claims of U.S. Patent No. 6,257,883 are not invalid, and affirmed the district court's finding that the case was not exceptional.
SIGNIFICANCE: Under the relaxed Medimmune standard, any dispute over whether a party can perform certain actions without a license creates a justiciable controversy under the Declaratory Judgment Act.
BRIEF: The Federal Circuit noted that in Medimmune, the Supreme Court stated that “[b]asically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” The Federal Circuit said that where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without a license under the patent, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights. The Federal Circuit found sufficient case and controversy under the recently relaxed standard, and affirmed the denial of the motion to dismiss.
Regarding the denial of JMOL on the finding of invalidity, Orthoarm complained about the lack of corporation for the anticipatory public use. Assessing the sufficiency of evidence which corroborates a witness’s testimony concerning invalidating activities has been analyzed under the "rule of reason" test. A "rule of reason" analysis involves an assessment of the totality of the circumstances including an evaluation of all pertinent evidence. Considering all the evidence presented, the Federal Circuit agreed with the district court that a reasonable fact finder could have concluded that clear and convincing evidence showed that a public use or sale had occurred, and affirmed the denial of JMOL.
Regarding defendant's cross appeal, that the the patentee and acted inequitably, and this the case was exceptional, the Federal Circuit noted the jury had found that no material information had been withheld, and thus did not need to even consider intent. LOF: The determination whether a case is exceptional is a question of fact, reviewed for clear error. The Federal Circuit found no clear error.