After Medmmune Transfer Considerations are Relevant to Discretionary Jurisdiction Over Declaratory Judgment Actions

Micron Technology Inc. v. MOSAID Technologies, Inc., [2007-1080 ] (February 29, 2008) [RADER, Newman, Dyk] The Federal Circuit reversed and remanded the district court's dismissal of a declaratory judgment action for lack of subject matter jurisdiction.
BRIEF: Micron filed a declaratory action seeking a declaration of noninfringement of fourteen MOSAID patents. The next day, MOSAID filed an infringement action against Micron asserting seven patents. MOSAID filed a motion to dismiss for lack of subject matter jurisdiction under Article III of the United States Constitution or the Declaratory Judgment Act, 28 U.S.C. § 2201. The district court granted that motion, finding no jurisdiction under the reasonable apprehension of suit test. The district court also held that even if subject matter jurisdiction were established, it would exercise its discretion and still decline to hear the case.
LOF: A district court's grant of a motion to dismiss for lack of subject matter jurisdiction presents a question of law that this court reviews without deference. In dismissing, the district court relied on the first factor of the pre-MedImmune declaratory judgment test. The district court noted MOSAID's pattern of serial litigation, but ultimately decided that "MOSAID's conduct was not sufficient to give rise to a reasonable apprehension of litigation against Micron."
The Supreme Court set forth the correct standard for jurisdiction over a declaratory judgment action:

[T]hat the dispute be definite and concrete, touching the legal relations having adverse legal interests and that it be real and substantial and admit of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.

In place of the reasonable threat of imminent suit test, the Supreme Court required a showing of "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 found that the record supports a judgment that the dispute between Micron and MOSAID is a case and controversy within the purview of declaratory judgment jurisdiction. In addition to threatening letters, and MOSAID's past behavior, MOSAID's recent public statements and annual reports also confirm its intent to continue an aggressive litigation strategy. The Federal Circuit said that The record evidence at the time of the filing in the California district court strongly suggested that MOSAID would sue Micron soon, and in fact that suit, filed only one day later, was actually pending in Texas at the time that the California district court made its ruling. The Federal Circuit concluded that the parties in this dispute are really just contesting the location and right to choose the forum for their inevitable suit.
A district court, when deciding whether to exercise its discretion, should decide whether hearing the case would serve the objectives for which the Declaratory Judgment Act was created. When these objectives are served, dismissal is rarely proper. Becuase the district court applied the wrong standard, and the Federal Circuit perceived that the exercise of jurisdiction would serve the objectives of the Declaratory Judgment Act. The Federal Circuit said that the relaxation of declaratory judgment standards is accompanied by unique challenges, including forum-seeking races to the courthouse between accused infringers and patent holders. Thus, in cases such as this with competing forum interests, the trial court needs to consider the "convenience factors" found in a transfer analysis under 28 U.S.C. § 1404(a).
The Federal Circuit said that the district court judge faced with reaching a jurisdictional decision about a declaratory judgment action with an impending infringement action either filed or on the near horizon should not reach a decision based on any categorical rules (e.g. the first-filed suit rule). The court weighing jurisdiction must consider the real underlying dispute: the convenience and suitability of competing forums. Where as here the discretionary determination is presented after the filing of an infringement action, the jurisdiction question is basically the same as a transfer action under § 1404(a). The convenience and availability of witnesses, absence of jurisdiction over all necessary or desirable parties, possibility of consolidation with related litigation, or considerations relating to the interest of justice must be evaluated to ensure the case receives attention in the most appropriate forum. The Federal Circuit noted that robust consideration of these factors will reduce the incentives for a race to the courthouse because both parties will realize that the case will be heard or transferred to the most convenient or suitable forum. The Federal Circuit went on to indicate that the Northern District of California was the more appropriate forum for the dispute between Micron and MOSAID. The Federal Circuit said that the trial court applied a standard for declaratory judgment jurisdiction that the Supreme Court has altered, resulting in an error of law. Moreover, the trial court needed to evaluate the "convenience factors" before effectively transferring the case to another jurisdiction. Applying the relevant convenience factors, it would be an abuse of discretion to transfer the action. Accordingly, the Federal Circuit reversed and remanded back to the district court.