There is No Facile, All-Purpose Standard to Police the Line of Case or Controversy

CAT Tech LLC v. Tubemaster, Inc., [2007-1443] (May 28, 2008) [MAYER, Schall, Young] The Federal Circuit affirmed judgment holding none of four configurations of loading devices manufactured by TubeMaster infringed U.S. Patent No. 6,905,660.
BRIEF: The Declaratory Judgment Act can prevent patent owners from “brandishing a Damoclean threat with a sheathed sword.” There is, however, no facile, all-purpose standard to police the line between declaratory judgment actions which satisfy the case or controversy requirement and those that do not. The analysis must be calibrated to the particular facts of each case, with the fundamental inquiry being “‘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.’” Until recently, the Federal Circuit applied a two-prong test for determining the existence of declaratory judgment authority. The first prong examined whether conduct by the patentee created a “reasonable apprehension” of suit, and the second prong focused on the declaratory judgment plaintiff’s conduct, and examined whether there had been “meaningful preparation” to conduct potentially infringing activity. In the wake of MedImmune, several opinions of the Federal Circuit have reshaped the contours of the first prong of declaratory judgment jurisprudence, but it is the second prong that is at issue in this case. The Federal Circuit concluded that although MedImmune articulated a “more lenient legal standard” for the availability of declaratory judgment relief in patent cases, the issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate. The Federal Circuit held that If a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither “immediate” nor “real” and the requirements for justiciability have not been met.
The Federal Circuit said that a party may not obtain a declaratory judgment merely because it would like an advisory opinion on whether it would be liable for patent infringement if it were to initiate some merely contemplated activity. Although a party need not have engaged in the actual manufacture or sale of a potentially infringing product to obtain a declaratory judgment of non-infringement, there must be a showing of “meaningful preparation” for making or using that product. The Federal Circuited noted that in the present case, plaintiff had taken significant, concrete steps to conduct loading activity with configurations 1, 2 and 4; developed two basic loading device designs; developed four loading device configurations, and generated AutoCAD® drawings for each of its four configurations. In fact, the Federal Circuit noted, because each reactor design is different, plaintiff could proceed no further without actually constructing the device. The Federal Circuit noted that configuration 3 had actually be constructed and used, and that all the designs were fixed and “real”. The Federal Circuit concluded that the dispute was “real,” not hypothetical, because it appears likely that, once the cloud of liability for infringement is eliminated, the accused products can be produced without significant design change. Lastly the Federal Circuit noted that accepting jurisdiction was within the district court’ss discretion, because absent a declaratory judgment of non-infringement, TubeMaster will be forced to “bet the farm” by making the “in terrorem choice” of proceeding and risking an infringement action and treble damages.
Regarding the summary judgment of non-infringement, the Federal Circuit found that the plain meaning of the words of the claims was clear, that it was not changed by anything in the specification, and was confirmed by the prosecution history. The Federal Circuit was critical of the patentee’s “semantic antics”, and affirmed the judgment of non-infringement.