623 F.2d 1207 (7th Cir. 1980), 79-2358, International Harvester Co. v. Deere & Co.

Docket Nº:79-2358.
Citation:623 F.2d 1207
Party Name:206 U.S.P.Q. 772 INTERNATIONAL HARVESTER COMPANY, Plaintiff-Appellee, v. DEERE & COMPANY, Defendant-Appellant.
Case Date:June 12, 1980
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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623 F.2d 1207 (7th Cir. 1980)

206 U.S.P.Q. 772



DEERE & COMPANY, Defendant-Appellant.

No. 79-2358.

United States Court of Appeals, Seventh Circuit

June 12, 1980

Submitted April 1, 1980.

Rehearing and Rehearing In Banc Denied Sept. 10, 1980.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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R. L. Hollister, H. V. Harsha, Deere & Co., Virgil Bozeman, Moline, Ill., Robert H. Fraser, Los Angeles, Cal., Theodore R. Scott, Chicago, Ill., for defendant-appellant.

Howard W. Clement, Chicago, Ill., for plaintiff-appellee.

Before CUMMINGS, SPRECHER and CUDAHY, Circuit Judges.

SPRECHER, Circuit Judge.

Plaintiff International Harvester Company (IH) filed suit in the court below seeking a declaratory judgment that its CX-41 corn head does not infringe patent 3,589,110 held by defendant Deere & Company (Deere). The district court granted summary judgment in favor of IH on this claim. Deere appeals from this judgment, urging reversal on two grounds. First, Deere contends that the district court lacked subject matter jurisdiction because this action did not present an actual case or controversy. Second, Deere asserts that even if jurisdiction existed, reversal is warranted because genuine issues of material fact precluded entry of summary judgment. We conclude that the district court erred in denying Deere's motion to dismiss for lack of subject matter jurisdiction and we therefore vacate the district court's order and remand with instructions to dismiss IH's suit without prejudice.


The Declaratory Judgment Act, 28 U.S.C. § 2201, 1 provides that federal courts may issue declaratory judgments only in cases of "actual controversy." This requirement is "a jurisdictional prerequisite of constitutional dimension." Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979) (citation omitted). The complaint in a declaratory judgment action must allege facts sufficient to establish such an actual controversy. Where the defendant raises factual questions concerning jurisdiction, the court need not accept the allegations of the complaint as true; the court may look behind the complaint and view the evidence to determine whether a controversy in fact exists. Id. The plaintiff has the burden of supporting the jurisdictional allegations of the complaint by competent proof. Id.; Super Products Corp. v. D P Way Corp., 546 F.2d 748, 752 (7th Cir. 1976). In deciding whether the plaintiff has carried this burden, the court must look to the state of affairs as of the filing of the complaint; a justiciable controversy must have existed at that time. Super Products, supra, 546 F.2d at 752; American Needle & Novelty Co. v. Schuessler Knitting Mills, 379 F.2d 376, 379 (7th Cir. 1967).

In declaratory judgment actions concerning patents, there are two prerequisites to establishment of an actual controversy. First, the defendant must have engaged in conduct giving rise to a reasonable apprehension on plaintiff's part that it will face an infringement suit or the threat of one if it commences or continues the activity in question. See Grafon Corp., supra, 602 F.2d at 783-84; Super Products, supra, 546 F.2d at 753. Second, the plaintiff must have actually produced the accused article or have engaged in preparations for production such that

but for a finding that the product infringes or for extraordinary and unforeseen contingencies, the plaintiff would and could begin production immediately.

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Sweetheart Plastics, Inc. v. Illinois Tool Works, Inc., 439 F.2d 871, 875 (1st Cir. 1971) (footnote omitted). See also Wembley, Inc. v. Superba Cravats, Inc., 315 F.2d 87, 89-90 (2d Cir. 1963). We will examine each of these jurisdictional prerequisites in turn.


IH had the burden below to adduce facts showing that Deere's statements or conduct created a reasonable apprehension on IH's part that it would face an infringement suit or the threat of one if it continued its activities with respect to the CX-41 corn head. As IH properly notes, resolution of this issue is governed by the liberal approach used in Super Products, supra, and Grafon Corp., supra. Those decisions establish that an explicit accusation of infringement need not be shown. Grafon Corp., supra, 602 F.2d at 784; Super Products, supra, 546 F.2d at 753. A plaintiff's reasonable apprehension may be the product of an implied charge of infringement or of a course of conduct which would lead a reasonable man to fear that he or his customers face suit or the threat of suit. Grafon Corp., supra, 602 F.2d at 784; Super Products, supra, 546 F.2d at 753. This reasonable apprehension, however, must be the product of defendant's statements or conduct; a reasonable apprehension alone, if not inspired by defendant's actions, does not give rise to an actual controversy. Super Products, supra, 546 F.2d at 753; Premo Pharmaceutical Laboratories, Inc. v. Pfizer Pharmaceuticals, Inc., 465 F.Supp. 1281, 1282 (S.D.N.Y.1979).

IH's complaint did not allege that Deere explicitly charged, prior to institution of this suit, that the CX-41 infringed its patent. As noted above, such an explicit charge is not required. However, while

it is not a necessary condition to a declaratory action by an alleged infringer that an actual accusation is made, the lack of such an accusation can be and is relevant in determining, along with all other facts, the reasonableness of the alleged infringer's apprehension of infringement litigation.

Pittway Corp. v. BRK Shareholders' Committee, 444 F.Supp. 1210, 1213 (N.D.Ill.) (emphasis in original), aff'd mem., 588 F.2d 835 (7th Cir. 1978). It is undisputed that Deere never contacted any of IH's customers or dealers with respect to the CX-41 and IH does not contend its ability to sell the CX-41 has been adversely affected by any actions of Deere. Plaintiff's Responses to Defendant's First Request for Admissions, Record, Document No. 17, at 5; Plaintiff's Answers and Objections to Interrogatory Nos. 1-72, Record, Document No. 21, at 16, 21, 22-23. It is apparent, therefore, that IH relies upon an implied charge of infringement or upon other statements or conduct of Deere to support its claimed "reasonable apprehension." 2

IH points to several facts to establish its reasonable apprehension. First, it emphasizes the prior suit between it and Deere involving this patent and the district court's order in that suit enjoining IH from further infringement. 3 Second, on April 3, 1979, IH submitted a partial drawing 4 of the CX-41

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to Deere and requested Deere's confirmation that it did not infringe Deere's patent; Deere was informed that if it refused to take a position or concluded that the CX-41 did infringe, IH would seek judicial relief. Defendant's Appendix at 61-62. Deere responded by letter on April 19, 1979:

I have reviewed your letter of 3 April 1979 concerning your proposed replacement for the IH 800 corn head with our management.

While a discussion of possible alternative designs would undoubtedly be appropriate in the context of an overall settlement of the dispute between us, we are not prepared to deal with this issue separately.

Defendant's Appendix at 63. Finally, IH alleges that on May 8, 1979, an officer of Deere advised IH that Deere would permit production of the CX-41 "for the payment of money . . . ." Affidavit of F. David AuBuchon, P 4. See Complaint, P 11. Deere denies this allegation; the other facts are undisputed. It is also undisputed that Deere in no way requested or solicited the CX-41 drawing.

The pending litigation between Deere and IH is of some relevance. It indicates that under certain circumstances, Deere will pursue patent infringement litigation to defend against what it perceives as infringement of its patents. It does not indicate, however, that Deere would pursue a patent suit with respect to the CX-41 or that Deere had formed any opinion as to whether the CX-41 infringed its patent. The CX-41 was in no way involved in the prior suit and thus that suit cannot be viewed as anything more than a general indication that Deere considers litigation a viable alternative once it has determined that a competitor is producing a product which infringes the patent at issue here. See TRW v. Ellipse Corp., 495 F.2d 314, 318-20 (7th Cir. 1974); Walker Process Equipment, Inc. v. FMC Corp., 356 F.2d 449, 451 (7th Cir.), cert. denied, 385 U.S. 824, 87 S.Ct. 56, 17 L.Ed.2d 61 (1966).

IH relies heavily on Broadview Chemical Corp. v. Loctite Corp., 417 F.2d 998 (2d Cir. 1969), cert. denied, 397 U.S. 1064, 90 S.Ct. 1502, 25 L.Ed.2d 686 (1970), as support for its emphasis on the prior suit. In the abstract, Broadview does lend some support to IH's position; however, the facts in Broadview readily distinguish it from the instant case. In Broadview, a patent suit between the parties had been resolved by consent decree. Broadview then developed a new formula. Loctite considered the new formula an infringement and successfully sued Broadview for violation of the consent decree, obtaining an injunction against further infringement applicable to Broadview and its customers having knowledge of the injunction. Id. at 1001. Loctite then sent letters to Broadview's customers informing them of the decree and injunction. The customers were also informed that Broadview was incapable of developing a noninfringing formula and that Loctite would sue any infringers. After developing still another formula, Broadview sought a declaratory judgment. The only similarity between Broadview and the instant action is the prior patent suit between the parties. Even that similarity is limited because the prior suit in Broadview had been finally resolved and an injunction had...

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