International Medical Prosthetics Research Associates, Inc. v. Gore Enterprise Holdings, Inc.
| Decision Date | 01 April 1986 |
| Docket Number | No. 85-2744,85-2744 |
| Citation | 787 F.2d 572 |
| Parties | INTERNATIONAL MEDICAL PROSTHETICS RESEARCH ASSOCIATES, INC., d/b/a IMPRA, Inc., Appellant, v. GORE ENTERPRISE HOLDINGS, INC., and W.L. Gore and Associates, Inc., Appellees. Appeal |
| Court | U.S. Court of Appeals — Federal Circuit |
Gerald D.W. North, McCabe, Polese & Pietzsch, P.A., Phoenix, Ariz. argued, for appellant. With him on the brief, were James F. Polese, McCabe, Polese & Pietzsch, P.A., Phoenix, Ariz., Dale M. Heist, Woodcock, Washburn, Kurtz, Mackiewicz & Norris, Philadelphia, Pa., and Thomas S. Howard, Chicago, Ill.
David H. Pfeffer, Morgan, Finnegan, Pine, Foley & Lee, New York City, argued, for appellee. With him on the brief, were Arnold I. Rady, Janet Dore and Bartholomew Verderame, Morgan, Finnegan, Pine, Foley & Lee, New York City, and John S. Campbell, W.L. Gore & Associates, Inc., Newark, Del.
Before MARKEY, Chief Judge, NIES and NEWMAN, Circuit Judges.
International Medical Prosthetics Research Associates, Inc. (IMPRA) appeals from a judgment of the United States District Court for the District of Arizona dismissing IMPRA's complaint as not within its subject matter jurisdiction. The judgment was entered in response to a motion filed under Rule 12(b) by Gore Enterprise Holdings, Inc. and W.L. Gore Associates, Inc. (Gore), challenging IMPRA's complaint for declaratory judgment of invalidity of Gore-owned Patent No. 3,953,566 ('566 patent) for failure of IMPRA to establish existence of an actual controversy. We vacate and remand.
This appeal represents one of many sideline skirmishes between the parties to an eleven-year corporate confrontation over the use of a process for producing porous articles of polytetrafluoroethylene (PTFE) and the marketing of products produced of PTFE. 1 In April 1984, Gore sued IMPRA for infringement of Gore's U.S. Patent No. 4,187,390 ('390 patent) directed to a product formed of PTFE.
In February 1985, IMPRA filed a complaint seeking a declaratory judgment that Gore's pre-trial activities produced 782 entries in the trial court's docket.
Asserting that it has not charged IMPRA with infringement of its '566 patent, Gore moved under Rule 12(b) for dismissal of IMPRA's declaratory judgment complaint, asserting inter alia the absence of an actual controversy and thus a lack of subject matter jurisdiction. 2 The district court granted the motion and IMPRA appealed.
Whether the district court erred in granting the motion for dismissal.
The present appeal presents a scenario that, it can be fervently hoped, will occur less frequently in future. Though the district court entered no findings or conclusions on a large number of allegations and assertions, the parties have elected to burden this court with arguments thereon, in a false and improper expectation that we will find the facts necessary to support their respective positions. Each charges the other with impropriety respecting the record and the appendices.
The case is unusual on its facts. The district court had cited to and apparently relied on Jervis B. Webb Co. v. Southern Systems, Inc., 742 F.2d 1388, 222 USPQ 943 (Fed.Cir.1984). Like the more "normal" case, Jervis B. Webb Co. involved one action, a patentee's suit for infringement of only six claims, and the defendant's counterclaim for a declaration that all twelve claims of the patent were invalid. In the present case two patents, the '390 patent claiming a product and the '566 patent claiming a process for making the product, issued as a result of a single patent application. The patentee, Gore, sued IMPRA on the former but not on the latter, and IMPRA says it seeks to settle the entire controversy by obtaining a declaration that the '566 patent is invalid, fearing a Pyrric victory if it wins the suit on the '390 patent but must then face a lawsuit on the '566 patent. 3
On July 8, 1985, in granting Gore's motion to dismiss, the district court said:
Well, I'm going to grant the motion to dismiss on the basis of lack of subject matter jurisdiction. I think the other bases are good, really, in proper [sic] service, venue, indispensable party, but those can really be cured by the the [sic] counterclaim, but the basis is the lack of subject matter jurisdiction.
On July 9, 1985, following a hearing on a different motion in the consolidated case, counsel engaged in this colloquy with the court about the July 8 dismissal:
Mr. North: [IMPRA's counsel] So the holding was that we didn't allege that we made an infringing product, and my argument to you was that all we were required to do was say we made a product that is accused. And you interpreted the Webb case to mean we must actually say we're infringing?
The Court: Yes. That's my interpretation.
Mr. North: Well, Your Honor--we must admit that we're infringing in order to seek declaratory relief under [the] patent laws?
The Court: That's my understanding of it.
Mr. Pfeffer: [Gore's counsel] Well, Your Honor, I understand it there was a particular requirement of the claim, and their assertions keep on being that they're not following that particular requirement of ten percent per second. That's their position.
Mr. North: That's correct.
Mr. Pfeffer [erroneously designated as Mr. North in the hearing transcript]: And according to the Webb case if somebody takes a position that they're not following a material portion of a claim then they're not entitled to declaratory judgment.
The Court: That's the way I ruled. 4
The judgment granting the motion merely says, as is appropriate in a judgment, "that plaintiff take nothing and the action is dismissed." The district court entered no findings or conclusions and filed no memorandum or opinion. We have before us, therefore, as the sole basis for the judgment, the statements of the district court quoted above. 5
There is, of course, no "rule" that parties seeking a declaratory judgment of patent invalidity must show an actual controversy by admitting "infringement." Such an admission can have legal consequences beyond those that might result from an admission that one is making a product or practicing a process that is accused or that might at trial be found an infringement. Declaratory judgment plaintiffs who have been accused of infringement or threatened with suit are at full liberty to deny infringement and often do. They are at liberty, also, to admit infringement while asserting that the patent is invalid and that no liability for the infringement can therefore exist. Indeed, when the latter is the truth, admission of infringement is to be encouraged as a means of limiting the issues to be tried. Thus, whether infringement is admitted is not alone determinative. It is difficult to conceive of a justiciable controversy when neither party says there is any possibility of infringement, yet no court has held that a declaratory judgment plaintiff must always admit infringement.
What counts is whether an actual controversy exists. The long established rule is that a party seeking a declaration of patent invalidity must, on the "totality of the circumstances," establish that the statutory requirement of 28 U.S.C. Sec. 2201 () is satisfied at the time the complaint is filed. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 272, 61 S.Ct. 510, 511-12, 85 L.Ed. 826 (1941); C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 880, 219 USPQ 197, 203 (Fed.Cir.1983).
In Jervis B. Webb Co., nothing of record indicated the presence of a justiciable controversy. There had been a trial and the evidence was that the patentee had done nothing to indicate any intent to sue on the non-asserted claims, there was no product accused as infringing those claims, and the declaratory plaintiff had testified without contradiction at the trial on the asserted claims that it had never employed a critical element of the non-asserted claims. This court said that the statutory requirement is satisfied when "a defendant's conduct has created on the part of the declaratory plaintiff a reasonable apprehension that it will face an infringement suit if it commences or continues the activity in question," and when the plaintiff has "actually produced the accused device" or has "prepared to produce such a device". Jervis B. Webb Co., 742 F.2d at 1398-99, 222 USPQ at 949. The required reasonable apprehension must be an objective, not purely subjective, apprehension. Id.; see also Indium Corporation of America v. Semi-Alloys, Inc., 781 F.2d 879, 883, 228 USPQ 845, --- (Fed.Cir.1985). If the district court had here found that IMPRA's process was not accused as an infringement of the '566 patent, or that IMPRA had not been threatened, or that IMPRA had no other objective basis for a reasonable apprehension of suit, the present case would have been brought within the ambit of Jervis B. Webb Co. Absent such findings, the sole basis for the judgment must be seen as IMPRA's failure to admit infringement.
The burden is on IMPRA to establish that jurisdiction over its declaratory judgment action existed at, and has continued since, the time the complaint was filed. To meet that burden, IMPRA must establish "the existence of facts underlying" an allegation that an "actual controversy" existed. 6 Jervis B. Webb Co., 742 F.2d at 1399, 222 USPQ at 949.
Courts do not issue advisory opinions. Absent an actual controversy, a declaratory judgment respecting validity of the '566 patent would be merely advisory. To avoid dismissal, therefore, IMPRA must establish that as of February 1985 it had an objectively reasonable apprehension that it would be sued for...
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