American Cyanamid Co. v. Ethicon, Inc.
| Decision Date | 26 May 1977 |
| Docket Number | No. 76 Civ. 2301 (HFW).,76 Civ. 2301 (HFW). |
| Citation | 443 F. Supp. 46 |
| Parties | AMERICAN CYANAMID CO., Plaintiff, v. ETHICON, INC. and Johnson & Johnson, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Pennie & Edmonds, New York City, for plaintiff, by Jonathan A. Marshall, Thomas F. Reddy, Jr., Brian D. Coggio, New York City, of counsel.
Rogers & Wells, New York City, for defendants, by David F. Dobbins, Stephen Froling, New York City, of counsel.
Defendants have moved to dismiss the complaint in this declaratory judgment action, pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, for want of a justiciable controversy. In the alternative, they ask that the court decline to exercise jurisdiction as a matter of judicial discretion.
The complaint alleges that the Davis & Geck Department ("Davis & Geck") of the Lederle Laboratories at American Cyanamid Company ("Cyanamid") has developed a releasable surgical needle-suture combination ("releasable suture")1 which it has distributed and marketed to hospitals and other clients in the City of New York and which it intends to market elsewhere; that the defendant Ethicon, Inc. ("Ethicon"), a wholly-owned subsidiary of co-defendant Johnson & Johnson, Inc. ("J & J"), is the assignee of United States Patent No. 3,890,975 ("the 975 patent"), issued to Walter McGregor on June 24, 1975 (and entitled "Controlled Release Suture"); and that "it has become apparent to Cyanamid from prior actions of defendant, sic the largest manufacturer of surgical sutures in the United States, that defendant sic intends to protect and maintain its position in the suture market" through the use of its patents.2 It is further alleged that responsible employees of defendant, having either actual or implied authority to speak for J & J, informed Davis & Geck that they knew of Cyanamid's efforts to develop a releasable suture and that "litigation would follow" any attempt by Cyanamid to introduce such a product into the market. The complaint also alleges that the 975 patent was prosecuted in the United States Patent Office by J & J and employees and agents of J & J, and that J & J improperly obtained the 975 patent through misrepresentations and omissions made during the course of prosecuting its application to the Patent Office. Cyanamid seeks, among other things, a declaration of noninfringement and invalidity with respect to the 975 patent.
Under the Declaratory Judgment Act,3 "in a case of actual controversy" a district court may "declare the rights and other legal relations of any interested party." (Emphasis added.) To meet this statutory requirement of an actual controversy and therefore to be justiciable under Article III of the United States Constitution, the disagreement between the litigants must be one which is "definite and concrete," rather than one which presents only an abstract or hypothetical question for the court to determine. Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 239-41, 81 L.Ed. 617 (1937). This necessarily presents a question of degree, Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941), to be determined on a case-by-case basis. Muller v. Olin Mathieson Chemical Corp., 404 F.2d 501, 504 (2d Cir. 1968).
In the area of patents, the courts have rejected rigid formulations of the test for an actual controversy, e. g., Wallace & Tiernan, Inc. v. General Electric Co., 291 F.Supp. 217, 220 (S.D.N.Y.1968). Still, it is clear that "a justiciable controversy is present if defendant, the patentee, has charged plaintiff with infringement or has threatened plaintiff with an infringement suit, either directly or indirectly," Muller v. Olin Mathieson Chemical Corp., supra, 404 F.2d at 504; accord, Dr. Beck and Co., G. M. B. H. v. General Electric Co., 317 F.2d 538, 539 (2d Cir. 1963) (per curiam), and the plaintiff has already begun to produce and sell the allegedly infringing device or has made substantial preparations to do so. Wembley v. Superba Cravats, 315 F.2d 87, 89-90 (2d Cir. 1963); Dewey & Almy Chemical Co. v. American Anode, Inc., 137 F.2d 68, 70 (3d Cir.), cert. denied, 320 U.S. 761, 64 S.Ct. 70, 88 L.Ed. 454 (1943); Volkswagen of America, Inc. v. Engelhard Minerals & Chemicals Corp., 401 F.Supp. 1210, 1213 (S.D.N.Y.1975). "The touchstone is a reasonable apprehension" on the part of the plaintiff that beginning or continuing the activity in question will subject him or his customers to either an action for infringement or the threat that such an action will be brought. Japan Gas Lighter Ass'n v. Ronson Corp., 257 F.Supp. 219, 237 (D.N.J. 1966) (emphasis in original); accord, Sherwood Medical Industries, Inc. v. Deknatel, Inc., 512 F.2d 724, 727-28 (8th Cir. 1975); Tubeco, Inc. v. Crippen Pipe Fabrication Corp., 402 F.Supp. 838, 844-45 (E.D.N.Y. 1975), aff'd 538 F.2d 314 (2d Cir. 1976). "There must be, in other words, some concrete indication that the defendant patentee claims the plaintiff's activity infringes his patent, and also that he will act affirmatively to enforce the protection which he claims." Japan Gas Lighter Ass'n v. Ronson Corp., supra, 257 F.Supp. at 237.
In making this determination, the court should view the requirement of a charge of infringement with considerable liberality, Muller v. Olin Mathieson Chemical Corp., supra, 404 F.2d at 504; see 6A Moore's Federal Practice ¶ 57.20 (2d ed. 1974), since the Declaratory Judgment Act itself is to be given a liberal construction, e. g., Swift & Sons, Inc. v. Lemon, 24 F.R.D. 43, 46 (S.D.N.Y.1959), to advance the salutary purposes underlying the remedy of declaratory relief, see Printing Plate Supply v. Curtis Publishing Co., 278 F.Supp. 642, 645 (E.D.Pa.1968); see generally E. Borchard, Declaratory Judgments (2d ed. 1941). Thus, in determining whether a charge reasonably can be inferred, "the court must look at the entire course of action and all of the defendant's relevant conduct," Sherwood Medical Industries v. Deknatel, Inc., supra, 512 F.2d at 728 (emphasis in original), carefully weighing the business realities involved. See Mine Safety Appliance Co. v. Energetics Science, Inc., 416 F.Supp. 530, 532 (S.D.N.Y.1976).
Since the parties seem to agree that Cyanamid began to produce and market releasable sutures by at least May 26, 1976, the date on which the complaint herein was filed, defendants correctly observe that the sole issue before the court for present purposes becomes whether Cyanamid had a reasonable apprehension that defendants would sue or threaten suit for infringement of the 975 patent held by Ethicon as assignee.
Cyanamid's fear of suit apparently derives from two in-house memoranda, each of which was executed by a Cyanamid employee to summarize a conversation with a managerial employee of Ethicon. The first such memorandum, from W.R. Deakin of the Davis & Geck Marketing Department to a C.B. Walker, is dated February 9, 1976. It indicates that on January 28, 1976, Deakin attended the Annual Meeting of the Society of Thoracic Surgeons at the Washington, D.C. Hilton, where he had a brief conversation with John Balenko, Ethicon's product manager for cardiovascular sutures, and it goes on to state that, to the best of his recollection, "in substance":
Mr. Balenko made the statement that he heard that we were working on a DAVIS & GECK equivalent to a control release needle, and he had heard that we were going to introduce them soon. I replied that yes, we had done some work on them but that there were a lot of problems involved. He replied that he was not the least bit surprised since it had taken Ethicon 10 years to develop them but that whatever we did in this area we better look out. This was the end of our discussion on the subject of control release needles.
(Plaintiff's Document A00038) (emphasis added). In the second memorandum, dated May 17, 1976, T.R. Lind of the Davis & Geck Marketing Department summarizes events which took place on May 12, 1976, after a meeting of the Sales Training Committee of the Health Industry Manufacturers Association held in Lincolnshire, Illinois. Lind's memorandum observes that:
Following the meeting and a group dinner about six of the Committee members including Mr. O'Brien Ethicon's Manager of Sales Administration and myself, were seated at the bar for a nightcap. At one point in the evening I was seated next to Mr. O'Brien and in the course of conversation he revealed that he had been called upon to give a deposition in connection with a lawsuit between DAVIS & GECK and Ethicon. I stated that this presumably was a DEXON® polyglycolic acid suture/Vicryl lawsuit and he said, no, that it was some...
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