Innovative Therapies Inc v. Kinetic Concepts Inc

• Decision Date: 01 April 2010
• Docket Number: No. 2009-1085.,2009-1085.
• Citation: 599 F.3d 1377
• Parties: INNOVATIVE THERAPIES, INC., Plaintiff-Appellant, v. KINETIC CONCEPTS, INC, KCI Licensing, Inc., and KCI USA, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

599 F.3d 1377

INNOVATIVE THERAPIES, INC., Plaintiff-Appellant, v. KINETIC CONCEPTS, INC, KCI Licensing, Inc., and KCI USA, Inc., Defendants-Appellees.

No. 2009-1085.

United States Court of Appeals Federal Circuit

Decided: April 1, 2010.

Rehearing Fn Banc Denied May 26, 2010.

Jonathan G. Graves, Cooley Godward Kroriish, LLP, of Reston, VA, argued for plaintiff-appellant. With him on the brief was Justin P.D. Wilcox.

Erik R. Puknys, Finnegan, Henderson Farabow, Garrett & Dunner, L.L.P., of

Palo Alto, CA, argued for defendants-appellees. With him on the brief were Wendy A. Herby; Donald R. Dunner and Don 0. Burley, of Washington, DC. Of counsel on the brief were R. Laurence Macon and Karen Kroesche Guide, Akin Gump Strauss Hauer & Feld LLP, of San Antonio, TX.

Before MICHEL, Chief Judge NEWMAN and PROST, Circuit Judges.

NEWMAN, Circuit Judge.

Innovative Therapies, Inc. ("ITI") appeals the judgment of the United States District Court for the District of Delaware dismissing ITI's declaratory judgment action against Kinetic Concepts, Inc. ("KCI") based on absence of an actual controversy within the contemplation of the Declaratory Judgment Act.¹ We affirm the dismissal.

DISCUSSION

The five patents at issue are United States Patent Nos. 4, 969, 880; 5, 645, 081 5, 636, 643; 7, 198, 046; and 7, 216, 651, all owned by the defendant KCI or exclusively licensed to KCI from the assignee Wake Forest University. The patents relate to medical devices for negative pressure wound therapy, used in treatment of chronic wounds. Several of the inventors are scientists at Wake Forest University in Winston-Salem, North Carolina.

The declaratory plaintiff ITI was established in 2006 by several former employees of KCI, in conjunction with Dr. Paul Svedman, a surgeon who had worked in the field of negative pressure wound therapy. On September 25, 2007 ITI filed this suit for declaration that the five patents are invalid and/or not infringed by a device that ITI planned to offer for sale "on or about October 1, 2007, " called the Svedman Wound Treatment System. KCI moved to dismiss for lack of declaratory jurisdiction, stating that it had not seen the ITI device, had not examined it for possible infringement of any KCI patent and had not accused ITI of infringement. ITI responded that sufficient adverse interests existed to entitle it to adjudication citing the liberalized criteria for declaratory actions as established by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007). ITI identified several factors that when considered together, as required by MedImmune's totality of the circumstances test, were stated by ITI to establish declaratory jurisdiction.

I

In dismissing the complaint, the district court observed that the mere existence of an adversely held patent does not suffice to establish adverse legal interests and that the circumstances cited by ITI did not establish declaratory jurisdiction at the time the complaint was filed. On appeal ITI again argues that a confluence of three factors, taken together, established the existence of a controversy of "sufficient immediacy and reality, " the words of Medlmmune, to warrant declaratory jurisdiction. These factors are (1) ITI's representations to the FDA, (2) ITI's phone calls to KCI executives, and (3) KCI's patent enforcement history.

(1) ITI's representations to the FDA

ITI had obtained expedited pre-marketing approval of the Svedman device basedon its representations to the FDA that the Svedman device has the "same technological characteristics" as KCTs previously approved wound therapy device and other FDA-approved devices that KCI has charged with infringement. ITI stated that such expedited approval, obtained pursuant to § 510(k) of the Food, Drug and Cosmetic Act, 21 U.S.C. § 360(k), demonstrated the reasonableness of ITI's belief that KCI would regard the Svedman device as infringing KCI's patents. ITI stated that it learned through discovery that KCI was aware of ITI's filings with the FDA. ITI thus argued that KCI had sufficient knowledge of ITI's Svedman device, even before its introduction to the market, to suggest that KCI might have been preparing to sue ITI for infringement.

KCI responded in the district court that at the time ITI filed this declaratory action KCI had not seen any device produced or intended to be produced by ITI, that no such device had been sold or offered for sale, and that KCI had not charged ITI with infringement as to any such device. KCI argued that ITI's representations that the Svedman device has the "same technological characteristics" as a patented product did not establish infringement of any KCI patent.

The district court accepted that ITI had requested and received regulatory approval for a product that it intended to place on the market. Although "meaningful preparation" to take infringing action may suffice for declaratory jurisdiction in some circumstances, see Cat Tech LLC v. TubeMaster, Inc., 528 F.3d 871, 881 (Fed. Cir.2008), representations to a third person about "technological characteristics" do not establish a justiciable controversy with the patentee. Although the parties disputed the extent of knowledge that KCI had about ITI's filings with the FDA, we agree with the district court that even if KCI knew of ITI's representations to the FDA, this knowledge of itself did not create a controversy within the contemplation of the Declaratory Judgment Act.

(2) ITI's phone calls to KCI executives

ITI placed its strongest reliance on two telephone calls from ITI, arguing that statements made by KCI employees during these phone conversations were sufficient to demonstrate the existence of a justiciable controversy.

On September 12, 2007 ITI's Chief Technology Officer, David Tumey, who had previously been employed at KCI as Director of Research and Development, telephoned his former colleague Michael Girouard, KCI's Director of Marketing. Another ITI employee who also was a former KCI employee, Mark Meents, participated in the call. The parties agree that during the call Tumey described the Svedman device and asked Girouard to predict KCI's response to ITI's planned launch of this product. Tumey and Meents stated that Girouard responded: "KCI will act aggressively. You know that." Tumey and Meents also stated that Girouard qualified his statement by saying that KCI would sue only "if it first determined that the product infringed the KCI patents." Tumey stated that Girouard said that he was aware of one of ITI's two 510(k) filings with the FDA, but Girouard disputed this aspect of the conversation. The district court stated that it accepted ITI's version of this conversation for the purpose of determining whether to accept declaratory jurisdiction.

On September 17, 2007 Tumey telephoned another former colleague, Michael Burke, Senior Vice President of Manufacturing at KCI. Tumey knew that Burke planned to retire at the end of September. The parties stated that after discussing Burke's imminent retirement, Tumey described the Svedman device and asked Burke how he thought KCI would react when ITI introduced this device. Tumey stated that Burke responded that KCI would "aggressively go after us... particularly if it is foam-based." Tumey stated that when he asked Burke if the odds were "100%" that KCI would sue, Burke responded "100% no doubt about it, " and stated that any product that "scratches the surface of our patents" would be the subject of a lawsuit. Tumey stated that he asked about the possibility of peacefully coexisting, and that Burke said there was "no way to coexist."

ITI argued that these telephone conversations established that a controversy existed with respect to patent infringement by the devices that ITI intended to market. KCI argued that these phone calls, initiated by ITI in the guise of friendly conversations, did not constitute a threat of legal action by KCI as to products they had not seen and had not reviewed for infringement. KCI stated that neither Girouard nor Burke had authority to decide on his own whether KCI would conduct infringement litigation, although ITI disputed this point.

The district court described these phone calls as a "sub rosa" effort to create jurisdiction "by initiating telephone conversations to employees of the patentee who were not in decision-making positions and who were not informed of the real purpose behind the conversations." The court found that these phone calls, made to former colleagues who had not seen and had not evaluated ITI's device, produced im promptu responses, not an assertion of patent rights.

ITI argues on this appeal that a justiciable controversy was indeed created by KCI's statements during ITI's telephone calls. ITI states that the district court misunderstood the purpose of the phone calls, and that they were not a subterfuge to establish jurisdiction, but an effort to clear the air as to the product ITI was about to launch. KCI responds that Tumey phoned his ex-colleagues under cover of friendship, without revealing his true purpose and without knowing whether those persons had knowledge of the structure of the ITI device and any basis for threatening an infringement suit. KCI argues that ITI sought to obtain indirect evidence of a controversy without subjecting itself to the possibility of suit. Thus KCI argues that its employees' impromptu responses cannot be deemed to be charges of infringement or other indications of a real and immediate controversy within the cognizance of the Declaratory Judgment Act.

The district court found that these informal conversations did not constitute a threat of suit for patent infringement against a device that had not been seen and evaluated for infringement of any patent. We agree that the indirection reflected in these conversations did not produce a controversy of such "immediacy and reality" as to require the district court to accept declaratory...