Serco Services Co., L.P. v. Kelley Co., Inc., 94-1396
| Decision Date | 29 March 1995 |
| Docket Number | No. 94-1396,94-1396 |
| Citation | 51 F.3d 1037,34 USPQ2d 1217 |
| Parties | SERCO SERVICES COMPANY, L.P., Plaintiff-Appellant, v. KELLEY COMPANY, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
Neil B. Siegel, Sughrue, Mion, Zinn, MacPeak & Seas, Washington, DC, argued, for plaintiff-appellant. With him on the brief, was David H. Judson, Hughes & Luce, P.C., Dallas, TX.
Andrew J. Nilles, Nilles & Nilles, S.C., Milwaukee, WI, argued, for defendant-appellee. With him on the brief, was John P. Fredrickson.
Before MAYER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and PLAGER, Circuit Judge.
Serco Services Company, L.P., appeals the judgment of the United States District Court for the Northern District of Texas, No. 93-CV-1885, 1994 WL 715913 (May 24, 1994), dismissing its action for a declaratory judgment of noninfringement and invalidity of United States Patent No. 4,448,325. Because we conclude that the decision to dismiss fell within the district court's discretion, we affirm.
These facts are undisputed. Serco Services Company, L.P. (Serco) and Kelley Company, Inc. (Kelley) manufacture and distribute loading dock equipment used in the trucking industry. Kelley owns United States Patent No. 4,448,325 (the '325 patent), entitled "Truck Locking Device."
On December 23, 1992, Serco received a letter from Kelley's patent counsel, asserting that Serco's VR series truck restraint was infringing the claims of the '325 patent. The letter concluded: "Unless we receive a reply from you no later than February 1, 1993 to the effect that your company is discontinuing the sale of this infringing truck restraint, the Kelley Company will take legal action to stop such infringement." Serco responded by letter dated January 29, 1993, setting forth its conclusion that the VR restraint did not infringe.
Months passed. Then Serco's patent counsel received a second letter, dated September 8, 1993, again charging that the VR restraint infringed the claims of the '325 patent. This letter ended with the warning: "Unless you confirm to us by September 20, 1993 that Serco will discontinue the manufacture or sale of any infringing device, Kelley will commence a law suit to enjoin further infringement in addition to seeking other available remedies."
On September 20, 1993, Serco responded by facsimile to Kelley's attorney. This letter reiterated Serco's prior assertion that its product did not infringe the patent; it stated further that "[t]o protect Serco's interests Serco has taken the necessary action in Texas." Nothing said just what action Serco had taken.
Meanwhile, on September 17, 1993, Serco had filed this declaratory judgment action in the Northern District of Texas. On September 20, 1993, Kelley filed suit in the Eastern District of Wisconsin seeking damages and injunctive relief from Serco's alleged infringement of the '325 patent.
On February 3, 1994, Kelley filed a motion seeking to dismiss Serco's declaratory judgment suit in the Northern District of Texas. The district court granted the motion on May 24, 1993. The court concluded that Serco had filed its suit in anticipation of Kelley's infringement action, and that this anticipatory filing coupled with convenience factors--the location of witnesses and documents--merited dismissal of the declaratory judgment action so that the Wisconsin case could go forward. Serco appeals.
The question is whether the district court properly dismissed Serco's suit under the Declaratory Judgment Act. That act provides
In a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.
28 U.S.C. Sec. 2201(a) (Supp. V 1993). The proper relationship between an action under this act for a declaration of patent rights and a later-filed infringement suit triggers this court's special responsibility to foster national uniformity in patent practice; we do not defer to the procedural rules of other circuits. Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937, 27 USPQ2d 1241, 1244 (Fed.Cir.1993).
A declaratory judgment action affords a measure of relief to the potential infringer who is under the shadow of threatened infringement litigation. The declaratory plaintiff need only satisfy the jurisdictional requirement "that the conflict be real and immediate, i.e., that there be a true, actual 'controversy' required by the Act." Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 735, 6 USPQ2d 1685, 1688 (Fed.Cir.1988). In practice, this means that there is jurisdiction over a declaratory judgment action if (1) the declaratory plaintiff has acted, or has made preparations to act, in a way that could constitute infringement, and (2) the patentee has created in the declaratory plaintiff a reasonable apprehension of suit for infringement. BP Chem. Ltd. v. Union Carbide Corp., 4 F.3d 975, 978, 28 USPQ2d 1124, 1126 (Fed.Cir.1993). *
But even if a case satisfies the actual controversy requirement, there is no absolute right to a declaratory judgment, for the statute specifically entrusts courts with discretion to hear declaratory suits or not depending on the circumstances. Minnesota Mining & Mfg. Co. v. Norton Co., 929 F.2d 670, 672, 18 USPQ2d 1302, 1304 (Fed.Cir.1991). The court must make a reasoned judgment whether the investment of time and resources will be worthwhile. Of course, the court's discretion is not unfettered: "An abuse of discretion may occur when the trial court's decision was based on an incorrect conclusion of law or clearly erroneous findings of fact, was devoid of any evidence in the record upon which the court rationally could have based its decision, or was clearly unreasonable or arbitrary." Genentech, 998 F.2d at 936, 27 USPQ2d at 1243.
The district court dismissed Serco's declaratory judgment action so that Kelley's infringement suit, filed three days later, could proceed in the Eastern District of Wisconsin. In such cases, raising the question whether a suit for a declaration of patent rights should yield to a later-filed infringement suit, the trial court's discretion is guided by the general rule favoring the forum in which the first suit is filed. Genentech, 998 F.2d at 937, 27 USPQ2d at 1244. Serco says the district court abused its discretion by basing dismissal on a finding that Serco filed suit in anticipation of the infringement suit eventually filed by Kelley. It suggests that this case copies Genentech, where we vacated a similar dismissal, relying on the first-filed rule.
The first-filed action is preferred, even if it is declaratory, "unless...
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