Tuesday, January 06, 2009

Declaratory Judgment Jurisdiction Still Has its Limits

Contrary to popular belief, there are limits on the scope of declaratory injunction subject matter jurisdiction despite the Supreme Court's broad interpretation of the standard in MedImmune v. Genentech.

For instance, if the patent holder never contacts you at all -- let alone alleges you infringe, or even just sends one of those ├╝ber-bland letters that brings its patent to your attention -- your DJ action is probably going to be difficult to maintain.

That's the message delivered by Panavise Products, Inc. v. National Products, Inc., a January 6, 2009 non-precedential opinion from the Federal Circuit. Panavise and National each manufacture suction cup mounting devices; National is the assignee of U.S. Patent 6,666,420. National had actively pursued a number of alleged infringers of the '402 patent, but had never contacted Panavise concerning the patent or any Panavise product.

Panavise nonetheless filed a DJ action, alleging that Panavise sold a "potentially infringing" product; that "upon information and belief," National had seen the product at a trade show; and that National had sued other parties for infringing the '420 patent as well as other patents.

The Federal Circuit upheld the trial court's grant of National's motion to dismiss for lack of subject matter jurisdiction. National, the court noted, had attacked the factual allegations in Panavise's complaint that National had seen the Panavise product at the trade show, so that the allegations in Panavise's complaint were not controlling. This "placed the burden on Panavise to demonstrate facts sufficient to support its contention regarding the court's jurisdiction."

Panavise failed to meet this burden: "there is nothing 'definite and concrete,' and nothing 'real and substantial,' as Panavise has never presented any evidence and proof to support its allegation."

The Federal Circuit was careful to point out that it did not mean to say "that the lack of direct pre-complaint communication between a patentee and a declaratory judgment plaintiff by itself is sufficient to defeat subject matter jurisdiction." In this case, however, National's only other actions were its earlier lawsuits against other defendants concerning different products, and Panavise did not make a showing that its product was similar to any of those products.

While it denied National's motion for sanctions, the panel did take pains to note that "the appeal can be viewed as very weak from both a factual and a legal standpoint," and that it "approaches wasting the court's time and unduly delaying more deserving litigants."

Takeaway point: there are limits to the breadth of declaratory judgment jurisdiction even after MedImmune. In the absence of a direct communication from the patent holder, a DJ plaintiff will need to show something else -- in this case, perhaps, a showing that the Panavise product was structurally similar to other products accused by National in the past.

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