Distinguishing MedImmune: Federal Circuit Denies Declaratory Judgment Jurisdiction

Innovative Therapies, Inc. (ITI) v. Kinetic Concepts, Inc. (KCI) (Fed. Cir. 2010)

ITI is an upstart company formed by former KCI employees. Before launching their negative-pressure wound product (that would compete directly with KCI), ITI filed a declaratory judgment action arguing that KCI's patents were invalid. As of the time of the lawsuit, no one at KCI had seen or evaluated ITI's new product.

The district court dismissed the case for lack of subject matter jurisdiction. On appeal, the Federal Circuit affirmed – holding that no "actual controversy" existed between the parties at the time the complaint was filed.

In MedImmune v. Genentech, 549 U.S. 118 (2007), the Supreme Court broadened the scope of declaratory judgment jurisdiction and rejected the Federal Circuit's somewhat formalist test that required a reasonable apprehension of suit in order to establish jurisdiction. Rather, the Supreme Court held that the totality of the circumstances should be examined to determine the existence of "a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant relief." (quoting Maryland Casualty, 312 U.S. 271 (1941)).

Here, the DJ Plaintiff (ITI) argued that the actual controversy was evident based on three factors: (1) that ITI had obtained pre-marketing approval from the FDA based on representations that its product had the "same technological characteristics" as KCI's already approved device and that KCI new of that representation; (2) that KCI employees had indicated over the telephone that the company would react "aggressively" to competitive entry into the marketplace; and (3) that KCI has a history of using litigation to enforce its patent rights.

The Federal Circuit held that these facts were insufficient to create declaratory judgment jurisdiction. In particular, the representations to the FDA were not tied directly to KCI's patent rights and therefore did not create any actual controversy over those rights. The telephone conversations (initiated by ITI) were lacking because they were initiated by ITI (rather than by the patentee) and were directed to individuals who were not in "decision-making positions" or informed about the sub rosa purpose behind the conversations. Finally, while the patentee's enforcement history can contribute to DJ jurisdiction, that fact alone is insufficient for such jurisdiction.

Comment: The practical fight in this case is not about whether litigation will continue, but rather whether the litigation should be sited in Delaware (the choice of the alleged infringer) or in North Carolina (the choice of the patentee). Soon after ITI filed its DJ action in Delaware, KCI (the patentee) filed an infringement complaint in North Carolina. The Delaware case is out for now because the court did not have DJ Jurisdiction over the case when it was originally filed. ITI had also asked the North Carolina court to transfer its case to Delaware – that motion was denied.

Although the subsequent events (KCI's filing of a lawsuit) indicated the existence of an actual case or controversy, post-filing events cannot create jurisdiction even if the complaint is amended to encompass those events.

28 thoughts on “Distinguishing MedImmune: Federal Circuit Denies Declaratory Judgment Jurisdiction

  1. You know, come to think of it, I have never seen IANAE and NAL at the same time.

    Hmmmmmm.

    (of ourse, I have never seen either on their own, but such a statement rates a zero on teh rumor starting scale)

  2. some people are real good at highlighting things to the point of distraction a typical first year syndrome

  3. In other words, it should be impossible for ITI to strike first.

    Is that what you are saying?

    Think of it like the patent equivalent of self-defense.

  4. I get it.

    The only cause or controversy is the decision itself by KCI to sue.

    All other facts are exactly the same. The underlying conditions are the same. Nothing else has changed, except for the patentee’s decision. Their decision has no stated analysis that distinguishes from the facts present in the first court case.

    In other words, it should be impossible for ITI to strike first.

    Is that what you are saying?

  5. no new facts of legal standing are present.

    There was no controversy of sufficient immediacy and reality. Then the party with the actual rights decided to make a controversy of it. Now the controversy is much more immediate and much more real.

    The law, as it currently stands, says more or less that there is no controversy over validity or infringement until the patentee starts one. Whether the patentee has threatened litigation is the most important fact for determining legal standing. All the other factors are circumstantial ways of identifying a threat of litigation.

  6. Anon,

    Aren’t you mixing up DJ jurisdiction with “regular” jurisdiction? The identity of the party filing is the crux of the matter.

  7. IANAE,

    The relevancy of the fact is being compared directly to the previous court action.

    Your comment of “used to be the only way an infringer could get DJ jurisdiction” is pedantic given that no new facts of legal standing are present.

    Do you not find it surprising that without more, a Judge’s ruling is so simply eviscerated?

  8. Interesting case.

    I’ll bet the Fed Cir also finds there is no DJ jurisdiction in the Myriad case. If there is no jurisdiction, then the court has no authority to opine on the district court’s ruling that isolated DNA is not patentable.

  9. A patentee saying “hey you infringe” per se and without more is not a fact in the legal sense that should be understood on this forum without a map being drawn.

    A patentee saying “hey you infringe” used to be the only way an infringer could get DJ jurisdiction. Don’t act so surprised that it’s still a highly relevant fact.

  10. is this an area where we really require perfection?

    I will settle for a reasonable stand. I am funny that way in that I think a Judge’s ruling should mean something.

    Between the first suit and the second suit, the patentee looked at the device, made up its mind that the device infringed, and decided to bring a suit for infringement that it hadn’t even considered before. Those are all facts.

    IANAE, Those are facts but so is it a fact that you typed a message that has no bearing on the case and has no impact on overruling what a judge has determined as the existence of a case or controversy.

    Do I need to be more specific about facts, or do you want to be a je-rk?

    If there are stated facts coming from the second party’s review of the situation (making up their minds) that differ from the facts presented from the first ruling, then we have intervening facts that can affect the first ruling.

    A patentee saying “hey you infringe” per se and without more is not a fact in the legal sense that should be understood on this forum without a map being drawn.

  11. With no change in facts, the other party, at its whim, takes a look at the facts and believes that based on the totality of the circumstances that a case or controversy exists.

    The Judge says “No.”

    With no change in facts, the other party, at its whim, takes a look at the facts and believes that based on the totality of the circumstances that a case or controversy exists.

    Perhaps we’re confusing a legal conclusion that there is no case or controversy with reality? In a perfect world, there would be a perfect correlation, but is this an area where we really require perfection?

  12. Given the posture of the case, I think DJ jurisdiction was present. What apparently pissed the Feds off was the “sub rosa” phone call to an underling. In the future, the phone call needs to be replaced by a videotaped meeting with at least the president.

  13. With no change in facts,

    There was a change in facts. Between the first suit and the second suit, the patentee looked at the device, made up its mind that the device infringed, and decided to bring a suit for infringement that it hadn’t even considered before. Those are all facts.

  14. Not to be argumentative, but that’s my point.

    Let’s take our discussion at face value and clarify that no material facts are different between the time of the two filings.

    At the time of the first filing, one party believes that based on the totality of the circumstances that a case or controversy exists.

    The Judge says “No.”

    With no change in facts, the other party, at its whim, takes a look at the facts and believes that based on the totality of the circumstances that a case or controversy exists.

    How can a different Judge make a different ruling?

  15. You cannot create a case or controversy out of thin air.

    You can, actually. Part of the test is whether the infringer apprehends that the patentee is, in a legal sense, itchin’ to sue. When that factor is the tipping point, it’s as simple as the patentee filing the suit.

    The filing must be backed with some statement of fact or supposition.

    According to the Federal Circuit, KCI examined the device, determined that the device infringed its patents, and presumably alleged in its complaint facts that make out an infringement.

  16. The second filing. The patentee can create a case or controversy at any time.

    You cannot create a case or controversy out of thin air. The filing must be backed with some statement of fact or supposition. Please do not play pedantic games with me.

  17. If ITI copied, how would this impugn KCI’s position?

    KCI’s position was that they hadn’t threatened litigation in this particular case and they hadn’t even determined whether ITI’s product infringed. I was wondering whether you could end-run around that by showing that ITI’s product was an exact copy of KCI’s marked product (implying KCI already believes the product infringes its patent, even without seeing the product). Recall that KCI said they will sue anyone who infringes.

    What facts changed between the time of the first filing and the time of the second filing?

    The second filing.

    The patentee can create a case or controversy at any time.

  18. I am not following your logic IANAE,

    If ITI copied, how would this impugn KCI’s position? I think that you have reversed the players somehow.

    What facts changed between the time of the first filing and the time of the second filing? If there were no change in facts (other than who is actually doing the filing where), shouldn’t the first court’s decision of no case or controversy be enforced by the second court? If not, why not?

  19. Interesting set of facts. It seems that the court reached the right decision in this case.

    However, what if ITI had led evidence that it had copied KCI’s device exactly and that KCI’s device was marked with the patents? Would that be sufficient to counter KCI’s position that it had not seen the ITI device or evaluated it for infringement? In that hypothetical I’d say you have the patentee’s “statements” that the device is believed to infringe, that the patentee is aware of the existence of the device, and that the patentee will sue any perceived infringer.

    Besides, who wouldn’t want one more way for patent marking to bite the patentee in the sensitive parts?

  20. This family of wound sucker patents have been worth so much to Wake Forest. I believe one was invalidated in Australia.

  21. Soon after ITI filed its DJ action in Delaware, KCI (the patentee) filed an infringement complaint in Texas.

    North Carolina, that is.

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