Benitec Australia v. Nucleonics (Fed. Cir. 2007)
Benitec’s infringement suit against Nucleonics was derailed by several factors. Perhaps most critically, the Supreme Court’s Merck v. Integra decision expanding the research exemption of 271(e)(1) left Benitec with no viable infringement claim. Benitec voluntarily dismissed its claims against the defendant Nucleonics and also issued a covenant not to sue for Nucleonics current activities. (Covenant submitted within its appeal opposition brief).
In the meantime, Nucleonics had filed declaratory judgment counterclaims — asserting invalidity and unenforceability. Nucleonics wants the patent invalidated to remove any investor concerns regarding future products. On appeal, the CAFC determined whether DJ jurisdiction still exists in this case.
The Supreme Court’s jurisdiction requires “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune.
DJ jurisdiction clearly existed at the time of filing. However, when the controversy disappears, so does jurisdiction. Here, the CAFC found that the controversy was gone and that Nucleonics “future work” was too speculative and might not be infringing anyway.
We also recognize that Nucleonics wishes to receive the benefit of a ruling on the validity and scope of Benitec’s patent now, while Nucleonics undertakes any nascent animal work. There is currently, however, no “substantial controversy, between [Benitec and Nucleonics], of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, 127 S. Ct. at 771. And there may never be. Although Nucleonics lost the appeal, it certainly won a major victory by forcing Benitec to issue a covenant not to sue.
In Dissent, Judge Dyk would have allowed the DJ case to continue:
Supreme Court precedent requires that, if a patentee files an infringement lawsuit and the particular claim of infringement is mooted, a counterclaim for invalidity should not be dismissed unless the patentee demonstrates that there is no possibility of a future controversy with respect to invalidity. See Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 98 (1993). In my view, Benitec made no such showing.
- Sitting by designation, Judge Whyte penned the opinion. This is only the second CAFC opinion where a judge sitting by designation cast the deciding vote, and is the only CAFC case where a judge sitting by designation penned an opinion and another judge dissented. The N.D. California IP Bar has often called for Judge Whyte’s appointment to the CAFC. This opinion my provide some guidance as to his potential jurisprudential conduct.
- Although formally a loser, Nucleonics’ appeal forced Benitec into issuing a covenant not to sue — a major litigation victory.