3M v. Avery: Walking the Line of Declaratory Judgment Jurisdiction

By Jason Rantanen

3M Company v. Avery Dennison Corporation (Fed. Cir. 2012) Download 11-1339
Panel: Rader, Lourie (author), Linn

There's a fine (and perhaps rather fuzzy) line between engaging in patent licensing discussions that are sufficient to trigger declaratory judgment jurisdiction and those that are not.  In 3M v. Avery, the court perhaps made that line a bit clearer for those trying to stay on one side of it.

According to 3M's declaratory judgment complaint, in March 2009 Avery's Chief IP Counsel called 3M's Chief IP Counsel to tell him that a new 3M product "may infringe" two of Avery's patents and "licenses are available."  3M subsequently rejected Avery's licensing offer, and in the course of that discussion was told that Avery had performed an analysis of 3M's product in connection with the two patents and that Avery would send claim charts.  No claim charts were ever sent.

Over a year later, 3M filed an action seeking a declaratory judgment of noninfringement, invalidity, and intervening rights as to the two Avery patents.  The district court dismissed the action, concluding that "'even accepting the facts as set forth by 3M,' subject matter jurisdiction did not exist at the time 3M filed its declaratory judgment complaint."  Slip Op. at 5.  In response to 3M's appeal, the Federal Circuit vacated and remanded for factual determinations.

Defining the line: In general, establishing the existence of a case or controversy for purposes of declaratory judgment jurisdiction requires something more than just "a communication from a patent owner to another party, merely identifying its patent and the other party's product line."  Slip Op. at 11 (citing Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)).  How much more is determined "on a case-by-case basis,"  Slip Op. at 11, although 3M v. Avery provides an important data point for identifying behavior that goes too far. 

In vacating the district court's dismissal, the CAFC concluded that the facts alleged by 3M in this case amounted to Avery "effectively charg[ing] 3M with infringement of [the patents-in-suit]."  Id.  That Avery's counsel (who initiated the communication) said "may infringe" rather than "does infringe" was immaterial in light of the license offer, the representation that Avery had analyzed 3M's product, and the statement that claim charts would be forthcoming. Especially in light of the facets of the case that the court held to be immaterial discussed below, the opinion suggests that there is a narrow gap indeed between the non-case or controversy creating communication discussed in Hewlett Packard and communications sufficient to establish jurisdiction.

Immaterial Facts: The CAFC considered several other facts in reaching its ultimate decision to vacate, but concluded that all were immaterial or equivocal. Two related to time: Avery had not provided a deadline for responding to its licensing offer and 3M's declaratory judgment action was filed more than a year after the parties' discussions.  Neither fact significantly favored the conclusion that a case or controversy was lacking.  "[W]e note that, as part of a pre-filing investigation, it takes time to review a set of asserted patents, the record generated before the PTO, and the accused products before a potential infringer can make an informed decision to file a declaratory judgment complaint."  Slip Op. at 15. 

On the other side of the equation, neither the history of litigation between the parties nor the fact that Avery had initiated reissue proceedings for the patents weighed strongly in favor of a finding a case or controversy.  Here, while there was much prior litigation between the parties, it involved different products and patents, and thus was not the type of pattern of litigation leading to the reasonable assumption that the patentee will bring suit based on the patents in suit.  Similiarly, as to the reissue proceedings, the court commented that "[t]he purpose of reissue proceedings is to correct errors in an issued patent…and, in this case, even with the unrelated litigation between the parties, there is no evidence that an objective observer in 3M's position would conclude that Avery initiated reissue proceedings for the purpose of bringing a lawsuit against 3M accusing [its product] of infringement."  Slip Op. at 14. 

Remand for factfinding: Because the district court concluded that 3M failed to allege a justiciable controversy on the fact of its complaint, it had not resolved two key factual disputes: the actual content of the statements made by Avery's counsel and whether the parties' discussions were covered by a confidentiality agreement that precluded their use to establish jurisdiction.  Given the disputed nature of these facts, the CAFC remanded to the district court for resolution.

8 thoughts on “3M v. Avery: Walking the Line of Declaratory Judgment Jurisdiction

  1. 8

    As for issued patents tracking filing, patent filing is immaterial to allowances. The reason is because of the backlog. If a single patent application wasn’t filed in the next couple of years, there would still be plenty of work to keep the USPTO busy. The patent backlog acts as a buffer to any decrease (or increase) in filings.

    The key is that despite the patent backlog, issuances dropped dramatically when Dudas hit town. The BPAI tightened up, and the BPAI backlog shot up like a rocket as examiners stopped allowing applications.

    All one has to do is look at all the rule promulgations that Dudas attempted during his reign to see how “patent unfriendly” his administration was. Everything proposed on his watch would have made it more difficult to applicants to get
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  2. 6

    If the facts were enough to support a finding of wilful infringement if Avery did ultimately sue and win then that should have been enough to justify an action for declaratory relief.

    One reason for allowing companies to sue promptly is to discourage frivolous allegations of infringement.

  3. 4

    Just file the lawsuit already. If you have already established that a claim chart may exist, then file the d@mn lawsuit. Don’t go from hero to zero. File the lawsuit, then settle with a license. Maybe it costs a little more initially, but beats the h3ll out of winding up in a position similar to a defendant.

  4. 2

    H*ll, I would have authorized a DJ action just because the Chief IP counsel of competitor gave me a call regarding some reissues in a context such as were every applicable patent had been actually litigated against every applicable product for years.

    Get real.

  5. 1

    The correct response:


    Yeah, we “may” be infringing all patents of everywhere and licenses are pretty much always available. The patent system has become such a joke lately hasn’t it? Give us some meat to chew or please help your letter find its way out as we have business to conduct.

    Sincerely your friend in Iiip,

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