Allied Mineral v. OSMI and Stellar Materials (Fed. Cir. 2017)
US-based Allied manufactures a cement specially designed for lining aluminum furnaces. Allied distributes both in the US and in Mexico (through Ferro Alloys and Pyrotek). The patentee Steller is also US-based. However, rather than suing Allied for infringing its US patent, Steller sued only the Mexican distributors in Mexico on its Mexican family member patent. U.S. Patent No. 7,503,974; Mexican Patent No. 279757.
Allied then filed a declaratory judgment action in the US — asking for a declaration that, inter alia, the US patent is invalid, not infringed, and unenforceable. In the appeal here, the Federal Circuit has affirmed a lower court ruling that the DJ action is not based upon a “case of actual controversy” as required both by the Declaratory Judgment Act as well as the US Constitution.
Courts consider a totality-of-the-circumstances on the case-or-controversy question — asking whether “there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Citing to MedImmune v. Genentech, 549 U.S. 118 (2007).
Here, the Mexican lawsuit was quite relevant since a parallel patent was asserted accusing Allied products. Those same products are also sold Allied in the US, and the main parties are all in the US. However, after reviewing those facts, the Federal Circuit ruled that they were insufficient to create a sufficient controversy. Importantly, there was no evidence that (1) the patentee had ever approached Allied; or (2) ever threatened to sue on its U.S. patent. In Arkema Inc. v. Honeywell International, Inc., 706 F.3d 1351 (Fed. Cir. 2013), the Federal Circuit relied on foreign litigation in finding the a case-or-controversy. Here, the court distinguished Arkema by pointing to parallel US litigation in that case. There, “the combination of the German litigation and the U.S. litigation over a related patent” were sufficient to find a case-or-controversy.