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No case or controversy when patentee doesn't even know of potentially infringing product

August 21, 2008
Post by Blog Staff

In a decision last week, the Federal Circuit upheld a district court's decision that Article III jurisdiction did not exist in a case where a potential infringer was seeking a declaration of noninfringement. The district court granted a motion to dismiss the under the Federal Circuit's pre-MedImmune reasonable apprehension of suit test, noting that there was no reasonable apprehension of suit. In a footnote, the court noted that even if MedImmunev. Genentech had overruled this test, it would still conclude that there was no case or controversy because there was "no definite and concrete dispute that touches the legal relations of the parties." To the district court's credit, its decision was made shortly after MedImmune and without the benefit of the Federal Circuit's interpretation of MedImmune. Following the Federal Circuit's decision in Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., the court reconsidered its ruling and decided under all the circumstances there was still not an Article III case or controversy.The Federal Circuit affirmed. The court noted that there was no actual present injury traceable to the defendants nor had the defendants asserted any rights or taken affirmative actions against the declaratory judgment plaintiff. The court framed the issue of subject matter jurisdiction in the context of standing, ripeness, and lack of mootness, observing that "satisfying these doctrines represents the absolute constitutional minimum for a justiciable controversy." Here, there was insufficient evidence of standing, as there was no injury-in-fact that was fairly traceable to the patentee's conduct. When the case was filed, there had been no contact regarding the patent whatsoever between the patentee and the potential infringer. While the potential infringer argued that prior assertions of unrelated patents were sufficient to confer jurisdiction, the court disagreed, noting jurisdiction cannot be conferred by "a purely subjective or speculative fear of future harm." As a result, considering the totality of the circumstances, the court affirmed the district court's dismissal of the case.

More on Prasco LLC v. Medicis Pharm. Corp. after the jump.

Prasco makes a generic benzoyl peroxide cleansing product called OSCION. At the time Prasco filed its declaratory judgment action, it had not yet begun marketing OSCION, but had devoted substantial efforts to development and marketing plans. Shortly after filing the declaratory judgment action, Prasco launched its OSCION product. Medicis markets a benzoyl peroxide cleansing product TRIAZ, which is marked as being covered by four patents.Prasco filed the current action requesting a declaration that OSCION did not infringe the four patents-in-suit. In its initial complaint, Prasco argued declaratory judgment jurisdiction was established by two facts: 1) Medicis's marking of TRIAZ products with the numbers of the four patents-in-suit and 2) an infringement suit brought by Medicis against Prasco in 2005 concerning a different cleanser product covered by an unrelated patent. At the time the complaint was filed, Medicis did not know about the existence of OSCION.Medicis moved to dismiss the initial complaint for lack of subject matter jurisdiction. After the motion was filed, Prasco sent a sample of OSCION to Medicis and requested a covenant not to sue under the four patents. Medicis did not sign the covenant not to sue, and responded with a single sentence letter stating Medicis did "not plan to withdraw [its] motion to dismiss the complaint." Prasco then filed an amended complaint (which the Federal Circuit pointed out was actually a supplemental complaint) that included allegations regarding Medicis's refusal to sign the covenant not sue and the fact that it had begun to market OSCION.The district court granted Medicis's motion to dismiss the under the Federal Circuit's pre-MedImmune reasonable apprehension of suit test. The district court's decision, though, was made shortly after MedImmune and without the benefit of Federal Circuit interpretation of MedImmune. The district court noted in a footnote that even if MedImmune had overruled this test, it would still find that no case or controversy existed because there was "no definite and concrete dispute that touches the legal relations of the parties." Following the Federal Circuit's decision in Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., the court reconsidered its ruling and decided that under all the circumstances there was no Article III case or controversy. Prasco appealed.The Federal Circuit affirmed. The court reiterated that it was difficult to fashion a precise test for determining in every case whether there is a sufficient case or controversy to confer jurisdiction. Instead the court relied on "helpful guides" in applying the all-circumstances test. Specifically, the court noted that the requirements of standing, ripeness, and lack of mootness are the bare minimum for subject matter jurisdiction under Article III. Here, the court used standing to assist its analysis.To establish a controversy of sufficient "immediacy and reality" as viewed through the lens of standing, the plaintiff must allege: (1) injury in fact, (2) that is fairly traceable to the defendant's conduct and (3) redressable by a favorable decision. Prasco's alleged actual harm was "paralyzing uncertainty" that Medicis would bring an infringement suit against it. The court found the opposite to be the case, given that Prasco had launched its OSCION product during the suit. Thus, any fear of future harm was purely subjective or speculative and could not be the basis of an Article III case or controversy.Finally, the court emphasized that jurisdiction generally will not arise without some affirmative acts by the patentee. For example, a patentee can cause injury in a variety of ways, including creating a reasonable apprehension of an infringement suit, demanding the right to royalty payments, or creating a barrier to the regulatory approval of a product that is necessary for marketing. In contrast to these examples, Medicis did not accuse Prasco of infringement or assert any rights against OSCION, nor did Medicis take any actions which imply such claim. Even when combined with Medicis' failure to sign the covenant not to sue and its prior litigation, the facts under all the circumstances did not present an actual controversy between the parties. Thus, the district court's dismissal was proper.To read the full opinion in Prasco LLC v. Medicis Pharm. Corp., click here.


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