Law suit threat determined to be insufficient to give court jurisdiction

The Federal Circuit court of appeals recently addressed the issue of whether the threat that a supplier's customers may be sued for patent infringement can support jurisdiction in federal courts to consider the validity of the patents at issue when the supplier itself cannot be sued for infringement. In Microchip Technology Inc. v. Chamberlain Group, Inc., the Court held that under such circumstances, no jurisdiction exists.Microchip Technology manufactures microchips used in, among other things, garage door openers. Chamberlain manufactures garage door openers. In 1998, Microchip Technologies sued Chamberlain for infringement of its patent involving technology incorporated in the microchips used in garage door openers to automatically \'learn\' a remote opener's code. As part of the settlement agreement in that case, Chamberlain agreed not to sue Microchip Technologies under its patents covering garage door openers using this technology. In 2001, Microchip Technologies sued Chamberlain, seeking a declaration that Chamberlain's patents were invalid, not infringed, or that, by virtue of the prior settlement, they possessed a license.In order for federal courts to have jurisdiction to hear a case, the Constitution requires that there be a \'case or controversy\'. This does not always mean that a potential defendant must wait to be sued; Congress has enacted the Declaratory Judgment Act, which allows a potential defendant to initiate suit to have a court declare the relative rights and duties of the parties. However, courts only have jurisdiction under the Act when there is a \'case or controversy\'. The Federal Circuit has previously stated that the case or controversy requirement, in patent cases, this requires two things: (1) a reasonable apprehension that the party will face a patent infringement suit if it commences or continues the activity at issue, and (2) present activity by the party seeking the declaration that could constitute infringement or concrete steps taken with the intent to conduct such activity. Only the first part of this test was applicable in this case. While Microchip Technologies did not have the requisite \'reasonable apprehension\' of suit, it contended that because its customers could be subject to suit if they use its chips, and that this apprehension on the part of its customers was hurting its sales, there was a sufficient controversy to support jurisdiction.The Federal Circuit disagreed. Specifically, the court stated that it was clear that Microchip Technologies did not possess the required reasonable apprehension of suit. Further, the court held that Microchip Technologies' apprehension that its customers could be sued was likewise insufficient. As a result, the court remanded the case with instructions for the district court to dismiss the action.This case is important because the parties to the action spent nearly 5 years litigating the validity and scope of several different patents. However, because the court lacked jurisdiction to hear the matter, all rulings in the case are now vacated, and the parties are put back into the same legal position they were had the case never happened. In short, without jurisdiction, the parties only waste time and money on litigation that will eventually result in no answers to the questions they sought to be resolved.For the complete decision, visit http://fedcir.gov/opinions/05-1339.pdf.


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