Sierra Applied Sciences, Inc. v. Advanced Energy Ind. (AEI) (Fed. Cir. 2004)
Sierra designed and tested a power supply that arguably infringes AEI's Patents. (E.g., U.S. Patent 6,001,224). Sierra filed a declaratory judgment action prior to putting its power supply on the market and conceded that it did not intend to sell the supply unless the Court determined invalidity or noninfringement in favor of Sierra. The court considered whether a sufficient case or controversy existed to support such a declaratory action.
AEI's counsel, at oral arguments, represented that AEI would not sue Sierra for its current in-house use (for design or testing) of its power supply technology. The Court found that these representations created an estoppel against AEI in future suits and thus eliminated any case or controversy for the associated actions. In reference to a second power supply technology being developed by Sierra, the Court ruled that Sierra's efforts at developing the device were not sufficiently far along "on the date of the complaint." Reversed-in-part, vacated-in-part, affirmed-in-part, and remanded.
Geof has more on the case.
Commentary: Declaratory judgments actions require action by both the defendant (e.g., threaten suit) and the plaintiff (e.g., arguably infringing activity) in order to be appropriate. It is interesting that the Court examined the plaintiff’s actions up to the date of filing the complaint (Sierra being far from completing its new product as of filing) but examined the defendant’s actions that occurred much later (counsel conceding at oral arguments that AEI will not file suit for in-house uses).