SanDisk v. STMicroelectronics (Fed. Cir. 2007).
SanDisk and ST were undergoing explicitly "friendly discussions" regarding cross-licensing of flash-memory technology rights. At a "settlement" meeting, ST showed a powerpoint presentation that mapped its claims to SanDisk technology and openly discussed SanDisk's [alleged] infringement.
Apprehension: To avoid a declaratory judgment suit, ST's attorney told SanDisk that "ST has absolutely no plan whatsoever to sue SanDisk." SanDisk agreed that it would at least wait until the following Tuesday to sue. License proposals were exchanged, but SanDisk eventually didn't like the deal. About one month after the initial meetings, SanDisk sued for declaratory judgment of noninfringement and invalidity.
Case Dismissed: The district court dismissed the case -- finding no actual controversy under the Declaratory Judgment Act "because SanDisk did not have an objectively reasonable apprehension of suit." Under Article III of the constitution, courts only have jurisdiction over actual "cases and controversies." In regards to patent related declaratory judgment actions, the Federal Circuit has held that such a case or controversy only exists when a party has an objectively reasonable apprehension of being sued for patent infringement.
Deleting The Reasonable Apprehension Test: In the meantime, the Supreme Court decided MedImmune v. Genentech -- tearing a large hole through the CAFC's DJ reasonable apprehension test.
"The Supreme Court’s opinion in MedImmune represents a rejection of our reasonable apprehension of suit test."
Under the CAFC's new rule, a patentee can create a situation amenable to declaratory judgment jurisdiction by making statements far short of threatening legal action. In particular, DJ jurisdiction can exist when the patentee's position vis-a-vis a DJ plaintiff either (1) indicate that the DJ plaintiff is taking illegal actions or (2) pushes the DJ plaintiff toward abandoning legitimate activities.
"Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do."
In particular, the following should be closely considered when writing cease and desist letters:
"We hold only that where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights."
Here, the CAFC found that ST's activities were sufficient to create DJ jurisdiction. In particular, the claim charts mapping out infringement along with ST's discussion of SanDisk's "infringement" were sufficient to create jurisdiction. There was no need to cut-off license negotiations prior to filing suit. Furthermore, ST's self-serving statement that it did not intend to sue did "not moot the actual controversy created by its acts."
Vacated and remanded.
- The rule still requires some activity by the patentee: "In the context of conduct prior to the existence of a license, declaratory judgment jurisdiction generally will not arise merely on the basis that a party learns of the existence of a patent owned by another or even perceives such a patent to pose a risk of infringement, without some affirmative act by the patentee."
- Concurrence: In a concurring opinion, Judge Bryson spells the fear of many patent holders: "it would appear that under the court’s standard virtually any invitation to take a paid license relating to the prospective licensee’s activities would give rise to an Article III case or controversy if the prospective licensee elects to assert that its conduct does not fall within the scope of the patent."