Adenta GMBH v. OrthoArm and American Orthodontics (Fed. Cir. 2007).
History:
- OrthoArm patented a new type of bracket for holding orthodontic braces.
- In 2001, OrthoArm assigned patent rights to American Orthodontics (in a settlement agreement). American agreed to pay an ongoing royalty of 4%.
- American distributes Adenta’s products — in a contract between American and Adenta, the German company began to share royalty payments.
- Adenta threatened to stop paying its share of the royalties and American responded with threats.
- Adenta then sued for declaratory judgment of invalidity.
Declaratory Judgment Jurisdiction: In MedImmune, the Supreme Court made clear that declaratory judgment jurisdiction is much broader than allowed by CAFC precedent. In particular, the court rejected the CAFC’s requirement that a DJ plaintiff show a “reasonable apprehension of suit.” Under the court’s newly developed precedent, Article III jurisdiction will arise when a patentee asserts its patent rights against another party’s activity or planned activity. No actual infringement is required nor is any cessation of royalty payments.
Here, jurisdiction was simple because the patent holder had threatened to assert its rights if Adenta failed to pay royalties — “thereby creating a substantial controversy.”
Evidence of 102(b) Public Use: Under the CAFC’s “rules of evidence,” a single person’s testimony is never sufficient to invalidate a patent. Rather, some corroborating evidence must always be presented. Once that threshold is passed, a jury may evaluate the validity of a patent considering all of the evidence as a whole (using a “rule of reason.”)
Here, Adenta brought forth five witnesses to testify that the invention had been shown at the trade show. In addition, Adenta produced a letter from a German attorney directing that the US application be filed quickly because of the trade show exhibit. Despite the patentee’s attempts to discredit the evidence, the CAFC found that the corroboration threshold was met and that the fact finder had not committed clear error in evaluating the totality of the evidence.
Sham Litigation: There is some indication that this was a sham litigation between Adenta and American. Although American owns the patent, it was required to continue to pay royalties to OrthoArm under their original settlement agreement. The CAFC, however, refused to hear that argument.
Notes:
- John Fredrickson of Boyle Fredrickson represented Adenta
- Thomas Reynolds of Michael Best (Milwaukee) took the other side
