Declaratory Judgment Standing: Must All Patent Owners be Joined?

In re KGK Synergize (Fed. Cir. 2009) (nonprecedential order)

KGK’s patent No. 6,987,125 covers the use of polymethoxyflavone to treat cardiovascular disease and is co-owned by the US Government. (Trade Name Sytrinol). It appears that two of the inventors were under an obligation to assign rights to the USDA while the other two assigned their rights to KGK. 

Classic declaratory judgment scenario: SourceOne is a former licensee who developed a competing product.  KGK allegedly began threatening customers and SourceOne filed for declaratory judgment of invalidity and non-infringement against KGK.  The problem is that the US government as co-owner is likely immune from a DJ action.

On motion, the district court refused to dismiss the case even though the US government had not been joined as a party to the litigation.  KGK then filed a petition for writ of mandamus with the Federal Circuit.  Writing for a three-member panel, Judge Gajarsa denied the petition – finding that KGK had not explored all of its alternatives or that it could not obtain adequate relief after waiting for final judgment.

The district court opinion on rehearing is interesting in the way that it differentiates between constitutional and prudential limitations on federal court jurisdiction.  Although prudential requirements do not allow a patentee to sue for infringement without joining co-owners, such an action is within Article III standing limitations.  On the flip side, the declaratory judgment act (28 U.S.C. 2201(a)) does not have the same prudential limitations.

Rather, as the Supreme Court indicated in the MedImmune case, the requirement for declaratory judgment is much broader and focuses on the existence of “a substantial controversy, between parties having adverse legal intersts, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”

Links:

• David Donoghue discussed the original district court opinion here. He takes the following quote from that decision: “The approach urged by KGK (and the Government) would allow KGK to threaten legal action against SourceOne (or others) with impunity.  For those who gave into those threats, KGK would receive the benefit of the patent (a cessation of the alleged infringing conduct and perhaps compensation) without the need to do anything more.  For those who might rear up and seek a judicial resolution, KGK could retreat behind the Government's cloak of immunity and prevent the infringement or validity of the '125 Patent from ever being tested in court.”

Comments

[Ned Heller]

Without even reading the cases, I would note that since the one patent owner cannot sue without joining the other patent owner, how can there be a serious "threat" to sue unless the threat is signed by all patent owners or a representative of all patent owners?

There should be no case and controversy here.

[Dennis Crouch]

Ned - A few years ago, your comments would be on-point. In MedImmune, however, the Supreme Court eliminated the apprehension of suit test and killed the notion that a DJ action is only available if the right-holder could have sued on the merits.

[Ned Heller]

I understand, Dennis. But still my point somewhat remains valid. There is no serious threat to sue.

So what do we have? X patent owner sends Y a notice of infringement. Y sues X for a declaration of invalidity, but cannot join Z, X's co-owner. What can the court decide? It cannot decide the patent is invalid? If it did, the patent claims held invalid would effectively be cancelled from the patent. But since Z is not joined, that would be fricken unconstitutional IMHO.

There is something seriously wrong here. Think about it.

[Anon]

Just because there is no serious "legal" threat to sue, that doesn't stop a joint owner of a patent of making "business" threats.

[Ned Heller]

Anon, true. But what remedy can the district court give? He cannot declare the patent invalid without the other owners. Any judgment of "non infringement" woul be advisory only as it would not bind the absent owner.

[Steven Fox]

"Although prudential requirements do not allow a patentee to sue for infringement without joining co-owners"

Where does this come from?