By Dennis Crouch
Matthews Int’l Corp. v. Biosafe Eng’g, LLC, (Fed. Cir. 2012)[1]
Judge Mayer begins his opinion with the statement: “Matthews is a leader in the “death care” industry.[2] It manufactures cremation equipment, caskets, and bronze memorials and sells them to funeral homes.” Matthews is moving into the field of environmentally conscious cremation with its new BioCremation units.[3]
The patent owner in this case – Biosafe – purchased a handful of patents at the bankruptcy sale of the defunct company Waste Reduction Inc. Those patents are directed to using alkaline hydrolysis to break down hazardous biological waste.[4]
After a series of communications between the parties, Matthews filed for a declaratory judgment of non-infringement, invalidity, and unenforceability. The complaint also alleged state law claims of trade libel, defamation, and tortious interference with contractual relations. Western District of Pennsylvania Judge Fischer[5] dismissed the case – holding that the court lacked declaratory judgment jurisdiction over the case.
At the time of the DJ lawsuit, Matthews had only created prototype models of the BioCremation units and had not settled on various parameters of the system or its operation. Based upon that fact, the district court held that the potentially infringing features of the system were “fluid and indeterminate” and thus that the DJ claim “lack[ed] the necessary reality to satisfy the constitutional requirements for declaratory judgment jurisdiction.”[6]
On appeal, the Federal Circuit has affirmed – holding that “Matthews’ dispute with Biosafe lacks the requisite immediacy and reality to support the exercise of declaratory judgment jurisdiction.”
Immediacy: Basically, the court agreed with the lower court that the action was not ripe because no party was in a position to immediately infringe the patent since – at the time of filing – no BioCremation units were in operation. Further, the complaint did not allege that anyone would be using the units in an allegedly infringing manner. As such, “its dispute with Biosafe is too remote and speculative to support the exercise of declaratory judgment jurisdiction.”
To be clear, Matthews (or its customers) do not have to release their product at-risk (i.e., begin infringing) before the courts will hear the lawsuit. Rather, the declaratory judgment jurisdiction threshold can be crossed prior to product release. In this case, the court suggests that the way to meet that threshold test is to provides “some specific and concrete evidence regarding how Matthews’ customers plan to use the cremation units.”[7]
Reality: The court explained its “reality” test for declaratory judgment jurisdiction as focusing on whether the DJ plaintiff has an actual product whose technology is “substantially fixed” as opposed to being “fluid and indeterminate.” Here again, at the prototype stage it was impossible to know or predict whether the BioCremation units would be used in a way that could allegedly infringe.
Burden on DJ Plaintiff: Although the court did not discuss presumptions, the de facto holding here falls in line with the court’s recent decision in Medtronic, Inc. v. Boston Scientific Corp. (Fed. Cir. 2012).[8] In both cases, the court places the burden on the DJ plaintiff to actually show that a real and immediate controversy exists between the parties.
Trap for Unwary DJ Plaintiffs: The court does, however, present a bit of a trap for declaratory judgment plaintiffs when it asks them to provide evidence of a credible infringement argument.
[2] Before RADER, Chief Circuit Judge, MAYER and SCHALL, Circuit Judges.
[4] See U.S. Patent Nos. 5,332,532, 6,437,211, 6,472,580, 7,183,453, 7,829,755, and 7,910,788.
[5] Biography of Judge Nora Barry Fischer at http://www.pawd.uscourts.gov/Documents/Public/Reference/j_fischer.pdf.
[6] Matthews Int’l Corp. v. Biosafe Eng’g, LLC, No. 11-CV–0269, 2011 WL 4498935 (W.D. Pa. Sept. 27, 2011) (“District Court Decision”).
[7] See Sierra Applied Scis., Inc. v. Advanced Energy Indus., Inc., 363 F.3d 1361, 1379 (Fed. Cir. 2004) (concluding that a dispute lacked the required immediacy where a prototype of the product in question would not be operational until more than a year after the complaint was filed); Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 982 F.2d 1520, 1527 (Fed. Cir. 1992) (affirming the dismissal of a declaratory judgment claim where clinical trials of an allegedly infringing product had just begun and it was “years away” from being approved by the Food and Drug Administration (“FDA”)); Lang v. Pac. Marine & Supply Co., 895 F.2d 761, 764 (Fed. Cir. 1990) (concluding that the actual controversy requirement was not satisfied where the allegedly infringing product “would not be finished until at least 9 months after the complaint was filed”).
[8] Good-Standing Licensee Must Prove Non-Infringement in DJ Action, at http://www.patentlyo.com/patent/2012/09/good-standing-licensee-must-prove-non-infringement-in-dj-action.html.
