Capo v. Dioptics (Fed. Cir. 2004).
Background
Dioptics produces “wear-over” sunglasses that are adapted to fit over or clip onto eyeglasses. Capo is a wholesale marketer of sunglasses. Prior to suit, the president of Dioptics (Henry Lane) called the president of Capo (Mark Ascik):
Lane left a voice mail message stating that if he did not hear promptly from Ascik, he would have to “presume that you are just ducking and racing forward to infringement;” Lane cautioned Ascik about “charging down a path here that’s going to end up into a multi-million dollar lawsuit.” Ascik then phoned Lane, and Ascik’s affidavit states that Lane said that Dioptics had thirteen United States patents and would soon have forty, and that these patents covered all of the basic wear-over sunglass frame shapes. Lane said that Dioptics would have no choice but to defend its patents against infringement, and that he was sure he would win an infringement suit.
After the conversations, Capo filed a declaratory judgment complaint, asking for a preemptive noninfringement holding. Dioptics moved for dismissal of the declaratory action, on the ground that Dioptics could not have threatened suit because no one at Dioptics had seen Capo’s product or analyzed it for infringement.
The district court dismissed the declaratory action, finding that the dispute was not “sufficiently crystallized” for declaratory action. On appeal, the Federal Circuit reversed:
Objective Apprehension Of Being Sued Sufficient For Declaratory Judgment Action.
Dioptics’ argument that it could not have ethically filed suit at that time may be relevant to whether Dioptics acted responsibly, but it is irrelevant to whether the patentee’s threats of suit instilled a reasonable apprehension of suit. Although Dioptics now characterizes Lane’s words as “cursory,” the record well supports the conclusion that Capo had the objectively reasonable apprehension that it would be sued by Dioptics for patent infringement. This objective apprehension was deliberately and intentionally created by the president of Dioptics. It is irrelevant whether Dioptics had adequately investigated the basis of its threats, if they created the requisite objective apprehension. . . . We conclude that the district court clearly erred in declining to find that Capo had a reasonable apprehension of suit.
Failure to Raise Counterclaims Does Not Warrant Dismissal.
The district court gave weight to Dioptics failure or refusal to make compulsory counterclaims for infringement. The Appellate Court found that Dioptics’ waiver of the claims should not add any weight to the argument for dismissal.
The Existence of Pending Patent Applications Does Not Justify Dismissal.
The district court also gave weight to Dioptics’ argument that it had pending patent applications that upon issuance would strengthen its case for infringement. The Appeals Court disagreed with this finding:
Capo is entitled to resolution of the infringement accusations already made, for the patents that already exist. The possibility of future patents is irrelevant to present rights and liability.
Conclusion
Resolution of this dispute is within the court’s capability, and it is the district court’s responsibility to resolve it. Declining to do so is an abuse of discretion.
We conclude that the dismissal was improperly granted. The dismissal is vacated, and the case is remanded for further proceedings.