Abb Inc. v. Cooper Industries, LLC, 635 F.3d 1345

Background

ABB Inc. and ABB Holdings, Inc. own several Cooper patents related to dielectric-fluid-insulated electrical equipment.
Cooper sued ABB in Wisconsin (2003) for BIOTEMP infringement; settled in 2005 with a license that ABB could make and use BIOTEMP, but restricted third-party manufacturing by others.
ABB paid $1,000,000 for the license and acknowledged the patents’ validity; the license excluded third-party manufacturing rights.
ABB outsourced BIOTEMP manufacturing to Dow Chemicals and agreed to indemnify Dow against infringement claims.
Cooper warned ABB and Dow in June 2009 that ABB’s outsourcing would breach the license and that Cooper would vigorously defend its rights.
ABB filed a declaratory judgment action in the Southern District of Texas (July 29, 2009) seeking noninfringement and authority under the license; Cooper later filed suit in Texas state court seeking a declaration that Dow’s manufacture was outside the license.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal jurisdiction exists for a DJ action arising from an infringement controversy.	ABB contends the dispute involves a patent-related infringement issue and thus arises under federal law.	Cooper argues the dispute is purely a state-law contract/license interpretation matter with no real infringement controversy.	Yes; there is federal-question jurisdiction because the hypothetical coercive suit would arise under patent law.
Whether the presence of a state-law defense defeats federal jurisdiction in a DJ action.	ABB asserts that although a license defense was raised, the underlying issue is infringement and patent law governs.	Cooper argues a non-federal defense should defeat jurisdiction if the defense is state-law in nature.	No; jurisdiction exists where the hypothetical infringement claim would raise a federal question.
Whether Textron Lycoming open question governs jurisdiction when a federal claim may be anticipated by a nonfederal defense.	ABB relies on the general rule that anticipated federal claims can sustain jurisdiction.	Cooper relies on Textron's openness about whether anticipated federal claims alone confer jurisdiction.	Courts may confer jurisdiction under patent laws even when the defense is nonfederal.
Whether Franchise Tax Board supports jurisdiction where a patent infringement suit would be federal.	ABB relies on Franchise Tax Board's rationale that the hypothetical infringement suit is the basis for jurisdiction.	Cooper argues the defense’s nonfederal character should defeat jurisdiction.	Franchise Tax Board supports jurisdiction where the hypothetical infringement action would be federal.

Key Cases Cited

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (U.S. 2007) (case or controversy exists without imminent suit requirement)
Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897 (Fed. Cir. 2008) (warning letters create immediate controversy supporting DJ jurisdiction)
Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358 (Fed. Cir. 2009) (declaratory judgment jurisdiction can attach without explicit infringement suit)
Textron Lycoming Reciprocating Engine Div., AVCO Corp. v. Auto. Workers, 523 U.S. 653 (U.S. 1998) (open question about jurisdiction when defense is nonfederal but federal claim anticipated)
Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust, 463 U.S. 1 (U.S. 1983) (jurisdiction based on federal character of hypothetical infringement suit)
Wycoff Co. v. Ecolochem, Inc., 344 U.S. 237 (U.S. 1952) (supports analysis that declaratory action is judged by defendant's hypothetical coercive action)
Speedco, Inc. v. Estes, 853 F.2d 912 (Fed. Cir. 1988) (applies Skelly Oil rule to declaratory judgments)
Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (U.S. 1950) (well-pleaded complaint rule for declaratory judgments)
Oneida Indian Nation of New York State v. County of Oneida, 414 U.S. 661 (U.S. 1974) (diversity and federal questions interplay in DJ jurisdiction)