Delano Farms Co. v. California Table Grape Commission
655 F.3d 1337
Fed. Cir.
2011

Background

  • USDA owns three patents under the Plant Patent Act for grapevines that produce table grapes and licensed rights to the California Table Grape Commission; royalties are split 60/40 between the Commission and USDA.
  • The Commission can sublicense the patents and designated three nurseries as exclusive distributors; growers sign Domestic Grower License Agreements prohibiting propagation and allowing destruction of purchased plants for violations.
  • Delano Farms and other California grape growers sued in district court seeking voidance/unenforceability of the patents and challenging the licensing/enforcement scheme as to the USDA and Commission.
  • Delano asserted prior-use and inequitable-conduct claims, including alleged pre-criticial-date disclosures at public meetings by USDA co-inventor Dr. Ramming and undisclosed pre-patent uses.
  • The district court held USDA indispensable but immune, dismissed related patent claims for lack of joinder and sovereign immunity, and dismissed the Commission’s antitrust/unfair-competition claims for failure to pleading a plausible market.
  • On appeal, the court addressed (i) whether the USDA must be joined as a party; (ii) whether APA §702 sovereign-immunity waiver allows non-APA equitable relief against the USDA; (iii) sufficiency of inequitable-conduct allegations; and (iv) the Sherman Act claim premised on Walker Process against the Commission.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether USDA must be joined as a party to the patent claims. Delano argues USDA transferred all substantial rights to Commission so USDA is not necessary. USDA retained substantial rights and enforcement control; not joined would render claims improper. USDA is a necessary party; remand allows joinder.
Whether Section 702 of the APA waives sovereign immunity for Delano's Patent Act claims against the USDA. Section 702 broadly waives immunity for non-monetary relief against federal agencies. Waiver is limited to APA-based or final agency actions under §704; here, not so limited. Section 702 waives sovereign immunity for Delano's non-monetary Patent Act claims against the USDA.
Whether Delano adequately pled inequitable conduct by the USDA/Dr. Ramming. Plaintiff pleads that Ramming knew of prior-use material and concealed it with deceptive intent. Presumption of regularity defeats intent unless pled with specific facts showing knowledge and intent. Complaint enough to permit the inequitable-conduct claim to proceed.
Whether the antitrust claim against the Commission survives a market-definition challenge. Sweet Scarlet constitutes a distinct antitrust submarket; the Commission abused its patent enforcement. Delano failed to define a plausible market; insufficient market power and substitutes. Antitrust claim dismissed for lack of a plausible market definition.

Key Cases Cited

  • A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213 (Fed. Cir. 2010) (licensee may hold all substantial rights; assignor not necessary)
  • Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090 (Fed. Cir. 1998) (assignee treated as patentee where all substantial rights transferred)
  • Alfred E. Mann Found. for Scientific Research v. Cochlear Corp., 604 F.3d 1354 (Fed. Cir. 2010) (enforcement rights and control affect substantial-rights analysis)
  • Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870 (Fed. Cir. 1991) (consideration of licensor control over enforcement)
  • Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333 (Fed. Cir. 2001) (licensing agreements and control over sublicensing matters)
  • Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965) (patent enforcement tainted by knowledge of invalidity negates antitrust immunity)
  • Brown Shoe Co. v. United States, 370 U.S. 294 (U.S. 1962) (market definition and substitutes in antitrust analysis)
  • Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038 (9th Cir. 2008) (market/submarket definition considerations for antitrust claims)
  • Smith v. Secretary of the Army, 384 F.3d 1288 (Fed. Cir. 2004) (APA-based action vs. exclusive monetary remedies in Court of Federal Claims)
  • Christopher Village, L.P. v. United States, 360 F.3d 1319 (Fed. Cir. 2004) (Tucker Act and exclusive monetary remedy limitations; sovereignty implications)
  • Nebraska Public Power Dist. v. United States, 590 F.3d 1357 (Fed. Cir. 2010) (section 702 sovereign-immunity analysis independent of APA)
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