3M Company (“3M”) appeals from the district court’s dismissal of its declaratory judgment action against Avery Dennison Corporation (“Avery”) for lack of a case or controversy.
See 3M Co. v. Avery Dennison Corp.,
No. 0:10-CV-3849,
Background
I.
This patent case relates to retroreflective sheeting technology, which is used in a variety of applications, such as road signs. Complaint, 3M Co. v. Avery Dennison Corp., No. 0:10-CV-3849 (D.Minn. Sept. 3, 2010) (“Complaint ”) 1 3M and Avery are direct competitors in the retroreflective sheeting product market. Id. at 2-3. Since 2005, 3M has manufactured and sold retroreflective sheeting under the Diamond Grade DG3 product line. Id. at 3. Avery sells a competing product sold under the OmniCube brand. Id. 3M’s declaratory judgment action puts at issue two patents that relate to retroreflective sheeting technology, specifically U.S. Patents RE40,455 and RE40,700 (collectively, the “Heenan patents”). Id. at 4, 6; see also id. at Ex. 1 and Ex. 2.
The parties have a history of patent litigation, starting in 2001. That year, Avery sued 3M and alleged that a prior version of the Diamond Grade DG3 product infringed two patents not at issue here. Id. at 4. In addition to retroreflective sheeting, the parties were engaged in a series of litigations relating to structured adhesive products and closure tape tab laminates in the United States and Europe. Id. at 4-5.
Those litigations settled by 2008. Id. In the course of settling those cases, 3M and Avery engaged in confidential settlement discussions. Id. at 7. 3M alleges that those confidential discussions did not relate to the Heenan patents or any retroreflective sheeting products. Id.
It was during the settlement discussions relating to the structured adhesive products and closure tab tape laminates disputes that 3M became aware that Avery was prosecuting reissue applications for the Heenan patents before the U.S. Patent and Trademark Office (“PTO”). Id. at 6. According to 3M, “Avery sought reissuance of the Heenan patents in an effort to correct errors in the patents and to better position the patents for litigation.” Id.
The parties’ discussions regarding the
Two days later, Rhodes telephoned Sardesai and informed him that 3M had rejected Avery’s offer to license the Heenan patents. Id. Rhodes also inquired if Avery had any new information that would cause 3M to revisit its decision. Id. Sardesai responded that Avery had performed an analysis of 3M’s Diamond Grade DG3 product with reference to the Heenan patents and that Avery would “send claim charts.” Id. Avery, however, never provided 3M with claim charts. Id. The Heenan patents emerged from reissue proceedings by April 2009. Id. at Ex. 1 and Ex. 2.
II.
In 2010, 3M became aware that Avery planned to launch a competing retroreflective sheeting product, the OmniCube T-11500. Id. at 8. That same year, Avery filed another patent infringement suit against 3M, alleging that an unrelated product, 3M’s label sheets, infringed an Avery patent not at issue in this case. Id. On June 25, 2010, 3M filed a patent infringement suit against Avery, alleging that the OmniCube T-11500, in addition to other products, infringed thirteen 3M patents. Id. at 9. Included in the complaint were counts for a declaratory judgment of noninfringement, invalidity, and intervening rights concerning the Heenan patents. Id. That same day, Rhodes telephoned Sardesai and stated that 3M would dismiss its declaratory judgment claims if Avery provided 3M with a covenant not to sue. Id. Avery did not respond. Id. 3M’s outside litigation counsel also inquired if Avery planned to sue 3M for infringement of the Heenan patents. Id. Avery’s counsel did not answer 3M’s question. Id.
In September, 3M amended its complaint and cancelled its declaratory judgment claims. Id. at 10. At the same time, 3M filed its declaratory judgment claims as a new complaint in a separate action. Id. It is from that separate action that 3M appeals.
Early in the case, Avery moved under Federal Rule of Civil Procedure 12(b)(1) to dismiss 3M’s declaratory judgment claims for lack of subject matter jurisdiction. In its motion, Avery asserted a factual challenge to 3M’s declaratory judgment complaint.
DJ Op.,
The district court thereafter entered judgment against 3M, from which it timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
Discussion
I.
The Declaratory Judgment Act provides that, “In a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The phrase “a case of actual controversy” in the Act refers to the types of “cases” and “controversies” that are justiciable under Article III of the U.S. Constitution.
Aetna Life Ins. v. Haworth,
Although there is no bright line rule to determine whether a declaratory judgment action satisfies Article Ill’s ease-or-controversy requirements, the dispute must be “definite and concrete, touching the legal relations of parties having adverse legal interests,” “real and substantial,” and “admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.”
MedImmune,
Even if there is a case or controversy, “district courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites.”
Wilton v. Seven Falls Co.,
In determining if an action presents a justiciable Article III controversy, one typically employs the doctrines of standing or ripeness.
See MedImmune,
“[T]he irreducible constitutional minimum of standing contains three elements.”
Lujan v. Defenders of Wildlife,
“Whether an actual case or controversy exists so that a district court may entertain an action for a declaratory judgment of non-infringement and/or invalidity is governed by Federal Circuit law.”
MedImmune, Inc. v. Centocor, Inc.,
II.
As an initial matter, the parties dispute which facts should be considered on appeal. Avery argues that, because the district court did not resolve Avery’s factual challenge to 3M’s complaint, it would be improper for this court to determine the disputed facts in the first instance. Specifically, Avery alleges that the district court failed to resolve two key factual disputes: (1) whether 3M proved that Sardesai stated that 3M “may infringe,” that “licenses are available,” and that Avery would “send claim charts”; and (2) whether those conversations were subject to a confidentiality agreement precluding their use as a basis to support a declaratory judgment action. Thus, argues Avery, even if the facts alleged by 3M support finding a case or controversy, at most 3M is entitled to a remand for the district court to resolve the parties’ factual disputes and determine if jurisdiction is proper under those facts.
3M responds that it would be improper to remand this case for additional fact finding. Specifically, 3M argues that it is “not truly disputed” what Sardesai communicated to Rhodes over the telephone. Reply Br. 3M Co. at 24,
III.
The district court held that it lacked jurisdiction because, even taking the facts alleged by 3M as true, there was not a justiciable controversy between the parties. We disagree. As discussed below, the facts alleged by 3M, if true, would be sufficient to give rise to a case or controversy under the Declaratory Judgment Act. However, “[ojnce challenged, allegations alone are insufficient to meet the complainant’s burden” to establish jurisdiction.
Cedars-Sinai
Challenging the district court’s dismissal of its declaratory judgment action, 3M argues that all of the circumstances demonstrate a substantial, real, and immediate controversy between 3M and Avery. 3M specifically asserts that the 2009 discussions between Rhodes and Sardesai demonstrate the existence of such a controversy because, in those discussions, Avery accused a specific 3M product of infringing the Heenan patents, 3M denied infringement and refused to accept a license to the Heenan patents, and Avery then stated that it would send 3M claim charts. In addition, 3M points to the parties’ history of patent litigation, Avery’s initiation of reissue proceedings for the Heenan patents, and Avery’s refusal to grant 3M a covenant not to sue. Finally, 3M argues that the district court legally erred when it concluded that the passage of time between the parties’ discussions and 3M’s filing of the declaratory judgment complaint counseled against concluding that the parties’ dispute was real and immediate.
Avery responds that the telephone conversations between Rhodes and Sardesai, even as alleged by 3M, were informal, equivocal, and did not include any threat of litigation. Regarding the surrounding circumstances, Avery argues that 3M’s subjective fears based on Avery’s decision to reissue the Heenan patents and its prior litigation conduct in unrelated patent cases are irrelevant to establishing declaratory judgment jurisdiction. Similarly, Avery argues that its refusal to grant an unconditional and unconstrained covenant not to sue to 3M cannot be used to manufacture declaratory judgment jurisdiction. Finally, Avery argues that the district court properly considered 3M’s more than one-year delay in filing suit as weighing against finding a case or controversy.
We agree with 3M that the facts alleged in its complaint, if found by the district court on remand, would demonstrate the existence of a case or controversy under the Declaratory Judgment Act. To establish the existence of a “definite and concrete” dispute, more is required
Here, 3M’s complaint alleges facts indicating that Avery effectively charged 3M with infringement of the Heenan patents. According to 3M’s complaint, Avery’s Chief Intellectual Property Counsel, Sardesai, telephoned 3M’s Chief Intellectual Property Counsel, Rhodes, and expressly stated that a specific product, the Diamond Grade DG3, “may infringe” the Heenan patents and that “licenses are available.” Two days later, Rhodes telephoned Sardesai and responded that 3M had rejected Avery’s license offer. During that call, Sardesai responded that Avery had analyzed the Diamond Grade DG3 with regard to the Heenan patents and that Avery would provide 3M with claim charts.
Those communications, if found by the district court, would be sufficient to constitute a case or controversy between 3M and Avery. That Sardesai employed the term “may infringe” instead of “does infringe” is immaterial in light of his offer to license the Heenan patents, his representation that Avery had analyzed the Diamond Grade DG3, and his statement that claim charts would be forthcoming.
See Hewlett-Packard,
To counter 3M’s allegations, Avery, relying on our decision in
Innovative Therapies, Inc. v. Kinetic Concepts, Inc.,
This case is markedly different from
Innovative Therapies.
Under the facts alleged in this case, Sardesai initiated the communications and, without provocation,
Similarly, that Avery might not have imposed a deadline to respond in its communications does not weigh against finding a case or controversy. While a patentee’s imposition of a deadline is a circumstance to consider under a
MedImmune
analysis,
Hewlett-Packard,
Here, after 3M denied infringement, it was Avery’s turn to act — it represented that claim charts were forthcoming — and, in that context, it would make little sense if a deadline to respond were imposed on 3M. In addition, by stating that it had analyzed the Diamond Grade DG3 and would send 3M claim charts, Avery perhaps signaled its intent to escalate the dispute. Thus, the lack of deadlines in this case would not favor a conclusion that a case or controversy is lacking.
The remaining circumstances would not strongly weigh in either direction toward concluding that 3M has proven the existence of a case or controversy. On the one hand, while “[pjrior litigious conduct is one circumstance to be considered,” a history of litigation “concerning different products covered by unrelated patents is not the type of pattern of prior conduct that makes reasonable an assumption” that the patentee will file suit regarding a new or different product.
Prasco, LLC v. Medicis Pharm. Corp.,
We do agree with Avery that its decision to initiate reissue proceedings for the Heenan patents would not weigh strongly in favor of finding a case or controversy. The purpose of reissue proceedings is to correct errors in an issued patent,
In re Bennett,
We disagree, however, with Avery’s assertion that the district court properly concluded that 3M’s delay in filing suit weighed against finding subject matter jurisdiction in this case. It is true that “[i]n many cases a controversy made manifest by a patentee’s affirmative assertion of its patent rights will dissipate as market players and products change.”
AMP,
In this case, the relevant circumstances surrounding Avery’s assertion of its patent rights appear to have remained unchanged during the over one-year period between Avery’s assertion of patent rights and 3M’s filing of the declaratory judgment complaint. There is no allegation that the Diamond Grade DG3 product has changed in relation to the Heenan patents or that either 3M or Avery altered its respective position. Moreover, we note that, as part of a pre-filing investigation, it takes time to review a set of asserted patents, the record generated before the PTO, and the accused products before a potential infringer can make an informed decision to file a declaratory judgment complaint. Thus, we would be disinclined to hold that the case or controversy between the parties sufficiently dissipated in the more than one-year passage of time between Avery’s assertion of patent rights and 3M’s filing of the declaratory judgment complaint.
Finally, the parties dispute what effect Avery’s failure to provide a covenant not to sue should have on the jurisdictional analysis. We have explained that “although a patentee’s refusal to give assurances that it will not enforce its patent is relevant to the determination [of declaratory judgment jurisdiction], it is not dispositive.”
Prasco,
In sum, the facts as alleged by 3M, if found by the district court, would demonstrate the existence of an ongoing case or controversy under the Declaratory Judgment Act. Under the Supreme Court’s decision in
Medlmmune,
the basic question for declaratory judgment jurisdiction is whether there is “a substantial controversy” between parties “having adverse legal interests” that is “of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
IV.
Having concluded that the facts in 3M’s complaint, if found by the district court,
In addition to fact-finding issues, the parties seek a ruling on whether the district court would abuse its discretion if on remand it declined to exercise jurisdiction over 3M’s declaratory judgment action, should it determine that such jurisdiction exists. We decline, however, to opine on a discretionary decision that the district court has yet to make, especially because that decision will ultimately be based on a set of facts that the district court has yet to find.
See Fina Research, S.A. v. Baroid Ltd.,
Conclusion
We have considered the parties’ remaining arguments and conclude that they are without merit. For the foregoing reasons, the judgment of the district court is
VACATED AND REMANDED
Notes
. Because the district court did not resolve the parties’ factual disputes and instead concluded that subject matter jurisdiction was lacking even under the facts alleged by 3M, we rely on the facts alleged in 3M's complaint for the purposes of this appeal.
. In its complaint, 3M also alleged that during settlement negotiations it became aware that Avery was monitoring the launch of the Diamond Grade DG 3 product and that Avery had examined the product in comparison to the Heenan patents’ claims.
Id.
at 6. Before the district court, however, 3M conceded that conversations prior to 2009 were covered by a confidentiality agreement that precluded their use as a basis to support a declaratory judgment action.
See DJ Op.,
