IP Alerts

March 12, 2014

On March 11, 2014, the Court of Appeals for the Federal Circuit held in Danisco US Inc. v. Novozymes A/S that pre-issuance conduct can establish an Article III case or controversy in a declaratory judgment action. The court reversed the district court ruling that “an affirmative act of enforcement” or “some implied or express enforcement threat” is required, and that “pre-issuance conduct” is not enough to satisfy that requirement. The case is significant in clarifying that pre-issuance conduct can indeed be sufficient to give rise to declaratory judgment jurisdiction.

The patent in suit was Novozymes’s U.S. Patent No. 8,252,573 (the “’573 patent”), relating generally to starch liquefaction enzymes. Danisco sued Novozymes under the Declaratory Judgment Act on the day the ’573 patent issued, to seek a declaration that the ’573 patent was invalid and not infringed. The district court held that the lawsuit “was filed prior to the time Novozymes took, or even could have taken, any affirmative action to enforce its patent rights.” From this, the district court reasoned that there was no Article III controversy, as is required to sustain a declaratory judgment action, and dismissed the case. Danisco appealed.

On appeal, the Federal Circuit observed the following:

• Novozymes had sued Danisco or its subsidiaries for patent infringement many times since 2001. 
• Danisco owns U.S. Patent No. 8,084,240 (“the ’240 patent”), which also generally relates to starch liquefaction. Shortly after Danisco received a notice of allowance for the application that matured into the ’240 patent, Novozymes attempted to provoke an interference proceeding between the Danisco application and the pending Novozymes application for the ’573 patent. Novozymes asserted that the Danisco application claimed the “same invention” as in the Novozymes application.
• After the U.S. Patent and Trademark Office (USPTO) rejected Novozymes’s attempt to provoke an interference, Novozymes amended its application and represented that its amended application read on the active ingredient in Danisco’s starch liquefaction products.
• Novozymes then filed public comments to the USPTO asserting its belief that the ’240 patent “falls within the scope” of the sole pending ’573 claim.

Significantly, the court held that the Article III case-or-controversy requirement “does not mandate that the declaratory judgment defendant have threatened litigation or otherwise taken action to enforce its rights before a justiciable controversy can arise.” Rather, there need only be a “substantial controversy” between the parties, the existence of which is determined by an examination of the totality of the circumstances. 

In this case, the court reasoned that the parties “have plainly been at war over patents involving [starch liquefaction technology] and are likely to be for the foreseeable future.” Also, the court observed Novozymes “sought its patent because it believed that Danisco’s products would infringe once the claim issued.” Given these factors and the facts described above, under this totality of the circumstances analysis, the court held that an Article III controversy did exist between the parties, and remanded. 

In reaching its conclusion, the court rejected the district court’s distinction between pre- and post-issuance conduct of the patentee as “irreconcilable with the Supreme Court’s insistence on applying a flexible totality of the circumstances test, its rejection of technical bright line rules in the context of justiciability, and our own precedent.” The court further held that “we have never held that ‘pre-issuance conduct’ cannot constitute an affirmative act, nor have we held that the only affirmative acts sufficient to create justiciable controversies are ‘implied or express enforcement threat[s].’” 

Finally, Danisco had sought relief under 35 U.S.C. 291 relating to priority of invention (pre-AIA). The district court had dismissed this claim as unripe in the absence of a case or controversy relating to the declaratory judgment counts. The Federal Circuit vacated and remanded this claim, and declined to address the claim on the merits.

Danisco is significant for parties who become involved with declaratory judgment patent actions, or who potentially may become involved in such actions. For more information, please contact Fitch Even partner Eric L. Broxterman, the author of this alert.


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