Second prong of declaratory judgment jurisdiction test survived MedImmuneMay 29, 2008

In a decision yesterday, the Federal Circuit affirmed a district court's grant of summary judgment of noninfringement and its related finding that the court had declaratory judgment jurisdiction. The court, for the first time since the Supreme Court's MedImmune decision, addressed the second prong of its pre-MedImmune declaratory judgment test. The court held this portion of the test, requiring "meaningful preparation" to conduct potentially infringing activity, is still relevant to the jurisdictional analysis. As stated by the court (internal citations omitted):

We conclude that although MedImmune articulated a "more lenient legal standard" for the availability of declaratory judgment relief in patent cases, the issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate. If a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither "immediate" nor "real" and the requirements for justiciability have not been met.

Under this standard, it was clear to the court that a real and immediate controversy existed between the parties. The party seeking the declaratory judgment was ready to produce the allegedly infringing products, but due to the nature of the products, did not actually begin production until an order was received. As a result, there were sufficient "significant, concrete steps" taken, and the issuance of a declaratory judgment was appropriate.On the merits, the court affirmed the district court's claim construction and the related finding of noninfringement. The court rejected the plaintiff's proposed construction because it would render the limitation functionally meaningless, and described the plaintiff's position as "semantic antics."More detail on CAT Tech. LLC v. TubeMaster, Inc. after the jump.

Cat Tech owns a patent claiming a method for using loading devices to place catalyst particles into multi-tube chemical reactors. The method uses a plurality of plates that are positioned to cover the upper tube-sheet of a chemical reactor. The claims call for "a spacing between adjacent plates having a width not greater than the smallest dimension of a single particle to be loaded into the multi-tube reactor." The space is designed for collecting dust and partial particles. The spacing between the plates is illustrated below:Figure 1During prosecution of the parent application of the patent-in-suit, Cat Tech used the spacing element to distinguish the invention of the prior art. Cat Tech argued that:

[a]djacent plates do not touch fully, but are separated by a gap, each gap having a width that is less than the smallest dimension of a particle to be loaded. The gaps are highly effective in collecting dust and partial particles, both of which are undesirable . . . . None of the prior art teach or disclose dust collection. . . . The present invention is able to collect dust and chips because multiple channels are formed when the plates are pieced together. The smaller the plates, the greater the number of channels per template.

Cat Tech incorporated the spacing element of the parent application into the patent-in-suit. Cat Tech responded to a rejection by arguing that the application does not focus on the shape of the plates but rather is based on the spacing between the adjacent plates prohibiting whole particles from entering.TubeMaster developed a method for putting a catalyst into reactor tube using loading devices known as Outage Loading Equipment ("OLE"). TubeMaster has four different configurations for its OLE devices and had generated engineering drawings for each. In each of these configurations, some of the spaces between adjacent plates are large enough to allow whole pieces of catalyst to fall between the plates. TubeMaster has already produced one configuration, configuration 3, for a customer. TubeMaster normally does not manufacture its devices until it receives an order from a customer specifying the appropriate dimensions.Cat Tech brought suit against TubeMaster alleging infringement of the '660 patent by its sale of configuration 3 of the OLE loading devices. TubeMaster counterclaimed, seeking a declaration of noninfringement and Cat Tech subsequently amended its complaint, seeking declaratory judgment of noninfringement on all four configurations.The district court held there was a sufficient controversy for declaratory judgment jurisdiction regarding configurations 1, 2, and 4, and, after construing the critical "spacing" limitation, entered judgment of noninfringement for all four configurations. Cat Tech appealed.The Federal Circuit affirmed. Turning first to the issue of declaratory judgment jurisdiction, the court agreed with the district court's conclusion that a "live controversy" existed. As an initial matter, the court addressed the effect of MedImmune on the second prong of its pre-MedImmune test for declaratory judgment jurisdiction. The court noted it had addressed the first prong in several earlier decisions (see here, here, here, here, here, and here), but had not substantively addressed whether the second prong of its test survived MedImmune. Although MedImmune had rejected the first prong of the test for declaratory judgment jurisdiction (reasonable apprehension of suit), it would have been satisfied in this case as Cat Tech had already brought suit against TubeMaster.The court went on to asses the fate of the second prong of the two-prong test following MedImmune. The court held this portion of the test, requiring "meaningful preparation" to conduct potentially infringing activity, is still relevant to the jurisdictional analysis. As stated by the court (internal citations omitted):

We conclude that although MedImmune articulated a "more lenient legal standard" for the availability of declaratory judgment relief in patent cases, the issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate. If a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither "immediate" nor "real" and the requirements for justiciability have not been met.

Applying this analysis to this case, TubeMaster was prepared to produce any of the four OLE configurations as soon as it received an order from the customer with the appropriate dimensions. TubeMaster could take no further steps toward manufacturing its loading devices until it received an order form a customer specifying the appropriate dimensions. Moreover, the dispute between TubeMaster and Cat Tech was immediate and real because the four OLE configurations were substantially fixed. TubeMaster had produced AutoCAD drawings and would produce the devices without major changes in design. The court noted TubeMaster had not advertised or sold the devices, but stated advertising or disclosure to customers was not an indispensable prerequisite to declaratory judgment jurisdiction. Rather, all the circumstances must be considered; in this case, the court found cogent evidence showing that TubeMaster had made meaningful preparations to conduct potentially infringing activity. As a result, it was clear to the court that TubeMaster had engaged in "meaningful preparation" of the OLE devices, and the exercise of declaratory judgment jurisdiction was permissible.The court then turned to the merits of the case, and again affirmed the district court. Cat Tech alleged that the claims of the '660 patent required only that there be one point between plates, a "pinch point," having a width not greater than the smallest dimension of whole catalyst particle. The court held the plain language of the claims, the specification, and the prosecution history to support the conclusion that every point between adjacent plates be smaller than the dimensions of a whole catalyst particle. Finding otherwise would render the "spacing" limitation functionally meaningless has whole catalyst particles would simply fall into the other, wider gaps between the plates. Further, during prosecution of the parent application, Cat Te

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