Cardinal Chemical Co. v. Morton International, Inc.
1993 U.S. LEXIS 3136, 508 U.S. 83, 124 L. Ed. 2d 1 (1993)
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Rule of Law:
An appellate court's affirmance of a determination that a patent has not been infringed does not moot a counterclaim for a declaratory judgment that the same patent is invalid. Absent unusual circumstances, the appellate court has a duty to decide the appeal of the invalidity judgment on its merits.
Facts:
- Morton International, Inc. (Morton) owned two patents for chemical compounds used in polyvinyl chloride (PVC).
- Morton believed that Cardinal Chemical Company (Cardinal) was infringing on these patents.
- Morton filed a lawsuit against Cardinal for patent infringement.
- In response, Cardinal denied infringing the patents and filed a counterclaim seeking a court declaration that Morton's patents were invalid.
- Separately, Morton sued two other companies for infringing the same patents, and those companies also filed counterclaims challenging the patents' validity.
Procedural Posture:
- Morton International, Inc. sued Cardinal Chemical Company in the U.S. District Court for the District of South Carolina for patent infringement.
- Cardinal filed an answer denying infringement and a counterclaim for a declaratory judgment that the patents were invalid.
- Following a bench trial, the District Court entered judgment for Cardinal, finding no infringement and declaring Morton's patents invalid.
- Morton, as appellant, appealed both the non-infringement and invalidity rulings to the U.S. Court of Appeals for the Federal Circuit.
- The Federal Circuit affirmed the District Court's finding of non-infringement.
- However, citing its own precedent, the Federal Circuit vacated the District Court's judgment of invalidity, reasoning that the issue was now moot.
- Cardinal's petition for rehearing en banc was denied by the Federal Circuit.
- Cardinal petitioned the U.S. Supreme Court for a writ of certiorari, which was granted.
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Issue:
Does a federal appellate court's affirmance of a finding of non-infringement of a patent render a counterclaim for a declaratory judgment of the patent's invalidity moot, thereby justifying the vacatur of the district court's invalidity judgment?
Opinions:
Majority - Justice Stevens
No. The Federal Circuit's practice of routinely vacating a declaratory judgment on patent validity after affirming a finding of non-infringement is improper because the issue of validity is not mooted by the non-infringement finding. A party that has been charged with infringement has an independent interest in obtaining a final resolution of its counterclaim that the patent is invalid. The District Court had jurisdiction over Cardinal's counterclaim, and that jurisdiction was not extinguished on appeal merely because the infringement claim was resolved. There is a strong public interest in the finality of judgments in patent litigation and in resolving questions of patent validity to prevent invalid patents from stifling competition. The Federal Circuit's practice undermines the rule of Blonder-Tongue, which prevents a patentee from relitigating the validity of a patent once it has been declared invalid, and unfairly deprives both the alleged infringer of the judgment it won and the patentee of full appellate review.
Concurring - Justice Scalia
No. The Federal Circuit erred in holding that the invalidity claim became moot once it was determined that the patent had not been infringed, and it was an abuse of discretion to decline to reach the issue for that erroneous reason. However, the Court should not have gone further in Part IV to decide that the Federal Circuit may not continue this practice on other, non-mootness grounds. This broader question was not subject to a true adversarial presentation, as both parties agreed on the desired outcome, and it involves the practicalities of the Federal Circuit's specialized jurisdiction which the Supreme Court should be hesitant to address without full argument from opposing sides.
Analysis:
This decision significantly altered patent litigation procedure by rejecting the Federal Circuit's longstanding 'Vieau' practice of vacating invalidity judgments after a finding of non-infringement. It strengthens the position of accused infringers by ensuring they can obtain a definitive ruling on patent validity, which has preclusive effect under Blonder-Tongue. The ruling serves the public interest by promoting the prompt and final resolution of patent validity disputes, thereby preventing holders of potentially invalid patents from using them as 'scarecrows' to repeatedly threaten competitors and chill innovation. It establishes that a counterclaim for invalidity is a distinct legal claim that does not simply evaporate once the primary infringement claim is resolved.
