SanDisk Corporation v. STMicroelectronics, Inc.

United States Court of Appeals, Federal Circuit
480 F.3d 1372 (2007)

ELI5:

Rule of Law:

An 'actual controversy' exists for declaratory judgment jurisdiction when a patentee asserts its rights based on specific, identified infringing activity by another party and seeks a license, even if the patentee expressly states it has no plan to sue. This holding rejects the previous 'reasonable apprehension of suit' test in favor of a broader 'totality of the circumstances' standard.

Facts:

STMicroelectronics (ST) sent letters to SanDisk Corporation (SanDisk) identifying several ST patents and requesting a meeting to discuss a cross-license agreement.
The parties engaged in business discussions, during which ST insisted that patent and licensing discussions be kept separate from business talks.
On August 27, 2004, the companies held a dedicated licensing meeting attended by lawyers, executives, and technical experts.
At the meeting, ST's experts delivered a four- to five-hour presentation detailing, on a claim-by-claim and element-by-element basis, how SanDisk's products allegedly infringed fourteen of ST's patents.
ST provided SanDisk with a packet of materials containing the patents, reverse engineering reports, and diagrams showing how ST's patent claims covered SanDisk’s products.
ST’s vice president, Lisa Jorgenson, acknowledged that the materials could allow SanDisk to file a declaratory judgment action but provided them anyway.
At the end of the meeting, Jorgenson told SanDisk's counsel that 'ST has absolutely no plan whatsoever to sue SanDisk.'
Following the meeting, licensing negotiations between the parties stalled.

Procedural Posture:

SanDisk filed a complaint against STMicroelectronics in the U.S. District Court for the Northern District of California.
The complaint included claims seeking a declaratory judgment of noninfringement and invalidity of fourteen ST patents.
ST filed a motion to dismiss the declaratory judgment claims, arguing the court lacked subject matter jurisdiction because there was no 'actual controversy.'
The district court granted ST's motion to dismiss, finding that SanDisk did not have an objectively reasonable apprehension of an infringement suit.
SanDisk, as the appellant, appealed the district court's dismissal to the U.S. Court of Appeals for the Federal Circuit.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does an 'actual controversy' exist for purposes of the Declaratory Judgment Act when a patentee accuses another party's specific products of infringement and seeks a license, even if the patentee simultaneously states it has no plan to file an infringement suit?

Opinions:

Majority - Linn

Yes, an actual controversy exists under these circumstances. The Supreme Court's decision in MedImmune v. Genentech rejected this court's 'reasonable apprehension of suit' test. The proper inquiry, under the totality of the circumstances, is whether there is 'a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.' By presenting a detailed infringement analysis of SanDisk's specific products and asserting a right to a royalty, ST took a position adverse to SanDisk, which contended it had the right to continue its activities without a license. A party need not 'bet the farm' by waiting to be sued for infringement before seeking a declaration of its rights. ST’s statement that it did not intend to sue does not eliminate the controversy created by its overall course of conduct, which showed a preparedness to enforce its patent rights.

Concurring - Bryson

Yes, an actual controversy exists, but only because the Supreme Court's decision in MedImmune compels this result. Under this court's prior precedent, the district court's dismissal would have been correct, as ST had not threatened suit and was engaged in licensing negotiations. However, MedImmune's criticism of the 'reasonable apprehension of suit' test effectively overrules that precedent. The majority's new standard—that jurisdiction exists 'where a patentee asserts rights under a patent based on certain identified ongoing or planned activity'—is a sweeping change that will allow declaratory judgment actions in virtually any case where a patentee offers a license. While I have reservations about this change, it is a fair reading of MedImmune, and I therefore concur in the judgment.

Analysis:

This case officially discards the Federal Circuit's long-standing 'reasonable apprehension of suit' test for declaratory judgment jurisdiction in patent disputes, aligning with the Supreme Court's guidance in MedImmune. The decision significantly lowers the threshold for an accused infringer to initiate litigation, shifting power from patentees to accused infringers during licensing negotiations. After this case, any patent holder that provides a detailed infringement analysis or otherwise asserts its rights against a specific product risks being sued for a declaratory judgment, even if it expressly disclaims any intent to litigate. This forces patentees to be far more cautious in their licensing communications.

Gunnerbot

AI-powered case assistant

Loaded: SanDisk Corporation v. STMicroelectronics, Inc. (2007)

Try: "What was the holding?" or "Explain the dissent"

Premium Feature