Opinion ID: 211823
Heading Depth: 2
Heading Rank: 3

Heading: Jurisdiction of the District Court to Hear Solo Cup's Counterclaim

Text: 21 The district court dismissed Solo Cup's counterclaim for a declaration that the '140 patent is unenforceable on the ground that the Post-Verdict Covenant mooted the controversy between the parties. Pursuant to 28 U.S.C. § 2201(a), a declaratory judgment counterclaim may only be brought to resolve an actual controversy. Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1340 (Fed.Cir.2001). In holding that no actual controversy existed here, the district court relied primarily on this court's jurisprudence in Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1058 (Fed.Cir.1995). 22 In Super Sack, this court stated that a patentee defending against an action for a declaratory judgment of invalidity can divest the trial court of jurisdiction over the case by filing a covenant not to assert the patent at issue against the putative infringer with respect to any of its past, present, or future acts. Id. at 1058. The rationale applied by the court in Super Sack was that the patentee's covenant not to sue resolved the actual controversy between the parties, i.e., the question of infringement of the subject patent, such that the court no longer had Article III jurisdiction to hear a declaratory judgment action regarding the validity or enforceability of that patent. Id.; Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 635-36 (Fed.Cir.1991). Here, the district court concluded that in light of the Post-Verdict Covenant there was no actual controversy between the parties capable of resolution by a hearing on the unenforceability of the '140 Patent and therefore Solo Cup's counterclaim was moot. 23 The district court's literal application of the holding of Super Sack fails to comprehend the unique procedural posture of the instant case. In Super Sack and its progeny, the patentee's covenant not to sue was filed prior to consideration or resolution of the underlying infringement claim. In such circumstances, the promise not to sue obviated any reasonable apprehension that the declaratory judgment plaintiff might have of being held liable for its acts of infringement. Super Sack, 57 F.3d at 1059 (as a result of the patentee's promise not to sue, the declaratory judgment plaintiff has no cause for concern that it can be held liable for any infringing acts); Spectronics, 940 F.2d at 636 (the patentee's statement of non-liability made the declaratory judgment plaintiff immune to suit under the claims of the contested patent); see also Intellectual Prop. Dev., 248 F.3d at 1341; Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed.Cir. 1999). Here, however, the Post-Verdict Covenant had no effect on Fort James's claim for infringement, because that controversy had already been resolved by the jury's verdict. The question then becomes whether the court retained jurisdiction to hear Solo Cup's declaratory judgment counterclaim after the jury determined that Solo Cup's products do not infringe Fort James's patents. 24 As the Supreme Court has explained, a case or controversy adequate to support jurisdiction of a declaratory judgment counterclaim necessarily exists if a party has actually been charged with infringement of a patent. Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 95, 113 S.Ct. 1967, 124 L.Ed.2d 1 (1993). Furthermore, a counterclaim questioning the validity or enforceability of a patent raises issues beyond the initial claim for infringement that are not disposed of by a decision of non-infringement. Id. at 96, 113 S.Ct. 1967; Altvater v. Freeman, 319 U.S. 359, 364, 63 S.Ct. 1115, 87 L.Ed. 1450 (1943). Accordingly, the jury verdict holding that Solo Cup did not infringe Fort James's patents did not moot Solo Cup's counterclaim for unenforceability nor did it act to divest the district court of jurisdiction to hear that unlitigated counterclaim. See Fin Control Sys. Pty, Ltd. v. OAM, Inc., 265 F.3d 1311, 1321 (Fed.Cir.2001) (holding that despite the district court's determination of no infringement, it was obligated to consider and rule on defendant's counterclaims of invalidity and unenforceability prior to entering judgment); Gen. Elec. Co. v. Nintendo Co., Ltd., 179 F.3d 1350, 1356 (Fed.Cir.1999) (stating that our affirmance of a district court's judgment of noninfringement does not, by itself, moot the declaratory judgment claim of invalidity). 2 The district court erred as a matter of law in holding that it did not have jurisdiction to hear Solo Cup's counterclaim. The case is remanded for resolution of the issues properly before the court prior to its order to bifurcate, namely Solo Cup's claims of unenforceability on the basis of inequitable conduct and its request for attorney fees pursuant to 35 U.S.C. § 285. 3