Court Opinion

ID: 4202983
Source: CourtListenerOpinion
Date Created: 2017-09-13 15:01:22.323401+00
Date Added: 2024-06-11T14:40:55.113028
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

  ALLIED MINERAL PRODUCTS, INC., AN OHIO
              CORPORATION,
              Plaintiff-Appellant

                          v.

     OSMI, INC., STELLAR MATERIALS, INC.,
          STELLAR MATERIALS, LLC,
               Defendants-Appellees
              ______________________

                      2016-2641
                ______________________

   Appeal from the United States District Court for the
Southern District of Florida in No. 9:15-cv-81753-KAM,
Judge Kenneth A. Marra.
                ______________________

             Decided: September 13, 2017
               ______________________

   JAMES DAVID LILES, Porter, Wright, Morris & Arthur
LLP, Cincinnati, OH, argued for plaintiff-appellant.

    JOHN DAVID LUKEN, Dinsmore & Shohl LLP, Cincin-
nati, OH, argued for defendants-appellees. Also repre-
sented by MARK SCHNEIDER, Troy, MI.
                ______________________

    Before MOORE, REYNA, and STOLL, Circuit Judges.
2                ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.

MOORE, Circuit Judge.
   The present appeal arises from the dismissal of a de-
claratory judgment action in the Southern District of
Florida. Allied Mineral Products, Inc. (“Allied”) sued
three related entities, OSMI, Inc., Stellar Materials, Inc.,
and Stellar Materials, LLC (collectively “Stellar”), seeking
a declaratory judgment that it did not infringe Stellar’s
U.S. Patent No. 7,503,974 (the “’974 patent”), the patent
is invalid, and Stellar committed inequitable conduct.
The district court dismissed the complaint for lack of
subject matter jurisdiction. Because the district court
correctly determined that Stellar’s actions do not create a
justiciable case or controversy, we affirm.
                       BACKGROUND
   This dispute centers on a Mexican infringement suit
between Stellar and two of Allied’s Mexican distributors. 1
Stellar and Allied are American companies; Ferro Alloys
de Mexico S.A. de C.V. (“Ferro”) and Pyrotek Mexico S. de
R.L. de C.V. (“Pyrotek”) are Allied’s Mexican distributors.
On June 24, 2015, Stellar sent notice letters to Ferro and
Pyrotek accusing them of infringing Stellar’s Mexican
Patent No. 279757 (the “Mexican Patent”). Allied manu-
factures the products accused of infringement in the
United States, which are then sold in Mexico by Ferro and
Pyrotek. Allied sells the same product in the United
States under a different name.
    Allied’s U.S. counsel responded to Stellar’s notice let-
ters on behalf of Ferro and Pyrotek. Allied identified
itself as the manufacturer of the accused products and
argued that the products do not infringe the Mexican
Patent. Stellar never responded to Allied’s letter. In-
stead, Stellar filed infringement actions against Ferro and

    1 All facts come from Allied’s complaint and are
presumed true for the purposes of the motion to dismiss.
ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.             3

Pyrotek in Mexico, accusing Ferro and Pyrotek of infring-
ing at least claim 16 of the Mexican Patent. Claim 16 of
the Mexican Patent is a Spanish translation of claim 16 of
the ’974 patent.
    Allied filed a declaratory judgment action against Stel-
lar in the Southern District of Florida, seeking a declara-
tory judgment of: (1) non-infringement of the ’974 patent;
(2) invalidity; (3) unenforceability due to inequitable
conduct; and (4) tortious interference with business
relationships under Florida state law. Stellar moved to
dismiss for lack of subject matter jurisdiction, and the
district court granted the motion. The district court held
that “Stellar’s decision to enforce its Mexican patent
under Mexican law against separate entities cannot,
without further affirmative action by Stellar, create an
actual controversy with Allied with regard to its U.S.
Patent.” J.A. 15. The district court found that the com-
plaint was “devoid of any allegations that Stellar has done
anything to give Allied a reasonable belief that Stellar
intends to enforce its ’974 Patent in the United States.”
Id. Allied appeals. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(1).
                       DISCUSSION
      The Declaratory Judgment Act requires “a case of
actual controversy.” 28 U.S.C. § 2201(a). There is no
bright-line rule for whether a dispute satisfies this re-
quirement, Prasco LLC v. Medicis Pharm. Corp., 537 F.3d
1329, 1336 (Fed. Cir. 2008), although the Supreme Court
has articulated a number of relevant factors:
   Our decisions have required that the dispute be
   definite and concrete, touching the legal relations
   of parties having adverse legal interests; and that
   it be real and substantial and admit of specific re-
   lief through a decree of a conclusive character, as
   distinguished from an opinion advising what the
   law would be upon a hypothetical state of
4                ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.

    facts . . . . Basically, the question in each case is
    whether the facts alleged, under all the circum-
    stances, show that there is a substantial contro-
    versy, between parties having adverse legal
    interests, of sufficient immediacy and reality to
    warrant the issuance of a declaratory judgment.
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127
(2007) (quotations and alterations omitted). We review
jurisdictional issues de novo. Prasco, 537 F.3d at 1335.
     The totality of the circumstances in this case does not
rise to the level of a case of actual controversy. Declarato-
ry judgment jurisdiction requires some affirmative act by
the patentee. SanDisk Corp. v. STMicroelectronics, Inc.,
480 F.3d 1372, 1381 (Fed. Cir. 2007). Stellar has not
directed any actions towards Allied, nor has it litigated or
threatened litigation in the United States or on its ’974
patent. All of Stellar’s conduct has been directed towards
Allied’s customers Ferro and Pyrotek, unrelated Mexican
entities, and that contact was limited to Stellar’s Mexican
Patent and potentially infringing acts in Mexico. Stellar
sent notice letters to the customers alone, and although
Allied responded on behalf of its customers, Stellar never
responded to Allied’s letter. Stellar then sued only the
customers, not the manufacturer. Stellar also limited its
actions to Mexico. Stellar filed suit in Mexico, suing for
infringement of a Mexican patent under Mexican laws. It
has not threatened or alleged infringement of the ’974
patent in the United States, much less filed suit. Stellar
took no actions directed at Allied, no actions with regard
to its ’974 patent, and no actions under U.S. patent laws.
    The actions in this case are even less sufficient than
those in Innovative Therapies, Inc. v. Kinetic Concepts,
Inc., 599 F.3d 1377 (Fed. Cir. 2013), which we held did not
give rise to declaratory judgment jurisdiction. In that
case, several of the patentee’s employees left the company
to start their own firm. The new company (the declarato-
ry judgment plaintiff) wished to sell a competing product
ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.              5

but worried about potential infringement liability. One of
the plaintiff’s employees called a former colleague at the
patentee’s company to raise his concerns, and the patent-
ee’s employee responded that the company would “act
aggressively . . . . You know that.” Id. at 1380. In a
subsequent call, the patentee stated it would sue “100%
no doubt about it” on “any product that scratches the
surface of our patents.” Id. at 1381. We held that these
communications did not produce a controversy of such
immediacy and reality to give the district court jurisdic-
tion to hear the case. Id.
    The Innovative Therapies plaintiff also sought to rely
on the patentee’s litigation history to establish jurisdic-
tion. The patentee had a history of litigation to enforce its
patents, and it previously asserted the patents at issue in
the declaratory judgment action against unrelated third
parties. We explained that while the patentee’s litigation
history was a circumstance to consider when evaluating
jurisdiction, the fact that it had sued other parties with-
out further evidence of acts directed toward the plaintiff
was insufficient to confer jurisdiction. Id. at 1382.
    Unlike Innovative Therapies, there have been no
veiled threats of litigation or even any direct communica-
tion from Stellar to Allied. There are no allegations that
Stellar has a history of litigating its patents in the United
States. In light of this precedent, the district court cor-
rectly held that it lacked jurisdiction to hear the case.
    Allied seeks to analogize its case to Arkema Inc. v.
Honeywell International, Inc., 706 F.3d 1351 (Fed. Cir.
2013), citing our reliance on a foreign litigation as creat-
ing a case or controversy regarding a related U.S. patent.
The declaratory judgment in Arkema, however, differed
significantly from this case. It is correct that the court
considered the fact that the patentee had filed suit in
Germany, alleging infringement of a German patent
covering a refrigerant used in automobile air conditioning
systems. In Arkema, however, there was also a compan-
6                ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.

ion U.S. litigation over two of the patentee’s U.S. patents
covering the same refrigerant. While the suit was in
discovery, the patentee obtained two additional U.S.
patents covering the same refrigerant, both of which
claimed priority to the patents-in-suit in the U.S. in-
fringement suit. The plaintiff moved to amend its com-
plaint to include a declaration that the new patents were
also invalid, but the district court denied the motion. We
reversed. We explained that the combination of the
German litigation and the U.S. litigation over a related
patent “creates a sufficient affirmative act on the part of
the patentee for declaratory judgment purposes.” Id. at
1358.
    In Arkema, it was not the foreign lawsuit alone that
provided jurisdiction; it was the foreign lawsuit coupled
with the U.S. lawsuit over a related patent. Id. Moreo-
ver, in Arkema, both the foreign lawsuit and the U.S.
lawsuit on related patents were directed at the same
alleged infringer. Here, Stellar has not sued Allied at all,
not in the foreign suit and not for infringing any U.S.
patents related to the ’974 patent. Arkema is not control-
ling.
     This case is also distinguishable from cases where we
have held that a patentee’s suit against a customer gave
the manufacturer standing to seek declaratory relief
against the patentee. In Arris Group v. British Telecom-
munications PLC, 639 F.3d 1368 (Fed. Cir. 2011), we
noted that a manufacturer has standing to bring a declar-
atory action if: (1) the manufacturer is obligated to in-
demnify its customers in the event of an infringement
suit; or (2) there is a controversy between the patentee
and the manufacturer as to the manufacturer’s liability
for induced or contributory infringement based on acts of
direct infringement by the customers. Id. at 1375. The
Arris patentee accused a customer of infringing claims of
four U.S. patents in which a manufacturer’s product
functioned as a material component. We held that the
ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.              7

allegations of direct infringement of U.S. patents against
the manufacturer’s customers were an implicit allegation
of indirect infringement against the manufacturer. Id.
at 1381. This gave the district court jurisdiction over the
manufacturer’s declaratory judgment action. Id.
    The dispute between Allied and Stellar does not satis-
fy either factor articulated in Arris. Allied does not allege
in the complaint that it is obligated to indemnify Ferro
and Pyrotek against allegations of infringement of the
Mexican Patent. Nor have there been any infringement
allegations against either company in the United States or
any infringement allegations involving any U.S. patent.2
There is no Arris-level controversy between Allied and
Stellar; Stellar has not implicitly accused Allied of in-
fringing the ’974 patent in the United States based on its
customers’ direct infringement of the Mexican Patent in
Mexico.
    Allied argues it has been forced into an unwinnable
business position; it can either continue to sell products in
the United States knowing it may be the target of an
infringement suit, or it can cease selling products it
believes it has a right to sell. But we have held that the
fear of a future infringement suit is insufficient to confer
jurisdiction. Prasco, 537 F.3d at 1338. In Prasco, we
rejected a declaratory judgment plaintiff’s argument that
it suffered actual harm when it merely feared a future
infringement suit. Id. at 1339. And in Arris, we noted
the fear of future lost business because of infringement
threats against a customer was, by itself, insufficient to
create standing for the manufacturer. Arris, 639 F.3d at
1374–75. Allied’s fear alone does not give the district

    2   We do not address whether an agreement to in-
demnify for foreign infringement of a foreign patent gives
rise to declaratory judgment jurisdiction over a counter-
part U.S. patent.
8                ALLIED MINERAL PRODUCTS, INC.   v. OSMI, INC.

court jurisdiction. See Prasco, 537 F.3d at 1341–42 (“Alt-
hough we understand [the declaratory judgment plain-
tiff’s] desire to have a definitive answer on whether its
products infringe defendants’ patents, were the district
court to reach the merits of this case, it would merely be
providing an advisory opinion. This is impermissible
under Article III.”); see also City of Los Angeles v. Lyons,
461 U.S. 95, 103 (1983) (holding that a plaintiff’s subjec-
tive fear of future injury did not confer jurisdiction over
his claims).
    Considering the totality of the circumstances, we
agree with the district court that there is not a substan-
tial controversy of sufficient immediacy and reality to
confer declaratory judgment jurisdiction. Stellar sent
notice letters to Ferro and Pyrotek in Mexico, and it sued
Ferro and Pyrotek in Mexico. Stellar did not even re-
spond to Allied’s letter about the Mexican Patent on
behalf of Ferro and Pyrotek. Nor has Stellar taken any
action in the United States or any action on the ’974
patent. Allied has failed to establish a case or controversy
regarding Stellar’s U.S. patent in the United States under
Article III.
                        CONCLUSION
     The judgment of the district court dismissing the case
for lack of jurisdiction is affirmed.
                        AFFIRMED
                          COSTS
    Costs to Stellar.