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finding the first-to-file rule applicable despite the fact that two named plaintiffs were not named parties in the first-filed action
Summary of this case from Koehler v. Pepperidge Farm, Inc.Opinion
No. C 02-03252 CRB
October 21, 2002
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Now before the Court is defendant Medimmune, Inc.'s Motion to Dismiss the Complaint filed against it. For the reasons stated herein, the Court GRANTS defendant's motion.
BACKGROUND
In 1992, Stanford and Columbia Universities granted Centocor an exclusive license on Patent `715, a process to produce immunoglobulins. Under the license, Centocor has the right to sublicense the patented process. Some time thereafter, Centocor contacted MedImmune regarding MedImmune's product, Synagis, a monoclonal antibody which targets infant respiratory virses. Centocor claimed that its patent covered Synagis and that absent a sublicense, MedImmune would be infringing that patent. Although MedImmune believed the patent was invalid and not infringed by its product, it did not want to risk an infringement claim. On September 15, 2000, MedImmune applied for and was granted a non-exclusive sublicense to make, use, offer for sale, sell and import products covered by the `715 patent. Under the agreement, MedImmune is required to pay royalties to Centocor for sales of Synagis. MedImmune continues to pay those royalties and remains in full compliance with its obligations under the license.
In April 2002, MedImmune filed an action in United States District Court for the District of Maryland seeking a declaration of its rights and obligations under the sublicense agreement and a declaration that the `715 patent is invalid or unenforceable. Centocor has filed a motion to dismiss in the Maryland action for failure to join the universities, the owners of the patent. In response, MedImmune informed the universities that it had no objection if they wished to intervene. One day later, the universities and Centocor filed the Complaint in this case.
Plaintiffs seek declarations from this Court that (1) MedImmune infringes valid and enforceable claims of the `715 patent, (2) the claims of the `715 patent are valid; (3) the claims of the `715 patent are enforceable; and (4) MedImmune has an obligation to pay royalties under the sublicense agreement. Defendant has filed a Motion to Dismiss the Complaint for failure to state a claim, or in the alternative, under the first-to-file rule.
DISCUSSION
A. The Actual Controversy Requirement
Plaintiffs seek declaratory relief pursuant to 28 U.S.C. § 2201, the Declaratory Judgment Act. Under the Act, there must be an "actual controversy" between the parties before a federal court may exercise jurisdiction. See 28 U.S.C. § 2201. The initial burden of establishing the trial court's jurisdiction rests on the party invoking that jurisdiction. Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 98 (1993). The threshold question, then, is whether plaintiffs have established that an actual controversy exists.
Most declaratory actions in the patent field are brought by manufacturers of allegedly infringing products against patent owners after manufacture has already begun. See, e.g., Cordis Corp. v. Medtronic, Inc., 835 F.2d 859, 862 (Fed. Cir. 1987); Goodyear Tire Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 955 (Fed. Cir. 1987). Such actions allow a manufacturer to determine whether its product would infringe a patented invention without waiting until the patent owner finds it convenient to file suit. Here, the situation is reversed. It is the owners of the `715 patent who are asking the Court to declare the patent valid and potentially infringed. Although it is unusual for a court to grant declaratory relief to a patent owner, the Federal Circuit has acknowledged that in rare cases, such relief may be appropriate. See Lang v. Pac. Marine Supply Co., Ltd., 895 F.2d 761, 764 (Fed. Cir. 1990).
Although the Complaint seeks a declaration that MedImmune "infringes valid and enforceable claims of the `715 claims," plaintiffs are actually requesting a declaration that MedImmune's activities "would infringe" the patent should it stop paying royalties. See Pls.' Opp'n to Mot. to Dismiss at 6. Thus, Lang applies.
In Lang, the Federal Circuit ruled that a patentee can bring a declaratory judgment action against a potential future infringer provided that there is a "true, actual controversy." Id. This requirement is met by "a sufficient allegation of immediacy and reality." Id. The Lang court set out a two-prong test designed to satisfy the justiciability requirement of the Declaratory Judgment Act. First, the defendant must be engaged in, or making meaningful preparations for engagement in, an activity directed toward making, selling, or using a patented invention.Id. Second, the acts of the defendant must indicate a refusal to change the course of its actions in the face of acts by the patentee sufficient to create a reasonable apprehension that a suit will be forthcoming. Id.
Here, the Federal Circuit's two-prong test is not satisfied. Although MedImmune is admittedly "making, selling, or using" a product that may be covered by the `715 patent, it is doing so with a valid license. Plaintiffs acknowledge that MedImmune continues to perform its obligations under the sublicense agreement. See Pls.' Opp'n to Mot. to Dismiss at 7. Nonetheless, they contend that an actual controversy exists because the defendant has filed an action in Maryland to have the patent declared invalid. But plaintiffs have cited no cases in which the filing of a lawsuit established that the defendant was "making meaningful preparation" to infringe. In fact, MedImmune's filing of the Maryland action would seem to indicate just the opposite. By continuing to maintain its obligations under the licensing agreement, MedImmune has demonstrated its willingness to follow the proper legal channels to ensure it that will not infringe should it stop paying royalties. The fact that MedImmune obtained a license in the first place, despite its belief that its product did not infringe the patent, is further evidence of its desire to avoid infringement.
Essentially, plaintiffs ask this Court to declare its patent valid just in case the defendant licensee, at some undetermined point in the future, stops complying with the terms of the license. But plaintiffs do not and cannot cite any cases in which a court has issued a declaratory judgment to stop such an uncertain future act. In fact, courts rarely afford declaratory relief to the patent owner, even when the likelihood of future infringement is much greater than it is here. In Lang, for example, the owners of two patents that pertained to features of a ship's hull brought a declaratory judgment action against a shipbuilder in the process of constructing a ship hull. See Lang, 895 F.2d at 763. The plaintiffs claimed the hull, when completed, would infringe the patents. The court held that the plaintiffs failed to meet the actual controversy requirement because the hull would not be completed for at least another nine months. See id. at 764.
Similarly, in Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp. 1269 (N.D. Cal. 1991), the court declined to exercise jurisdiction of a declaratory judgment claim when the possibility of FDA approval of the product at issue would have taken a year or more from the time that plaintiffs filed their complaint. See id. at 1289-90; see also Amgen, Inc. v. Hoechst Marion Roussel, Inc., 3 F. Supp.2d 104 (D. Mass. 1998) (declining to exercise jurisdiction to issue declaratory judgment when FDA approval was uncertain and the process itself was subject to alteration prior to approval); Abbott Labs v. Zenith Labs, Inc., 934 F. Supp. 925 (N.D. Ill. 1995) (declining to exercise jurisdiction when alleged future infringer did not have. FDA approval for its generic drug and had never indicated it planned to enter patentee's market).
Here, future infringement is not only uncertain but unlikely. Should the Maryland court rule in favor of MedImmune and declare the `715 patent invalid, MedImmune would be free to stop its royalty payments to Centocor because there would be no patent to infringe. Should the court rule in favor of Centocor, there is no indication that MedImmune would discontinue performance of its obligations under the sublicense and thus infringe the patent. In short, there is no immediate and real threat of infringement to justify declaratory relief at this time.
Even had plaintiffs met their burden of showing the existence of an actual controversy, the Court has discretion to decline jurisdiction if it feels the action will serve no useful purpose. See Spectronics Corp. v. H.B. Fuller Co., Inc., 940 F.2d 631, 634 (Fed. Cir. 1991). Many courts decline to exercise jurisdiction when, as here, a suit between the same parties is pending in another forum. See, e.g., Intermedics Infusaid, Inc. v. Univ. of Minn., 804 F.2d 129 (Fed. Cir. 1986); Int'l Harvester Co. v. Deere Co., 623 F.2d 1207 (7th Cir. 1980); Aluminum Housewares Co. v. Chip Clip Corp., 609 F. Supp. 358 (E.D. Mo. 1984).
Plaintiffs readily admit this case mirrors MedImmune's first-filed Maryland action. See Pls.' Opp'n to Mot. to Dismiss at 6-7. The complaints differ only insofar as the universities have been named as parties to the case at bar. Still, plaintiffs assert arguments in favor of allowing this action to go forward. First, they contend that the universities are necessary and indispensable parties to this dispute, but are not named as defendants in the Maryland action. Second, plaintiffs contend that Maryland is an improper forum for the original action because the court lacks personal jurisdiction over the universities.
Whether or not plaintiffs' arguments have merit is not for this Court to decide. Rather, those issues properly belong before the Maryland court, in fact, the parties' motions on those very topics are now pending before that court. For purposes of this action, there is no actual controversy to satisfy the Declaratory Judgment Act.
B. The First-To-File Rule
Under the first-to-file doctrine, it is "a principle of sound judicial administration [that] the first suit should have priority, absent special circumstances. . . . Restraint of the first-filed suit is made only to prevent wrong or injustice . . . ." Kahn v. Gen. Motors Corp., 889 F.2d 1078, 1081 (Fed. Cir. 1989). The party filing the second action must demonstrate the existence of special circumstances to overcome the strong presumption in favor of the first-filed action. See id. at 1081-83;Applied Vision Inc. v. Optical Coating Lab., Inc., No. C 97-1233, 1997 WL 601425 at *2 (N.D. Cal. 1997).
Here, plaintiffs argue that the rule does not apply because the universities are not named as parties to the Maryland action. While acknowledging that the issues involved in this case mirror those in the Maryland action, plaintiffs claim that any adjudication of the `715 patent without the universities would be incomplete and prejudicial. But plaintiffs' argument ignores the fact that courts generally do not require identical issues or parties so long as the actions involve closely related questions or common subject matter. See, e.g., Guthy-Renker-Fitness L.L.C. v. Icon Health Fitness Inc., 46 U.S.P.Q.2d 1344, 1346 (C.D. Cal. 1998) ("When two actions involving similar parties and issues are commenced in separate forums . . . preference is given to the first-filed plaintiff's choice of forum under the `first-to-file' rule."); Texas Instruments Inc. v. Micron Semiconductor, Inc., 815 F. Supp. 994, 997 (E.D. Tex. 1993) ("[A]ll that need be present is that the two actions involve closely related questions or common subject matter, or that the core issues substantially overlap. The cases need not be identical . . . ."); Marshak v. Reed, No. 96 CV 2292, 2000 WL 33152076, at *3 (E.D.N.Y. 2000) (invoking the first-to-file rule when the second action involved additional parties since "[p]arties whose interests are clearly aligned may be treated as if they were the same parties"). Plaintiffs' argument is rendered even less compelling by defendant's offer to allow the universities to intervene in the Maryland action.
Finally, plaintiffs argue that the first-to-file rule does not apply because there is sound reason for a change in forum. As noted above, however, the issue of forum properly belongs before the Maryland court. "If the second-filed court is demonstrably more convenient for the parties and witnesses, a motion to transfer under Section 1404(a) should be addressed to the first-filed court" 8 Donald S. Chisum, Chisum on Patents § 21.02[4][b] (2002) (emphasis added).
In short, plaintiffs have failed to demonstrate the existence of "special circumstances" that would support adjudication of this second-filed complaint.
CONCLUSION
For the reasons stated above, defendant's Motion to Dismiss is hereby GRANTED.