CAFC: DJ Plaintiff Must Take "Significat, Concrete Steps To Conduct Infringing Activity" To Satisfy MedImmune Test

Cat Tech LLC v. TubeMaster, Inc. (2007-1443), May 28, 2008

TubeMaster developed a method of putting catalyst into reactor tubes using loading devices. Tube Master designed four different configurations for its devices, and has generated detailed computer drawings drawings for each of its configurations.

Cat Tech sued TubeMaster for patent infringement when one of TubeMaster's four configurations was commercially released ("configuration 3"). TubeMaster counterclaimed seeking a declaration that the accused configuration, along with the other configurations ("configurations 1, 2, and 4"), did not infringe. On summary judgment, the district court found that none of the configurations infringed.

On appeal, Cat Tech challenged the district court's authority to issue a declaratory judgment on all the configurations.

Since the SCOTUS decision in MedImmune, declaratory judgments must satisfy 2 prongs: (1) the party seeking DJ must, "under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment"; and (2) show that there had been "meaningful preparation" to conduct potentially infringing activity.

Here, the DJ was not challenged on the first prong, but on the second prong, namely, that TubeMaster's "other configurations" were not developed enough to quality as potentially infringing activity. While MedImmune did not directly address the second prong, the CAFC concluded that "the issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate."

Thus, if a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither "immediate" nor "real" and the requirements for justiciability have not been met.

Immediacy

TubeMaster has taken significant, concrete steps to conduct loading activity with configurations 1, 2 and 4. It has developed two basic loading device designs - one with circular plates and one with circular plates with tabs - and has developed four loading device configurations. TubeMaster has generated AutoCAD® drawings for each of its four configurations . . . Because TubeMaster’s loading device designs are customized based upon the dimensions of each customer’s reactor, it can take no further steps toward manufacturing its loading devices until it receives an order from a customer with the appropriate dimensions.

TubeMaster has already successfully manufactured and delivered a loading device using configuration 3 . . . It is prepared to produce loading devices using configurations 1, 2 and 4 as soon as it receives an order with the appropriate dimensions. Furthermore, it expects that it can produce devices using these configurations "within a normal delivery schedule" once it receives an order. Constitutionally mandated immediacy requirements have been satisfied because once the threat of liability to Cat Tech has been lifted, it appears likely that TubeMaster can expeditiously solicit and fill orders for loading devices using configurations 1, 2 and 4.

Reality

In the context of patent litigation, the reality requirement is often related to the extent to which the technology in question is "substantially fixed" as opposed to "fluid and indeterminate" at the time declaratory relief is sought . . . TubeMaster’s technology is "substantially fixed." TubeMaster’s four basic loading device designs are designed "to cover virtually all of the reactor configurations that might be encountered at customers’ facilities." Thus, TubeMaster does not expect to make substantial modifications to its loading device designs once production begins. The dispute with Cat Tech is "real," not hypothetical, because it appears likely that, once the cloud of liability for infringement is eliminated, the accused products can be produced without significant design change.

AFFIRMED