United States: Danisco v. Novozymes: Declaratory Judgment Action For Non-Infringement And Invalidity Improper And Dismissed Where Action Was Filed Prior To Or Simultaneously With The Issuance Of The Patent

Last Updated: January 22 2013
Article by Stanley M. Gibson

Danisco US, Inc. ("Danisco") filed a declaratory judgment action asserting that its Rapid Starch Liquefaction products ("RSL products") do not infringe certain patents held by Novozymes and that the patent-in-suit is invalid. Danisco and Novoyzymes are two of the major competitors in the field of developing and supplying industrial enzymes used in the process of converting corn into ethanol fuel.

Novozymes moved to dismiss the action and asserted that Danisco did not allege, and could not allege, that Novozymes took any affirmative act to enforce the patent-in-suit against Danisco. Danisco asserted that there was an actual controversy between the parties because it could be reasonably inferred that Novozymes obtained the patent with the hopes of asserting it against Danisco's products.

As explained by the district court, "Danisco insists there is an actual controversy here, ripe and justiciable, because under "all the circumstances" it should be obvious that Novozymes' very aim in obtaining the '573 patent was to be in position to charge Danisco's RSL's products with infringement. The circumstances to which Danisco points, including the parties' status in the industry, past litigation, and the prosecution history and timing, may all very well support a reasonable inference that Novozymes pursued the El 18P claim in the '573 patent with the hope of wielding it against the RSL products, and even that Novozymes may still be harboring the intent to pursue infringement claims at a time of its own choosing. Nevertheless, Danisco has not shown any affirmative act by Novozymes to enforce its patent rights. While matters such as a prior litigation history and statements made during prosecutions sometimes support a conclusion that an actual controversy exists, there is no precedent for finding jurisdiction based on such pre-patent issuance events alone, without any affirmative act of attempted enforcement."

The district court disagreed with Danisco's position and rejected its reliance on the recent 3M case: "[t]he decision in 3M Co. v. Avery Dennison Corp., 673 F.3d 1372 (Fed. Cir. 2012), on which Danisco places heavy emphasis, illustrates the potential relevance of a prior history of litigation. Around the time the patents involved in that case issued, the patent holder's Chief Intellectual Property Counsel telephoned his counterpart at the patent holder's primary competitor, and expressly asserted that the competitor's product 'may infringe' and that "licenses are available. Id. at 1379. Counsel also subsequently advised that claim charts would be provided. Id. Because declaratory relief jurisdiction requires more than just 'a communication from a patent owner to another party, merely identifying its patent and the other party's product line,' Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed.Cir. 2009), the question was whether these express and specific communications between the parties regarding the patents and potentially infringing products, taken together with all the other circumstances, provided a sufficient basis for a declaratory relief claim. In that context, the 3M court observed that prior litigation, if involving sufficiently related products and patents, 'is one circumstance to be considered.' 3M, 673 F.3d at 1380. In other words, where a patent holder has engaged in some communications--taken some 'affirmative act'--but there is ambiguity as to whether the statements or acts rise to the level of an attempt to enforce patent rights, then conduct predating issuance of the patent, such as prior litigation, may provide a relevant lens through which to interpret the import of the otherwise arguably vague or indefinite communications and acts. Nothing in 3M suggests that prior litigation or other pre-issuance conduct can constitute an affirmative act of enforcement."

The district court also found that jurisdiction was improper because Danisco had filed the action before the patent had even issued. "Furthermore, jurisdiction is also lacking for the more technical (but related) reason that Danisco filed this action prior to the time the patent even issued. See GAF Bldg. Materials Corp. v. Elk Corp. of Dallas, 90 F.3d 479, 482-83 (Fed. Cir. 1996) ('[A] threat is not sufficient to create a case or controversy unless it is made with respect to a patent that has issued before a complaint is filed.') Danisco's complaint was filed on August 27, 2012. The '573 patent issued the following day, August 28, 2012."

Finally, the district court determined that, at a minimum, Danisco filed the complaint nearly simultaneously with the issuance of the patents and Danisco had not shown any basis for leave to amend. "Regardless of the precise sequence of events, or what filing date the complaint should be given, it is clear that Danisco filed this action no later than virtually simultaneously with issuance of the patent. There is no indication that Novozymes did, or even could have, issued some implied or express enforcement threat so closely upon issuance of the patent such that it could be said to have taken any affirmative act to enforce its patent rights prior to the time the complaint was filed. Accordingly, the motion to dismiss must be granted. Additionally, while Danisco urges that it be given leave to amend, it has suggested no basis on which it could cure the jurisdictional defect by amending any of the allegations, under these circumstances. Accordingly, leave to amend will not be granted."

Danisco US Inc. v. Novozymes A/S and Novozymes North America, Inc., Case No. C 12-4502 RS (N.D. Cal. Jan. 8, 2013)

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Stanley M. Gibson
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