Biomune Company v. Merial Limited et al

Filing 30

MEMORANDUM AND ORDER denying 26 Motion for Oral Arugment on the Motion to Dismiss; and granting 16 Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction. This action is hereby dismissed. Signed by District Judge John W. Lungstrum on 06/26/2015. (ses)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

BIOMUNE COMPANY,

)
)
Plaintiff,
)
)
v.
)
)
MERIAL LIMITED and
)
MERIAL LLC,
)
)
Defendants.
)
)
_______________________________________)

Case No. 14-2567-JWL

MEMORANDUM AND ORDER
By this action, plaintiff Biomune Company seeks a declaratory judgment to the
effect that its animal vaccine does not infringe two patents held by defendants Merial
Limited and Merial LLC and that those patents are invalid. This matter comes before
the Court on defendants’ motion to dismiss (Doc. # 16). For the reasons set forth below,
the Court concludes that no case or controversy exists here under Article III of the
Constitution and that it therefore lacks subject matter jurisdiction. The Court therefore
grants the motion, and this action is hereby dismissed.1
“The burden is on the party claiming declaratory relief . . . to establish that an
Article III case or controversy existed at the time that the claim for declaratory relief was

1

In light of this ruling, the Court does not address defendants’ alternative
argument for dismissal based on a lack of personal jurisdiction. The Court also denies
plaintiff’s request for oral argument on this motion (Doc. # 26).

filed and that it has continued since.” See Danisco U.S. Inc. v. Novozymes A/S, 744 F.3d
1325, 1329 (Fed. Cir. 2014).2 “[T]he proper test of when an action for declaratory
judgment presents a justiciable controversy is ‘whether the facts alleged, under all the
circumstances, show that there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.’” See Arkema Inc. v. Honeywell Int’l, Inc., 706 F.3d 1351, 1356
(Fed. Cir. 2013) (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127
(2007)). The test is an objective one: “it is the objective words and actions of the
patentee that are controlling,” and “conduct that can be reasonably inferred as
demonstrating intent to enforce a patent can create declaratory judgment jurisdiction.”
See Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1363 (Fed. Cir. 2009).
There is no bright-line test; rather the Court considers the totality of the circumstances
in determining whether a case or controversy exists. See Danisco, 744 F.3d at 1331-32.
In its opposition brief, plaintiff disputes that it must show jurisdiction arising from
an affirmative act by defendants, but the Federal Circuit has repeatedly stated that such
an act is required. “[D]eclaratory judgment jurisdiction generally will not arise merely
on the basis that a party learns of the existence of a patent owned by another or even
perceives such a patent to pose a risk of infringement, without some affirmative act by

2

This issue of whether a case or controversy exists in this case is governed by
Federal Circuit law. See 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1377 (Fed.
Cir. 2012).
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the patentee.” See SanDisk Corp. v. ST Microelectronics, Inc., 480 F.3d 1372, 1380-81
(Fed. Cir. 2007); see also Hewlett-Packard, 587 F.3d at 1364 (quoting and applying
SanDisk’s requirement of an affirmative act by the patentee); Prasco, LLC v. Medicis
Pharmaceutical Corp., 537 F.3d 1329, 1339 (Fed. Cir. 2008) (same). The governing
objective standard “cannot be met by a purely subjective or speculative fear of future
harm” by the plaintiff; rather “a case or controversy must be based on a real and
immediate injury or threat of future injury that is caused by the defendants.” See Prasco,
537 F.3d at 1339 (emphasis in original). Plaintiff notes that in Danisco the Federal
Circuit held that the defendant need not specifically have “threatened litigation or
otherwise taken action to enforce its rights.” See Danisco, 744 F.3d at 1330. The
Federal Circuit did not state in that case, however, that the declaratory judgment plaintiff
need not point to some affirmative act by the defendant that gives rise to the reasonable
belief that the defendant will enforce its patent against the plaintiff. In finding
jurisdiction in Danisco, the court relied on the defendant’s “posturing” and its
“activities”—specifically, defendant’s claim that its patent covered the compound used
by the plaintiff and the “war” over patents that the parties had been waging—that
demonstrated that the defendant had “engaged in a course of conduct that shows a
preparedness and a willingness to enforce its patent rights.” See id. at 1332 (quoting
SanDisk, 480 F.3d at 1383). Thus, the Federal Circuit has consistently required that
declaratory judgment jurisdiction arise from an affirmative act of the defendant.
In asserting jurisdiction in its complaint and in its opposition brief, plaintiff relies
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solely on defendants’ refusal to enter into license negotiations on one occasion and
various patent infringement suits filed by defendants. The Court will consider those
alleged affirmative acts by defendants in turn.
In Paragraph 19 of its complaint, plaintiff alleges as follows:
On or about October 24, 2011, Ceva Sante Animale [plaintiff’s parent
company] employee Bernard Emery contacted Merial’s Vice President of
Business Development, Mr. Peter Selover, to discuss a potential license
with respect to Merial’s patent rights related to PCV-2 in an effort to
remove any uncertainty concerning Biomune’s vaccine. On or about
November 3, 2011, Merial, by and through its representative, Mr. Selover,
refused to enter into license negotiations with Ceva related to Merial’s
PCV-2 [patents].3
Plaintiff argues that defendants’ refusal to enter into license negotiations at that time
gives rise or contributes to a reasonable inference that defendants did intend to enforce
their patents against plaintiff’s vaccine. The Court disagrees.
Plaintiff has not cited any case in which a court has relied on such a refusal in
finding jurisdiction under the MedImmune test. In Prasco, the Federal Circuit rejected
the plaintiff’s argument based on the defendant’s refusal to sign a covenant not to sue
after being sent samples of the product. See Prasco, 537 F.3d at 1341. The court noted
that although a refusal to give assurances of non-enforcement may be relevant, it is not
dispositive, and that a patentee is not obliged to test a competitor’s product or to make

3

The last word of this paragraph as alleged in the complaint is actually “products”,
but plaintiff insists in its brief that the use of that word was a typographical error and that
“patents” was intended (and plaintiff is willing to amend to fix the error if necessary).
Because the Court does not believe that the issue of jurisdiction turns on this word, the
Court will consider the allegation as restated by plaintiff.
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a definitive determination regarding enforcement at a time of the competitor’s choosing.
See id. The court further stated that the patentee’s silence is not sufficient by itself to
create an actual controversy and that “affirmative” actions by the patentee are also
generally necessary. See id.
Similarly here, the Court gives minimal weight in evaluating the totality of the
circumstances to defendants’ alleged refusal to enter into license negotiations with
plaintiff. Plaintiff’s allegation does not include any detail about the conversations
between the parties or defendants’ stated reasons (if any) for refusing to enter into
negotiations. Moreover, plaintiff does not allege that defendants refused to grant them
some specific license; rather, plaintiff merely alleges that defendants refused to discuss
the subject at all (indeed, defendants provide evidence that Mr. Selover had no authority
to grant a license). The fact that defendants did not wish to talk about a license does not
necessarily imply any intent to enforce their patents against any particular product.
Finally, as defendants note, the alleged conversations took place well before plaintiff
even sought regulatory approval for the vaccine in 2012, and more than three years
before plaintiff filed the present suit; thus, the conversations in themselves say little
about defendants’ intent to enforce their patents against plaintiff’s vaccine in late 2014
when plaintiff filed this suit.
Plaintiff also relies on defendants’ history of patent infringement litigation in
arguing for jurisdiction here. In Paragraph 18 of its complaint, plaintiff alleges that
defendants have a “history” of enforcing their patents “against Biomune.” Plaintiff has
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not identified any such litigation between these parties, however. In Paragraph 18,
plaintiff proceeds to allege that defendants sued another subsidiary of plaintiff’s parent
company for infringement of patents related to flea control products. Thus, defendants
did not sue plaintiff, but rather sued a related company, and the suit involved a different
type of product. In Paragraph 17 of its complaint, plaintiff also alleges that defendants
have “a history of aggressively asserting its PCV-2 related patents to stop competitors
from bringing PCV-2 vaccine products to market.” In support of that allegation, in its
complaint and in its brief, plaintiff identifies only a series of related cases brought by
defendants against two companies between 2005 and 2009.
The Court concludes that these allegations are not sufficient to give rise to a case
or controversy under Article III. The Federal Circuit has noted that “a history, or lack
thereof, of litigating in the industry” can be a factor to be considered in this analysis. See
Hewlett-Packard, 587 F.3d at 1364 n.1 (citing Prasco, 537 F.3d at 1341). That court has
generally given weight, however, to suits involving the same parties and the same or
related technology or patents. See Teva Pharmaceuticals USA, Inc. v. Novartis
Pharmaceuticals Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007) (“related litigation
involving the same technology and the same parties is relevant in determining whether
a justiciable controversy exists on other related patents”). In this case, there is no history
of litigation between these parties, and the suit by defendants against a company related
to plaintiff involved an unrelated product. Defendants brought a series of suits against
two companies unrelated to plaintiff involving this same type of product, but that
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litigation was initiated many years before plaintiff filed this suit. In the absence of other
conduct by defendants, these suits do not give rise to a reasonable inference that
defendants have the intent to enforce their patents against plaintiff and its vaccine. See
Prasco, 537 F.3d at 1341 (one prior suit between the parties concerning different
products did not constitute “the type of pattern of prior conduct that makes reasonable
an assumption that [the patentee] will also take action against [the plaintiff] regarding
its new product”); Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 599 F.3d 1377,
1382 (Fed. Cir. 2010) (“Thus while prior litigation is a circumstance to be considered in
assessing the totality of circumstances, the fact that [the patentee] had filed infringement
suits against other parties for other products does not, in the absence of any act directed
toward [the plaintiff], meet the minimum standard discussed in MedImmune.”).
In support of their motion, defendants have provided evidence that they were
unaware of plaintiff’s vaccine until plaintiff filed this suit. In Hewlett-Packard, the
Federal Circuit stated that it was irrelevant whether the patentee defendant had
conducted an adequate investigation or whether it subjectively believed the plaintiff was
infringing. See Hewlett-Packard, 587 F.3d at 1363. Similarly, defendants’ claim that
they did not even know about this product does not automatically mean that no
controversy can exist here. Nevertheless, as explained above, an affirmative act by the
patentee is required to give rise to a controversy, and defendants’ insistence that they did
not know about the vaccine is consistent with the lack of any evidence or allegation that
defendants performed any affirmative act specifically relating to this product and these
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patents. Apropos here is the following conclusion by the Federal Circuit in Prasco:
In contrast [to other cases], here the defendants have not accused [the
plaintiff] of infringement or asserted any rights to [the plaintiff’s product],
nor have they taken any actions which imply such claims. Instead, all we
have before us is [the plaintiff’s] allegation that its product does not
infringe the defendants’ patents. The defendants’ lack of any “concrete
claim of a specific right” is an important factor weighing against a finding
of an actual controversy, particularly given that there has been no actual
injury. The lack of any evidence that the defendants believe or plan to
assert that the plaintiff’s product infringes their patents creates a high
barrier to proving that [the plaintiff] faces an imminent risk of injury.
Moreover, not only have the defendants not taken a concrete position
adverse to [plaintiff’s], but they also have taken no affirmative actions at
all related to [the plaintiff’s] current product.
See Prasco, 537 F.3d at 1340 (footnote omitted). Plaintiff has not identified any cases
in which an actual controversy was found on so little evidence of acts by the patentee
relating to the product at issue as has been alleged here. Accordingly, the Court
concludes from the totality of the circumstances that no case or controversy exists here
as required under Article III.
Finally, the Court rejects plaintiff’s apparent argument that a controversy arises
here under 35 U.S.C. § 271(e)(2)(B). That paragraph of Section 271 makes it a technical
act of infringement to submit an application for regulatory approval of certain products
that are claimed in a patent. See id. Under that statute, an applicant may certify that
such a patent is invalid or will not be infringed, and it may then give notice of that
certification to the patentee, who then has a limited time in which to sue for
infringement. See Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1568-69 (Fed. Cir.
1997). Section 271(e)(2) provides a defined act of infringement to create a case or
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controversy in that situation. See id. In this case, however, plaintiff has not alleged or
argued that it made a certification under Section 271 and gave such notice to defendants,
such that defendants would be required to assert any claims of infringement at this time.
Plaintiff has not cited any authority suggesting that, if no such certification has been
made, a case or controversy is created for purposes of Article III merely by applying for
regulatory approval, without consideration of the MedImmune standard and the Federal
Circuit caselaw applied above. In the absence of such authority, the Court cannot
conclude that plaintiff’s mere act in applying for regulatory approval creates a justiciable
controversy in this case.
Accordingly, because no case or controversy exists here, the Court grants
defendants’ motion and hereby dismisses this action for lack of subject matter
jurisdiction.

IT IS THEREFORE ORDERED BY THE COURT THAT defendants’ motion
to dismiss for lack of subject matter jurisdiction (Doc. # 16) is granted, and this action
is hereby dismissed.

IT IS FURTHER ORDERED BY THE COURT THAT plaintiff’s request for oral
argument on the motion to dismiss (Doc. # 26) is denied.

IT IS SO ORDERED.

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Dated this 26th day of June, 2015, in Kansas City, Kansas.

s/ John W. Lungstrum
John W. Lungstrum
United States District Judge

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