Earlier today, the Federal Circuit took formal note of the fact that the Supreme Court’s January 2007 decision in MedImmune v. Genentech eliminated the Federal Circuit’s “reasonable apprehension of suit” test for declaratory judgment jurisdiction in a patent infringement case. (I blogged this point about MedImmune the day after the decision, here.)

The Federal Circuit case is styled SanDisk Corp. v. STMicroelectronics, Inc., No. 05-1300 (Fed. Cir. March 26, 2007). Judge Linn writes for himself and Judge Dyk. Judge Bryson concurs in the result with a separate opinion.

Declaratory judgment plaintiff SanDisk had negotiated about a patent cross-license with d.j. defendant ST from August 2004 to October 2004. (ST had initiated the question by an April 2004 letter listing 8 ST patents and a July 2004 letter listing 4 more ST patents.) The negotiation meetings don’t strike me as unusually sharp or heated; and, at the end of the critical Aug. 27, 2004 day-long licensing meeting, ST’s IP Licensing VP stated to SanDisk’s Chief IP Counsel “that ‘ST has absolutely no plan whatsoever to sue SanDisk.’” Slip op. at 5. This case was a tough sell for jurisdiction under the “reasonable apprehension” test, and the District Court had thrown out SanDisk’s d.j. claims against ST’s 14 patents. Slip op. at 7.

Some key passages from the Federal Circuit’s opinion today:

• “The Supreme Court’s opinion in MedImmune represents a rejection of our reasonable apprehension of suit test.” Slip op. at 13.
• “In finding declaratory judgment jurisdiction in MedImmune, the Court specifically addressed and rejected our reasonable apprehension test … .” Slip op. at 14 (quoting MedImmune’s footnote 11 in full).
• “In the context of conduct prior to the existence of a license, declaratory 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 the patentee. But Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do. We need not define the outer boundaries of declaratory judgment jurisdiction, which will depend on the application of the principles of declaratory judgment jurisdiction to the facts and circumstances of each case. We hold only that where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights.” Slip op. at 14-15.
• “Under the facts alleged in this case, SanDisk has established an Article III case or controversy that gives rise to declaratory judgment jurisdiction. ST sought a right to a royalty under its patent based on specific, identified activity by SanDisk. For example, at the August 27, 2004 licensing meeting, ST presented, as part of the ‘license negotiations,’ a thorough infringement analysis presented by seasoned litigation experts, detailing that one or more claims of its patents read on one or more of SanDisk’s identified products. … ST communicated to SanDisk that it had made a studied and determined infringement determination and asserted the right to a royalty based on this determination. SanDisk, on the other hand, maintained that it could proceed in its conduct without the payment of royalties to ST. … SanDisk need not ‘bet the farm,’ so to speak, and risk a suit for infringement by cutting off licensing discussions[fn 3] and continuing in the identified activity before seeking a declaration of its legal rights.” Slip op. 17-18.
• “We decline to hold that Jorgenson’s statement that ST would not sue SanDisk eliminates the justiciable controversy created by ST’s actions, because ST has engaged in a course of conduct that shows a preparedness and willingness to enforce its patent rights despite Jorgenson’s statement.” Slip op. at 18.
• Two prior Federal Circuit decisions, other than Arrowhead, are repudiated by name: Cygnus Therapeutics Sys. v. ALZA Corp., 92 F.3d 1153 (Fed. Cir. 1996); and Phillips Plastic Corp. v. Kato Hatsujou Kabushiki Kaisha, 57 F.3d 1051 (Fed. Cir. 1995).

Judge Bryson, in his concurrence in the result, expresses concern over the breadth of the ruling: “Despite the references in the court’s opinion to the particular facts of this case, I see no practical stopping point short of allowing declaratory judgment actions in virtually any case in which the recipient of an invitation to take a patent license elects to dispute the need for a license and then to sue the patentee. Although I have reservations about the wisdom of embarking on such a course, I agree with the court that a fair reading of footnote 11 of the Supreme Court’s opinion in MedImmune compels that result … .” Concurring op. at 5.

It is thus easier than ever for a patentee to trigger declaratory judgment jurisdiction with an assertion of patent coverage over another’s product or process. This has consequences for, among other things, the availability of willfulness damages. Can one give notice that is sufficient to start the damages clock ticking but insufficient to support a claim for declaratory judgment of noninfringement or invalidity? We are now a long way, I think, from the Federal Circuit’s decision in SRI Int’l, Inc. v. Advanced Technology Labs., 127 F.3d 1462 (Fed. Cir. 1997). In SRI Int’l, the Federal Circuit expressly rejected ATL’s contention that a patentee notice letter was inadequate to start the clock running on willfulness damages unless it was adequate to trigger d.j. jurisdiction for the recipient accused infringer. According to the Federal Circuit, “[a]ctual notice may be achieved without creating a case of actual controversy in terms of 28 U.S.C. sec. 2201.” 127 F.3d at 1470. I seriously doubt that’s true anymore.