OCTOBER TERM, 1992
Syllabus
CARDINAL CHEMICAL CO. ET AL.
v. MORTON INTERNATIONAL,
INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL
CIRCUIT
No. 92-114. Argued March 3, 1993-Decided May 17, 1993
Since its 1987 decisions in
Vieau v.
Japax, Inc.,
823 F.2d
1510, and
Fonar Corp. v.
Johnson &
Johnson, 821 F.2d
627, the Court of Appeals for the Federal Circuit, which has
exclusive jurisdiction over appeals from all Federal District
Courts in patent litigation, has followed the practice of routinely
vacating declaratory judgments regarding patent validity following
a determination of noninfringement of the patent. Adhering to that
practice in this and a similar case brought by respondent, the
Federal Circuit affirmed the District Courts' findings that the
particular defendants had not infringed respondent's two patents on
chemical compounds used in polyvinyl chloride, and then vacated the
entry of judgments, on the defendants' counterclaims, declaring the
patents invalid. A third such case is still pending. Petitioners,
the alleged infringers in this case, sought certiorari on the
ground that the Federal Circuit has erred in applying a
per
se rule to what should be a discretionary matter. Respondent
did not oppose the grant of certiorari, but instead pointed out
that it also has an interest in having the validity issue
adjudicated, in that its patents have been effectively stripped of
any power in the marketplace by the Federal Circuit's refusals of
substantive review on the two invalidity findings.
Held: The Federal Circuit's affirmance of a finding that
a patent has not been infringed is not
per se a sufficient
reason for vacating a declaratory judgment holding the patent
invalid. pp. 89-103.
(a) The
Vieau and
Fonar opinions indicate that the
practice of vacating such declaratory judgments is limited to cases
in which the Federal Circuit is convinced that the finding of
noninfringement has entirely resolved the controversy between the
litigants by resolving the initial complaint brought by the
patentee. The Federal Circuit has concluded that in such cases the
declaratory judgment is "moot" in a jurisdictional sense, a
conclusion that it considers dictated by this Court's earlier
opinions in
Electrical Fittings Corp. v.
Thomas &
Betts Co., 307
U. S. 241, and
Altvater v.
Freeman, 319 U. S. 359. Pp.
89-92.
(b) While both
Electrical Fittings and
Altvater
are consistent with the Federal Circuit practice at issue, neither
case required it.
Electrical Fittings did not involve a
declaratory judgment, and
Altvater does
84
not necessarily answer the question whether, in the absence of
an ongoing infringement dispute between the parties, an invalidity
adjudication would be moot. Pp. 93-95.
(c) This case did not become moot when the Federal Circuit
affirmed the District Court's noninfringement finding. The practice
at issue concerns the Federal Circuit's jurisdiction. Where, as
here, the District Court has jurisdiction (established
independently from its jurisdiction over the patentee's
infringement charge) to consider an invalidity counterclaim, so
does the Federal Circuit, which is not a court of last resort and
is entitled to presume, absent further information, that federal
jurisdiction continues. If, before the Federal Circuit had decided
this case, either party had advised it of a material change in
circumstances that entirely terminated their controversy, it would
have been proper either to dismiss the appeal or to vacate the
District Court's entire judgment. In fact, however, there was no
such change. The Federal Circuit's decision to rely on one of two
possible alternative grounds (noninfringement rather than
invalidity) did not strip it of
power to decide the second
question, particularly when its decree was subject to review by
this Court. Even if it may be good practice to decide no more than
is necessary to determine an appeal, it is clear that the Federal
Circuit has jurisdiction to review the declaratory judgment of
invalidity. Accordingly, the practice at issue is not supported by
Article Ill's "case or controversy" requirement. Pp. 95-98.
(d) The Federal Circuit's practice cannot be supported on other
grounds. Although the court's interest in the efficient management
of its docket might support a rule requiring that the infringement
issue always be addressed before validity, there are even more
important countervailing concerns, including the successful
litigant's interest in preserving the value of its hard-won
declaratory judgment; the public's strong interests in the finality
of judgments in patent litigation and in resolving validity
questions; and the patentee's interests in having the validity
issue correctly adjudicated and in avoiding the loss of its
patent's practical value that may be a consequence of routine
vacatur. The practice in question denies the patentee appellate
review, prolongs the life of invalid patents, encourages endless
litigation (or at least uncertainty) over the validity of
outstanding patents, and thereby vitiates the rule announced in
Blonder-Tongue Laboratories, Inc. v.
University of Ill.
Foundation, 402
U. S. 313. pp. 99-102.
(e) It would be an abuse of discretion not to decide the
validity issue in this case. Although factors in an unusual case
might justify the Federal Circuit's refusal to reach the merits of
a validity determination, and that determination might therefore be
appropriately vacated, neither the finding of noninfringement
alone, nor anything else in the record,
85
justifies such a result here. The patents at issue have been the
subject of three separate lawsuits, and both parties have asked the
Federal Circuit to resolve their ongoing validity dispute. Pp.
102-103.
959 F.2d
948, vacated and remanded.
STEVENS, J., delivered the opinion for a unanimous Court with
respect to Parts I, II, and III, and the opinion of the Court with
respect to Part IV, in which REHNQUIST, C. J., and WHITE, BLACKMUN,
O'CONNOR, KENNEDY, and THOMAS, JJ., joined. SCALIA, J., filed an
opinion concurring in part and concurring in the judgment, in which
SOUTER, J., joined,
post, p.103.
Charles F. Schill argued the cause for petitioners. With
him on the brief was
Larry L. Shatzer II.
Gordon R. Coons argued the cause for respondent. With him on the
brief were John E. Rosenquist, Jeffrey S. Ward, and Gerald K.
White.*
JUSTICE STEVENS delivered the opinion of the Court.
The question presented is whether the affirmance by the Court of
Appeals for the Federal Circuit of a finding that a patent has not
been infringed is a sufficient reason for vacating a declaratory
judgment holding the patent invalid.
Respondent, Morton International, Inc. (Morton), is the owner of
two patents on chemical compounds used in polyvinyl chloride
(PVC).l In 1983 Morton filed this action in the
*J. Michael McWilliams, Jack C.
Goldstein, and
William C.
Rooklidge filed a brief for the American
Bar Association as
amicus curiae urging reversal.
Briefs of amici curiae were filed for the American Intellectual
Property Law Association by Joseph R. Re, William L. LaFuze, Nancy
J. Linck, Harold C. Wegner, and H. Ross Workman; and for Atochem
North America, Inc., by Brian G. Brunsvold, Herbert H. Mintz,
Richard B. Racine, and Michael D. Kaminski.
1 United States Patent No. 4,062,881, dated December 13, 1977,
and No. 4,120,845, dated October 17, 1978. The two patents are
directed to organotin mercaptoalkyl carboxylic acid ester
sulfides-basically, compounds of sulfur and tin that serve as heat
stabilizers for PVC, protecting it from decomposition,
discoloration, and loss of strength. See
959
F.2d 948, 949, and n. 1 (CA Fed. 1992).
86
United States District Court for the District of South Carolina
alleging that petitioners, Cardinal Chemical Company and its
affiliates (Cardinal), had infringed those patents. Cardinal filed
an answer denying infringement and a counterclaim for a declaratory
judgment that the patents are invalid. While this case was pending
in the District Court, Morton filed two other actions against other
alleged infringers of the same patents. One was filed in the
Eastern District of Louisiana, the other in the District of
Delaware. The defendants in both cases, like Cardinal, filed
counterclaims for declaratory judgments that the patents were
invalid. Of the three, the Louisiana case was tried first and, in
1988, resulted in a judgment for the defendant finding no
infringement and declaring the patents invalid.2 On appeal, the
Federal Circuit affirmed the finding of no infringement but vacated
the judgment of invalidity.3 The Delaware case is still
pending.
In 1990 this case proceeded to a 5-day bench trial. The South
Carolina District Court concluded, as had the Louisiana District
Court, that the patentee had failed to prove infringement and that
the defendant-counterclaimant had proved by clear and convincing
evidence that both patents were invalid.4 Accordingly, the court
mandated two sepa-
2 Morton Thiokol, Inc. v.
Witco Chemical Corp.,
No. 84-5685 (ED La., June 22, 1988), App. 10, 24-31, 36.
3
Morton Thiokol, Inc. v.
Argus Chemical Corp., 11
USPQ 2d 1152
(CA Fed. 1989), judgt. order reported at
873 F.2d
1451 (CA Fed. 1989) (nonprecedential). The court explained its
disposition of the judgment of invalidity as follows: "We hold that
the finding of no literal infringement is not clearly erroneous and
on that basis we affirm the portion of the judgment of the district
court that determined that the patents are not infringed and
dismissed the suit. We therefore find it unnecessary to reach the
district court's determination that the patents are invalid, and
vacate the portion of the judgment that so determined." 11 USPQ 2d,
at 1153, App.39.
4 "The evidence clearly and convincingly establishes that a
person skilled in the art is unable to ascertain the claimed
structures in order to avoid infringement .... Therefore, this
court concludes that the lan-
87
rate judgments: one dismissing the action for infringement with
prejudice, and another on the counterclaim, declaring the patents
invalid.5
Again, Morton appealed to the Federal Circuit, challenging both
the dismissal of its infringement claim and the judgment of
invalidity. Cardinal filed a cross-appeal contending that it was
entitled to an award of fees pursuant to 35 U. S. C. § 285 and that
Morton should be sanctioned for prosecuting a frivolous appeal. The
defendant in the third, Delaware, case filed a brief
amicus
curiae urging the court to affirm the judgment of invalidity.6
Again, however, after affirming the dismissal of the infringement
claim, the Federal Circuit vacated the declaratory judgment. It
explained:
"Since we have affirmed the district court's holding that the
patents at issue have not been infringed, we need not address the
question of validity. Vieau v. Japax, Inc., 823 F.2d
1510, 1517, 3 USPQ 2d 1094, 1100 (Fed. Cir. 1987). Accordingly,
we vacate the holding of invalidity." 959 F.2d
948, 952 (1992).
The court also ruled that Morton was not liable for fees because
it had advanced an argument that "apparently it was not in a
position to raise earlier."
Ibid. Judge Lourie concurred in
the result, but believed the parties were entitled
guage of the [claims] is too vague to satisfy the definiteness
requirement of § 112." App. to Pet. for Cert. 67a.
5 "Now, therefore,
"IT IS ORDERED that the Clerk is directed to enter judgment for
the defendants in this case, dismissing the plaintiff's action for
infringement with prejudice and at its costs.
"IT IS FURTHER ORDERED that the Clerk is directed to enter
judgment for the defendants on their counterclaim of invalidity of
the patents, as patents 4,062,881 and 4,120,845 are found to be
invalid."
Id., at 70a.
6 See 959 F. 2d, at 950, n. 2 (referring to
Morton
International, Inc. v.
Atochem North America, Inc., No. 87-60-CMW (Del., filed
Feb. 9, 1987)). Atochem has also filed a brief
amicus curiae
in this Court, urging our reversal of the Federal Circuit
practice.
88
to an affirmance of the invalidity holding "so that they can
plan their future affairs accordingly."
Id., at 954.
Both parties then filed petitions for rehearing, arguing that
the court should have decided the validity issue instead of
vacating the District Court's declaratory judgment; 7 they also
filed suggestions for rehearing en bane, urging the Court of
Appeals to reconsider its post-1987 practice of routinely vacating
a declaratory judgment of invalidity whenever noninfringement is
found. Over the dissent of three of its judges, the court declined
those suggestions.8 Chief Judge Nies filed a thorough explanation
of that dissent; she found no "justification for our
Vieau
decision either legally or as a 'policy' .... The parties can now
look only to the Supreme Court for correction."
967 F.2d
1571, 1578 (CA Fed. 1992).
Cardinal filed a petition for certiorari asserting that the
Federal Circuit errs in applying a
per se rule to what
should be a discretionary matter. Pet. for Cert. 13. Morton did not
oppose the grant of certiorari, but instead pointed out that it
also had an interest in having the validity issue adjudicated.9 It
explained that, after the Federal Circuit had
7Those petitions were denied. 1992 U. S. App. LEXIS 7580 (CA
Fed. 1992), App. to Pet. for Cert. 71a, 72a.
81992 U. S. App. LEXIS 10067 (CA Fed. 1992), App. to Pet. for
Cert. 73a,74a.
9Because both parties agree that we should reject the Federal
Circuit's practice, it might be thought that they lack the
adversarial posture required by Article III. Although both Morton
and Cardinal do agree on the correct answer to the question
presented, they do so only so that they can reach their true
dispute: the validity of Morton's two patents, a subject on which
they are in absolute disagreement. Further, it is clear that no
collusion between the parties has brought them here; if anything
has dulled the adverseness between them, it is the Federal Circuit
practice that is the subject of this case. Cf.
INS v.
Chadha, 462 U.
S. 919, 939 (1983) (finding Art. III adverseness even though
the two parties agreed on the unconstitutionality of the one-House
veto that was the subject of that case; the parties remained in
disagreement over the underlying issue
89
twice refused substantive review of findings that its two
patents were invalid, the patents have been
"effectively stripped of any power in the marketplace.
"If Morton were to proceed against another infringer, the
district court, in all likelihood would accept the twice-vacated
invalidity holdings, just as the district court below adopted
wholesale the [Louisiana] district court's invalidity holdings,
without any independent evaluation as to whether those holdings
were correct. Further, any future accused infringer would, in
alllikelihood, argue for an award of attorney's fees as Cardinal
has done here, on the ground that Morton should have known better
than sue on an 'invalid patent' ....
"The value of Morton's patents is therefore essentially
zero-effectively not enforceable and viewed with a jaundiced eye by
competitors and district courts alike. [Morton] has lost valuable
property rights ... without due process of law." Brief for
Respondent 16-17.
Because the Federal Circuit has exclusive jurisdiction over
appeals from all United States District Courts in patent
litigation, the rule that it applied in this case, and has been
applying regularly since its 1987 decision in
Vieau v.
Japax, Inc., 823 F.2d
1510, is a matter of special importance to the entire Nation.
We therefore granted certiorari. 506 U. S. 813 (1992).
I
The Federal Circuit's current practice of routinely vacating
declaratory judgments regarding patent validity following a
determination of noninfringement originated in two
of whether Chadha should be deported). The Federal Circuit's
improper finding of mootness cannot itself moot this case.
90
cases decided by different panels of that court on the same day.
In
Vieau, the patentee had appealed adverse rulings on
damages, infringement, and validity and the alleged infringer had
filed a cross-appeal asserting that the District Court should have
declared the patent invalid. After affirming the District Court's
finding of noninfringement, the Federal Circuit concluded:
"Our disposition on the issue of infringement renders moot the
appeal of the propriety of a directed verdict on the issues of
damages and willful infringement. There is no indication that J
apax's cross-appeal on invalidity extends beyond the litigated
claims or the accused devices found to be noninfringing.
Accordingly, we also dismiss the cross-appeal as moot. The judgment
entered by the district court with respect to each of the mooted
issues is therefore vacated. It is affirmed with
respect to infringement." 823 F. 2d, at 1517.
Judge Bennett filed a concurring opinion, fleshing out this
perfunctory holding and explaining that there was no need to review
the declaratory judgment of invalidity in the absence of any
"continuing dispute (such as the presence or threat of further
litigation) regarding other claims or other accused devices that
remains unresolved by the finding of noninfringement." 10
In the second case,
Fonar Corp. v.
Johnson &
Johnson, 821 F.2d
627 (CA Fed. 1987), the District Court had held that the patent
was not infringed and that the defendant-
10 Vieau, 823 F. 2d, at 1520. He added: "It is the burden
of the party seeking the declaratory judgment to illustrate, either
in its briefs or at oral argument, the continued existence of a
case or controversy should a decision of noninfringement be made by
this court in deciding the appeal.
See International Medical
Prosthetics, 787 F.2d
575, 229 USPQ at 281 (burden is on declaratory plaintiff to
establish that jurisdiction existed at, and has continued since,
the time the complaint was filed). This requirement avoids having
this court unnecessarily address what might turn out to be a
hypothetical situation."
Ibid.
91
counterclaimant had failed to prove invalidity. On appeal, the
court affirmed the noninfringement holding, and vacated the
judgment on the counterclaim as moot. In his opinion for the panel,
Chief Judge Markey explained:
"There being no infringement by J & J of any asserted claim,
there remains no case or controversy between the parties. We need
not pass on the validity or enforce- ability of claims 1 and 2 ...
[elf Altvater v. Freeman, 319 U. S. 359, 363-65 ...
(1943) ('To hold a patent valid if it is not infringed is to decide
a hypothetical case,' but a counterclaim for invalidity is not
mooted where counterclaim deals with additional patent claims and
devices not involved in the complaint and with license
issues.).
"The judgment that J & J has not proven claims 1 and 2
invalid or unenforceable is vacated and the appeal from that
judgment is dismissed as moot." Id., at 634.
A footnote emphasized that there was no longer any dispute
between the parties beyond the specific charge of infringement that
had been resolved by the finding of noninfringement.ll
The three opinions in
Vieau and
Fonar indicate
that the Federal Circuit's practice of vacating declaratory
judgments of patent validity (or invalidity) is limited to cases in
which the court is convinced that the finding of noninfringement
has entirely resolved the controversy between the litigants
11 "The record contains no assertion that J & J infringes
the '832 patent by any methods other than those found not to
infringe, or that J & J's machines infringe the nonasserted
apparatus claims. J & J's counterclaim merely repeated the
affirmative defenses of invalidity and unenforceability and the
verdict form, with no objection by J & J, dealt only with the
asserted claims. J & J's motion for JNOV dealt only with claims
1 and
2." Fonar, 821 F. 2d, at 634, n. 2.
92
by resolving the initial complaint brought by the patentee.12
The Federal Circuit has concluded that in such cases the
declaratory judgment is "moot" in a jurisdictional sense, a
conclusion that it considers dictated by two of our earlier
opinions,
Electrical Fittings Corp. v.
Thomas &
Betts Co., 307
U. S. 241 (1939), and
Altvater v.
Freeman,
319 U. S. 359
(1943).13 We therefore begin with a comment on those two cases.
12 That the holdings of
Vieau v.
Japex, Inc.,
823 F.2d
1510 (CA Fed. 1987), and
Fonar Corp. v.
Johnson &
Johnson, 821 F.2d
627 (CA Fed. 1987), can be said to have developed into a
uniform practice or rule is made clear by the regularity with which
they have been applied. See
Shat-R-Shield, Inc. v.
Trojan, Inc., 1992 U. S. App. LEXIS 9860, *7, judgt. order
reported at
968 F.2d
1226 (CA Fed.) (nonprecedential), cert. denied, 506 U. S. 870
(1992);
Winner Int'l Corp. v.
Wolo Mfg. Corp., 905 F.
2d
375,377 (CA Fed. 1990);
Wilson Sporting Goods Co.
v.
David Geoffrey &
Associates, 904 F.2d
677, 686
(CA Fed. 1990);
Neville Chemical Co. v.
Resinall Corp., 1990 U. S. App. LEXIS 16549, judgt. order
reported at
915 F.2d
1584 (CA Fed. 1990) (nonprecedential);
Freeman v.
Minnesota Mining and Mfg. Co., 13 USPQ 2d 1250, judgt. order
reported at 884 F. 2d
1398 (CA Fed. 1989) (nonprecedential),
cert. denied, 494 U. S. 1070 (1990);
Senmed, Inc. v.
Richard-Allan Medical Industries, Inc., 888 F.2d
815,
817 (CA Fed. 1989);
Environmental Instruments,
Inc. v.
Sutron Corp., 877 F.2d
1561, 1566
(CA Fed. 1989);
Julien v.
Zeringue, 864 F.2d
1569,
1571 (CA Fed. 1989);
Morton Thiokol, Inc.
v.
Argus Chemical Corp., 11 USPQ 2d 1152, judgt. order
reported at
873 F.2d
1451 (CA Fed. 1989) (nonprecedential);
Pfaffv. Wells
Electronic, Inc., 12 USPQ 2d 1158, judgt. order reported at
884 F.2d
1399 (CA Fed. 1989) (nonprecedential);
Specialized
Electronics Corp. v.
Aviation Supplies &
Academics, Inc., 12 USPQ 2d 1918, judgt. order reported at
884 F.2d
1397 (CA Fed. 1989) (nonprecedential);
Sun-Tek Industries,
Inc. v.
Kennedy Sky Lites, Inc., 848 F. 2d 179, 183
(CA Fed. 1988), cert. denied, 488 U. S. 1009 (1989);
Advance Transformer Co. v.
Levinson, 837 F.2d
1081, 1084
(CA Fed. 1988);
Pennwalt Corp. v.
Durand-Wayland, Inc., 833 F.2d
931, 939
(CA Fed. 1987) (en bane);
Perini America,
Inc. v.
Paper Converting Machine Co., 832 F. 2d 581,
584, n. 1 (CA Fed. 1987). In only one published opinion after
1987, Dana Corp. v.
IPC Ltd. Partnership, 860 F.2d
415 (CA Fed. 1988), did the court address the District
Court's validity determination without reaching the issue of
infringement, but it did so without referring to
Vieau or
Fonar.
13 See
Vieau, 823 F. 2d, at 1518-1519 (Bennett, J.,
concurring);
Fonar, 821 F. 2d, at 634.
93
II
In
Electrical Fittings, the District Court held one claim
of a patent valid but not infringed.14 The patentee was content
with that judgment, but the successful defendant appealed, seeking
a reversal of the finding of validity. The Court of Appeals
dismissed the appeal based on the rule that a prevailing party may
not appeal from a judgment in its favor. We reversed, and held that
although the defendant could not compel the appellate court to
revisit the finding of validity (which had become immaterial to the
disposition of the case), it could demand that the finding of
validity be vacated. That finding, we explained, "stands as an
adjudication of one of the issues litigated. We think the
petitioners were entitled to have this portion of the decree
eliminated, and that the Circuit Court of Appeals had jurisdiction,
as we have held this Court has, to entertain the appeal, not for
the purpose of passing on the merits, but to direct the reformation
of the decree."
Electrical Fittings, 307 U. S., at 242
(footnotes omitted).
Our command that the validity decision be eliminated was similar
to the Federal Circuit's mandate in the
Fonar case (both
cases suggest that an appellate court should vacate unnecessary
decisions regarding patent validity), but the two cases are
critically different. The issue of invalidity in
Electrical
Fittings was raised only as an affirmative defense to the
charge that a presumptively valid patent had been infringed,15 not
(as in
Fonar, and as here) as a basis for a counterclaim
seeking a declaratory judgment of patent invalidity. An unnecessary
ruling on an affirmative defense is not the
14 "Instead of dismissing the bill without more, it entered a
decree adjudicating claim 1 valid but dismissing the bill for
failure to prove infringement." 307 U. S., at 242.
15 Under 35 U. S. C. § 282, all patents are presumed valid.
Although that presumption is obviously resurrected after the
Federal Circuit vacates a finding of invalidity, Morton's current
situation makes clear that the revived presumption lacks some of
its earlier strength.
94
same as the necessary resolution of a counterclaim for a
declaratory judgment.
In
Altvater, as here, the defendant
did file a
counterclaim seeking a declaratory judgment that the patent was
invalid. The District Court found no infringement, but also granted
the declaratory judgment requested by the defendant. The Court of
Appeals affirmed the noninfringement holding but, reasoning that
the validity issue was therefore moot, vacated the declaratory
judgment. We reversed. Distinguishing our holding in
Electrical
Fittings, we wrote:
"To hold a patent valid if it is not infringed is to decide a
hypothetical case. But the situation in the present case is quite
different. We have here not only bill and answer but a
counterclaim. Though the decision of noninfringement disposes of
the bill and answer, it does not dispose of the counterclaim which
raises the question of validity .... [T]he issue of validity may be
raised by a counterclaim in an infringement suit. The requirements
of case or controversy are of course no less strict under the
Declaratory Judgments Act (48 Stat. 955, 28 U. S. C. § 400) than in
case of other suits. But we are of the view that the issues raised
by the present counterclaim were justiciable and that the
controversy between the parties did not come to an end on the
dismissal of the bill for non-infringement, since their dispute
went beyond the single claim and the particular accused devices
involved in that suit." 319 U. S., at 363-364 (footnotes omitted;
citations omitted).
Presumably because we emphasized, in the last clause quoted, the
ongoing nature of the
Altvater parties' dispute, the Federal
Circuit has assumed that a defendant's counterclaim under the
Declaratory Judgment Act should always be
95
vacated unless the parties' dispute extends beyond the terms of
the patentee's charge of infringement.16
While both of our earlier cases are consistent with the Federal
Circuit practice established in
Vieau and
Fonar,
neither one required it.
Electrical Fittings did not involve
a declaratory judgment, and
Altvater does not necessarily
answer the question whether, in the absence of an ongoing dispute
between the parties over infringement, an adjudication of
invalidity would be moot. We now turn to that question.
III
Under its current practice, the Federal Circuit uniformly
declares that the issue of patent validity is "moot" if it affirms
the District Court's finding of noninfringement and if, as in the
usual case, the dispute between the parties does not extend beyond
the patentee's particular claim of infringement. That practice, and
the issue before us, therefore concern the jurisdiction of an
intermediate appellate court-not the jurisdiction of either a trial
court or this Court. In the trial court, of course, a party seeking
a declaratory judgment has the burden of establishing the existence
of an actual case or controversy.
Aetna Life Ins. Co. v.
Haworth, 300
U. S. 227,240-241 (1937).17
In patent litigation, a party may satisfy that burden, and seek
a declaratory judgment, even if the patentee has not filed an
infringement action. Judge Markey has described
"the sad and saddening scenario that led to enactment of the
Declaratory Judgment Act (Act), 28 U. s. C. § 2201. In the patent
version of that scenario, a patent owner engages in a danse
macabre, brandishing a Dam-
16 See
Vieau, 823 F. 2d, at 1518-1521 (Bennett, J.,
concurring);
Fonar, 821 F. 2d, at 634, and n. 2.
17 As we have noted, the Declaratory Judgment Act affords the
district court some discretion in determining whether or not to
exercise that jurisdiction, even when it has been established. See
Brillhart v.
Excess Ins. Co. of America, 316 U. S. 491, 494-496
(1942).
96
oclean threat with a sheathed sword .... Before the Act,
competitors victimized by that tactic were rendered helpless and
immobile so long as the patent owner refused to grasp the nettle
and sue. After the Act, those competitors were no longer restricted
to an in terrorem choice between the incurrence of a growing
potentialliability for patent infringement and abandonment of their
enterprises; they could clear the air by suing for a judgment that
would settle the conflict of interests. The sole requirement for
jurisdiction under the Act is that the conflict be real and
immediate, i. e., that there be a true, actual 'controversy'
required by the Act." Arrowhead Industrial Water, Inc. v.
Ecolochem, Inc., 846 F.2d
731, 734-735 (CA Fed. 1988) (citations omitted).
Merely the desire to avoid the threat of a "scarecrow" patent,
in Learned Hand's phrase,18 may therefore be sufficient to
establish jurisdiction under the Declaratory Judgment Act. If, in
addition to that desire, a party has actually been charged with
infringement of the patent, there is,
necessarily, a case or
controversy adequate to support jurisdiction of a complaint, or a
counterclaim, under the Act. In this case, therefore, it is
perfectly clear that the District Court had jurisdiction to
entertain Cardinal's counterclaim for a declaratory judgment of
invalidity.
It is equally clear that the Federal Circuit, even after
affirming the finding of noninfringement, had
jurisdiction
to consider Morton's appeal from the declaratory judgment of
invalidity. A party seeking a declaratory judgment of invalidity
presents a claim independent of the patentee's charge of
infringement. If the District Court has jurisdiction (established
independently from its jurisdiction over the patentee's charge of
infringement) to consider that claim, so does (barring any
intervening events) the Federal Circuit.
18 Bresnick v. United States Vitamin Corp., 139 F.2d 239, 242
(CA2 1943).
97
There are two independent bases for this conclusion.
First, the Federal Circuit is not a court of last resort. If
that court had jurisdiction while the case was pending before it,
the case remains alive (barring other changes) when it comes to us.
The Federal Circuit's determination that the patents were not
infringed is subject to review in this Court, and if we reverse
that determination, we are not prevented from considering the
question of validity merely because a lower court thought it
superfluous. As a matter of practice, the possibility that we would
grant certiorari simply to review that court's resolution of an
infringement issue is extremely remote, but as a matter of law we
could do so, and if we did, we could also reach the declaratory
judgment, as long as the parties continued to dispute the issue of
validity, as they do here.19 As this case demonstrates, nothing
prevents us, as a jurisdictional matter, from reviewing the Federal
Circuit's disposition (even its vacatur) of the District Court's
resolution of the declaratory judgment counterclaim.
19 Commenting on
Electrical Fittings, in
Deposit
Guaranty Nat. Bank v.
Roper, 445 U. S. 326, 335
(1980), we wrote: "Although the Court limited the appellate
function to reformation of the decree, the holding relevant to the
instant case was that the federal courts retained jurisdiction over
the controversy notwithstanding the District Court's entry of
judgment in favor of petitioners. This Court had the question of
mootness before it, yet because policy considerations permitted an
appeal from the District Court's final judgment and because
petitioners alleged a stake in the outcome, the case was still live
and dismissal was not required by Art. III. The Court perceived the
distinction between the definitive mootness of a case or
controversy, which ousts the jurisdiction of the federal courts and
requires dismissal of the case, and a judgment in favor of a party
at an intermediate stage of litigation, which does not in all cases
terminate the right to appeal." See also 959 F. 2d, at 953 (Lourie,
J., concurring) ("[B]ecause this court is not a court of last
resort, a holding of either invalidity or noninfringement by our
court does not render the case moot because it is not over.
Therefore, when both infringement and validity issues are presented
on appeal, we can base our affirmance on both grounds, thereby
leaving a complete judgment available for review by the Supreme
Court").
98
Second, while the initial burden of establishing the trial
court's jurisdiction rests on the party invoking that jurisdiction,
once that burden has been met courts are entitled to presume,
absent further information, that jurisdiction continues. If a party
to an appeal suggests that the controversy has, since the rendering
of judgment below, become moot, that party bears the burden of
coming forward with the subsequent events that have produced that
alleged result. See
United States v.
W T. Grant Co.,
345 U. S. 629,
633 (1953).20 In this case Cardinal properly invoked the original
jurisdiction of the District Court, and Morton properly invoked the
appellate jurisdiction of the Federal Circuit. That court
unquestionably had the power to decide all the issues raised on
Morton's appeal. If, before the court had decided the case, either
party had advised it of a material change in circumstances that
entirely terminated the party's controversy, it would have been
proper either to dismiss the appeal or to vacate the entire
judgment of the District Court. Cf.
United States v.
Munsingwear, Inc., 340 U. S. 36, 39 (1950).
In fact, however, there was no such change in this case. The
Federal Circuit's decision to rely on one of two possible
alternative grounds (noninfringement rather than invalidity) did
not strip it of
power to decide the second question,
particularly when its decree was subject to review by this Court.
Even if it may be good practice to decide no more than is necessary
to determine an appeal, it is clear that the Federal Circuit had
jurisdiction to review the declaratory judgment of invalidity. The
case did not become moot when that court affirmed the finding of
noninfringement.
20 To the extent that the Federal Circuit, relying on Judge
Bennett's concurrence in
Vieau, see n. 10,
infra,
would have imposed the burden on Cardinal to show that jurisdiction
over its counterclaim, once established in the District Court,
continued to attach before the Court of Appeals, it would therefore
have been in error. Bearing the initial burden of establishing
jurisdiction is different from establishing that it has
disappeared.
99
IV
The Federal Circuit's practice is therefore neither compelled by
our cases nor supported by the "case or controversy" requirement of
Article III. Of course, its practice might nevertheless be
supported on other grounds. The courts of appeals have significant
authority to fashion rules to govern their own procedures. See,
e. g., OrtegaRodriguez v.
United States, 507 U. S. 234, 244, 246,
249-250
(1993); Thomas v.
Arn, 474 U. S. 140, 146-148
(1985). Just as we have adhered to a practice of deciding cases on
statutory rather than constitutional grounds when both alternatives
are available, see,
e. g., Edward J.
DeBartolo Corp.
v.
Florida Gulf Coast Building and Construction Trades
Council, 485 U.
S. 568, 575 (1988), there might be a sufficient reason always
to address the infringement issue before passing on the patent's
validity. If, for example, the validity issues were generally more
difficult and time consuming to resolve, the interest in the
efficient management of the court's docket might support such a
rule.
Although it is often more difficult to determine whether a
patent is valid than whether it has been infringed, there are even
more important countervailing concerns. Perhaps the most important
is the interest of the successful litigant in preserving the value
of a declaratory judgment that, as Chief Judge Nies noted, "it
obtained on a valid counterclaim at great effort and expense." 21 A
company once charged with
21967
F.2d 1521, 1577 (CA Fed. 1992) (Nies, C. J., dissenting from
denial of rehearing en bane). As she added in a footnote: "Nor
should we be unmindful of the expense and effort of the district
court. Judge Avern Cohn of the Eastern District of Michigan (the
Vieau trial judge) stated, in a panel discussion at our most
recent Judicial Conference: 'I took six months to write a JNOV,
found the patent invalid and not infringed and was very proud of my
work product. And when I read that court of appeals opinion and
found that my finding of invalidity had been vacated, there was no
case or controversy, I was in a state of shock for ten minutes.'
Cohn, Remarks at the Patent Breakout Session of the Tenth Annual
Judi-
100
infringement must remain concerned about the risk of similar
charges if it develops and markets similar products in the future.
Given that the burden of demonstrating that changed circumstances
provide a basis for vacating the judgment of patent invalidity
rests on the party that seeks such action, there is no reason why a
successful litigant should have any duty to disclose its future
plans to justify retention of the value of the judgment that it has
obtained.22
Moreover, our prior cases have identified a strong public
interest in the finality of judgments in patent litigation. In
Sinclair &
Carroll Co. v.
Interchemical
Corp., 325 U. S.
327 (1945), we approved of the District Court's decision to
consider the question of validity even though it had found that a
patent had not been infringed. Criticizing the contrary approach
taken by other courts, we stated that "of the two questions,
validity has the greater public importance,
Cover v.
Schwartz, 133 F.2d 541 [(CA2 1943)], and the District Court
in this case followed what will usually be the better practice by
inquiring fully into the validity of this patent."
Id., at
330.
We also emphasized the importance to the public at large of
resolving questions of patent validity in
Blonder-Tongue
Laboratories, Inc. v.
University of Ill. Foundation,
402 U. S. 313
(1971). In that case we overruled
Triplett v.
Lowell,
297 U. S. 638
(1936), which had held that a determination of patent invalidity
does not estop the patentee from relitigating the issue in a later
case brought against another alleged infringer. We also commented
at length on the wasteful
cial Conference of the United States Court of Appeals for the
Federal Circuit 65 (April 30, 1992)."
Id., at 1577, n.
9.
22 Altvater cannot be read to require such a disclosure.
In that case, the counterclaimant was a licensee, and there was no
question but that its obligations to the patentee would continue
unless the patent were found invalid. Our holding did not depend on
that fact, however, and we nowhere stated that a counterclaimant
could seek the affirmance of a declaratory judgment only if it
ensured that its future actions would continue to violate the
patentee's alleged rights.
101
consequences of relitigating the validity of a patent after it
has once been held invalid in a fair trial,23 and we noted the
danger that the opportunity to relitigate might, as a practical
matter, grant monopoly privileges to the holders of invalid
patents.24 As this case demonstrates, the Federal Circuit's
practice of routinely vacating judgments of validity after finding
noninfringement creates a similar potential for relitigation and
imposes ongoing burdens on competitors who are convinced that a
patent has been correctly found invalid.
Indeed, as Morton's current predicament illustrates, see
supra, at 89, the Federal Circuit's practice injures not
only
23 "In any lawsuit where a defendant, because of the mutuality
principle, is forced to present a complete defense on the merits to
a claim which the plaintiff has fully litigated and lost in a prior
action, there is an arguable misallocation of resources. To the
extent the defendant in the second suit may not win by asserting,
without contradiction, that the plaintiff had fully and fairly, but
unsuccessfully, litigated the same claim in the prior suit, the
defendant's time and money are diverted from alternative
usesproductive or otherwise-to relitigation of a decided issue.
And, still assuming that the issue was resolved correctly in the
first suit, there is reason to be concerned about the plaintiff's
allocation of resources. Permitting repeated litigation of the same
issue as long as the supply of unrelated defendants holds out
reflects either the aura of the gaming table or 'a lack of
discipline and of disinterestedness on the part of the lower
courts, hardly a worthy or wise basis for fashioning rules of
procedure.'
Kerotest Mfg. Co. v.
C-O-Two Co.,
342 U. S. 180,
185 (1952)." 402 U. S., at 329.
24 "In each successive suit the patentee enjoys the statutory
presumption of validity, and so may easily put the alleged
infringer to his expensive proof. As a consequence, prospective
defendants will often decide that paying royalties under a license
or other settlement is preferable to the costly burden of
challenging the patent."
Id., at 338.
"The tendency of
Triplett to multiply the opportunities
for holders of invalid patents to exact licensing agreements or
other settlements from alleged infringers must be considered in the
context of other decisions of this Court. Although recognizing the
patent system's desirable stimulus to invention, we have also
viewed the patent as a monopoly which, although sanctioned by law,
has the economic consequences attending other monopolies. A patent
yielding returns for a device that fails to meet the
congressionally imposed criteria of patentability is anomalous."
Id., at 342-343 (footnotes omitted).
102
the alleged infringer and the public; it also may unfairly
deprive the patentee itself of the appellate review that is a
component of the one full and fair opportunity to have the validity
issue adjudicated correctly. If, following a finding of
noninfringement, a declaratory judgment on validity is routinely
vacated, whether it invalidated the patent (as in Vieau) or upheld
it (as in Fonar), the patentee may have lost the practical value of
a patent that should be enforceable against different infringing
devices. The Federal Circuit's practice denies the patentee such
appellate review, prolongs the life of invalid patents, encourages
endless litigation (or at least uncertainty) over the validity of
outstanding patents, and thereby vitiates the rule announced in
BlonderTongue.
25
In rejecting the Federal Circuit's practice we acknowledge that
factors in an unusual case might justify that court's refusal to
reach the merits of a validity determination-a determination which
it might therefore be appropriate to vacate. A finding of
noninfringment alone, however, does not justify such a result. Nor
does anything else in the record of this case. The two patents at
issue here have been the subject of three separate lawsuits, and
both parties have
25 The Federal Circuit's practice has been the subject of a good
deal of scholarly comment, all of which has consistently criticized
the practice. See R. Harmon, Patents and The Federal Circuit
551-554 (2d ed. 1991); Wegner,
Morton, The Dual Loser
Patentee: Frustrating
Blonder-Tongue, 74 J. Pat. & Tm.
Off. Soc. 344 (1992) ("A dual loser patentee at a trial court who
fails both on infringement and validity and then loses at the
Federal Circuit on infringement is given the judicial blessing of
that appellate tribunal to sue and sue again against third parties,
to the extent the invalidity ruling is vacated under
Vieau"); Re & Rooklidge, Vacating Patent Invalidity
Judgments Upon an Appellate Determination of Noninfringement, 72 J.
Pat. & Tm. Off. Soc. 780 (1990). See also Donofrio, The
Disposition of Unreviewable Judgments by the Federal Circuit, 73 J.
Pat. & Tm. Off. Soc. 462, 464 (1991) ("[T]he Federal Circuit's
present practice of vacating such judgments [even if it correctly
considers them unreviewable] should not continue because it permits
litigants to destroy the conclusiveness of invalidity
holdings").
103
urged the Federal Circuit to resolve their ongoing dispute over
the issue of validity; it would be an abuse of discretion not to
decide that question in this case. Accordingly, the judgment of the
Court of Appeals is vacated, and the case is remanded to that court
for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE SCALIA, with whom JUSTICE SOUTER joins, concurring in
part and concurring in the judgment.
I agree that the Federal Circuit erred in holding that the
invalidity claim became moot once it was determined that the patent
had not been infringed. Moreover, though the Federal Circuit had
discretion to reach (or not to reach) respondent's appeal of the
declaratory judgment ruling, it was an abuse of discretion to
decline to reach it for that erroneous "mootness"
reason-constituting, in effect, a failure to exercise
any
discretion at all. I therefore join the judgment of the Court,
and all of its opinion except Part 1\1.
In Part IV the Court determines that, upon remand, the Federal
Circuit may not,
"on other grounds," ante, at 99 (emphasis
added), continue its practice of declining review in these
circumstances, set out in
Vieau v.
Japax, Inc.,
823 F.2d
1510 (1987). That point is much less tied to general principles
of law with which I am familiar, and much more related to the
peculiarities of patent litigation, with which I deal only
sporadically. It need not be reached to decide this case, and I am
unwilling to reach it because of the lack of adversary
presentation.
The lack of adversariness was frankly acknowledged at oral
argument. See,
e. g., Tr. of Oral Arg. 25, 37 ("On the
limited issue before this Court, where there is a declaratory
judgment held, we do not have any difference whatsoever").
Petitioners and respondent disagree only as to some hypothetical
applications of the Federal Circuit's reviewing
authority-applications clearly outside the facts of this case-
104
and are in utter agreement concerning the invalidity of the
Vieau practice. The briefs starkly reflect this
uniformity:
Respondent's brief, in a mere 10 pages of argument, essentially
incorporates by reference much of petitioners' brief, which in turn
largely reflects Chief Judge Nies' dissent from the denial of en
bane review below. Brief for Respondent 8-9. (Not surprisingly,
petitioners did not bother to file a reply brief responding to
their own echo.)
Amici likewise all weighed in on the single
side in this case, one of them even identifying its submission as
"in support of petitioners & respondents." Brief for Federal
Circuit Bar Association as
Amicus Curiae. While this harmony
is heartwarming and even (since it reduces the number and length of
briefs) environmentally sound, it may encourage us to make bad
law.
In the past, when faced with a complete lack of adversariness,
we have appointed an
amicus to argue the unrepresented side.
See,
e. g., Toibb v.
Radloff, 501 U. S. 157, 160, n. 4
(1991);
Bob Jones Univ. v.
United States, 461 U. S. 574, 585, n. 9,
599, n. 24 (1983);
Granville-Smith v.
GranvilleSmith,
349 U. S. 1, 4
(1955). Cf.
INS v.
Chadha, 462 U. S. 919, 939-940
(1983). The wisdom of that course is shown by
Cheng Fan Kwok
v.
INS, 392 U.
S. 206, 210 (1968). That case, like this one, involved a Court
of Appeals' refusal to decide-the Third Circuit's determination
that it lacked jurisdiction to review the INS's denial of
petitioner's application for a stay of deportation. And in that
case, as in this one, both parties agreed that the Court of Appeals
should have decided the case. We appointed an
amicus
to defend the judgment below,
id., at 210, n. 9, and ended
up
affirming the determination rejected by the parties.
I agree with the Court that the parties' total agreement as to
disposition of this case poses no constitutional barrier to its
resolution.
Ante, at 88-89, n. 9. For prudential reasons,
however, I would frame the resolution more narrowly. I can say with
confidence that the question of the validity of
105
the patent is not moot, so that mootness was an impermissible
ground for failing to decide validity. It seems to me that is
enough for us to determine for the moment. If supposed mootness was
in fact the only support for the
Vieau policy, the Federal
Circuit will abandon it and we will never see the issue again. If,
however, there is some other support, we should hear about it from
counsel before we reject the policy out of hand.
The issue of discretionary refusal (as opposed to the issue of
mootness) is, it seems to me, more than usually deserving of
adversary presentation. It involves the practicalities of the
Federal Circuit's specialized patent jurisdiction, rather than
matters of statutory or constitutional interpretation with which we
are familiar. The opinions of the Federal Circuit do not discuss
the practical benefits of the
Vieau practice, nor can we
find them discussed in the opinions of other courts, the Federal
Circuit's jurisdiction over patent appeals being exclusive, see 28
U. s. C. § 1295(a). One must suspect, however, that some practical
benefits exist, since despite the fragility of the "mootness"
jurisdictional justification that we reject today,
Vieau has
enlisted the support of the experienced judges on the Federal
Circuit-who denied en banc review despite criticism of
Vieau
in Chief Judge Nies' opinion dissenting from the denial,
967 F.2d
1571 (1992), and in Judge Lourie's panel concurrence,
959 F.2d
948, 952 (1992).
For these reasons, I concur in the judgment of the Court, and
join all of its opinion except Part 1\1.
Comments
Be the first to comment
Leave a Comment