Tuesday, January 31, 2017

Supreme Court nominee Neil Gorsuch on intellectual property

In SUREFOOT LC v. SURE FOOT CORPORATION, 531 F.3d 1236, 87 U.S.P.Q.2D 1266 (CA10 2008), Judge Gorsuch authored an opinion on a DJ action in a trademark dispute.

Within, he wrote: our job as a federal appellate court is to follow the Supreme Court's directions, not pick and choose among them as if ordering from a menu. See Gaylor v. United States, 74 F.3d 214, 217 (10th Cir. 1996) (we are "bound by Supreme Court dicta almost as firmly as by the Court's outright holdings, particularly when the dicta is recent and not enfeebled by later statements").

Related to intellectual property: Second, Sure Foot ND argues that MedImmune at most invalidated only the reasonable apprehension of suit test in patent cases, while Cardtoons, like this case, involved a trademark issue. But Sure Foot ND offers no persuasive reason why the interpretation of the Declaratory Judgment Act's terms depends on the nature of the intellectual property right at issue, and nothing in MedImmune's analysis suggests one. Indeed, two of the cases the MedImmune Court cited in the process of rejecting the reasonable apprehension of suit test were insurance cases -- themselves well outside the intellectual property, much less patent, context. See MedImmune, 127 S. Ct. at 774 n.11 (citing Maryland Cas., 312 U.S. at 273 (insurance case), and Aetna, 300 U.S. at 239 (same)).

Having concluded that MedImmune displaced the jurisdictional test we announced in Cardtoons, the question remains what test replaces it, in light of MedImmune, and whether Surefoot UT can meet that test in this case. Our starting point naturally lies in MedImmune's language. There, the Court reminded us of the formulations it offered in Aetna and Maryland Casualty and suggested they remain key to our jurisdictional inquiry in declaratory judgment actions.

There is some "down home" language:

In this respect, our case finds a home in the heartland of declaratory judgment cases, closely resembling Aetna. In that case, an insured repeatedly claimed coverage under certain insurance policies for a present disability, but never brought suit against the insurer; meanwhile, the insurer, though believing the insured was not entitled to any payment under the policies, felt compelled to maintain a sum of money in reserve to guard against the contingent liability posed by the insured's claims. See id. at 237-39. Seeking to dispel the cloud that the insured's claims placed over the insurer's business affairs, and unwilling to wait until the insured finally (if ever) filed suit, the insurer sought a declaration of the insured's rights in federal court. See id. The case presented no complicating issues of future contingencies and the Supreme Court readily held that jurisdiction existed, stressing that the "parties had taken adverse positions with respect to their existing obligations," and the dispute concerned "a present right" based upon historical or "established facts." See id. at 242. The very same may be said of the case before us. Indeed, the only perceivable difference between Aetna and our case, on the one hand, and conventional litigation, on the other, is the bare formality that the parties are transposed. See id. at 244; Maryland Cas., 312 U.S. at 273 (HN16Go to this Headnote in the case."It is immaterial that . . . , in the declaratory judgment suit, the positions of the parties in the conventional suit are reversed; the inquiry is the same in either case"). 5

Footnote 6 invoked the CAFC:

We do note, however, that the Federal Circuit, which appears to have addressed this issue more than any other court, has concluded that the mere passage of time does not eviscerate the existence of an actual controversy unless a declaratory defendant has, for example, made a covenant not to sue the declaratory plaintiff, or where the circumstances of the parties have significantly changed, perhaps such as by the withdrawal of one side's product from the marketplace -- neither of which have occurred in this case. See, e.g., Fina Research, S.A. v. Baroid Ltd., 141 F.3d 1479, 1484 (Fed. Cir. 1998).

Footnote 8 goes to a law review:

Along related lines, other commentators have expressed the concern that one of MedImmune's effects might be that a single cease-and-desist letter, if not carefully drafted to avoid making threats of litigation, may more frequently give rise to declaratory judgment jurisdiction. See, e.g., Michael Weinstein, The Fate of the Federal Circuit's "Reasonable Apprehension" Standard in Patent Suits for Declaratory Judgment Following MedImmune, Inc. v. Genentech, Inc., 76 U. Cin. L. Rev. 681, 704-06 (2008); cf. D. Peter Harvey & Seth I. Appel, The Declaratory Judgment Response to a Cease and Desist Letter: "First-to-File" or "Procedural Fencing", 96 Trademark Rep. 639 (2006).

The conclusion

Though we hold that the district court has jurisdiction to entertain this case, the question remains whether, as a discretionary matter, it should do so. As we noted above, see supra Part II, HN19Go to this Headnote in the case.the Declaratory Judgment Act does not demand that a district court decide every declaratory suit brought to it even where the court has the power to do so. Instead, once the court is satisfied that Article III's jurisdictional requirements are met, it must then consider a number of factors, including those previously set out by this court in Mhoon, to determine whether the suit warrants the district court's attention. These factors include:

[1] whether a declaratory action would [**34] settle the controversy; [2] whether it would serve a useful purpose in clarifying the legal relations at issue; [3] whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race to res judicata"; [4] whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and [5] whether there is an alternative remedy which is better or more effective.

Mhoon, 31 F.3d at 983.

In this case, the district court never reached the issue whether it should, as a matter of statutory discretion, consider Surefoot UT's request for declaratory relief because it held that, by failing to present a case or controversy, the suit could not be entertained at all. Now, of course, the discretionary question must be faced and answered. Rather than tackling it ourselves, we believe the appropriate course is to afford the district court the opportunity to evaluate it in the first instance. In this vein, we are guided again by MedImmune where, after holding that Article III jurisdiction existed, the Court explained that "it would be imprudent for us to decide whether the [**35] District Court should, or must, decline to issue the requested declaratory relief," and so held that "[w]e leave the equitable, prudential, and policy arguments in favor of such a discretionary dismissal for the lower courts' consideration on remand." 127 S. Ct. at 776-77. In doing so, the Court echoed its own previous direction in Wilton v. Seven Falls Co., 515 U.S. 277, 289, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995), where it said that HN20Go to this Headnote in the case."[w]e believe it more consistent with the statute to vest district courts with discretion in the first instance." So we say here, and further stress that we express no views on what the [***1276] proper outcome of the district court's analysis should be.

* * *

While the district court faithfully applied our precedent, since the time it issued its decision the Supreme Court has undone that precedent. Applying the Court's new direction in MedImmune, we conclude that Article III jurisdiction exists over this controversy and so must reverse the district court's contrary judgment. At the same time, [*1249] acknowledging that discretionary considerations associated with Surefoot UT's invocation of the Declaratory Judgment Act remain to be addressed, we remand this matter for further proceedings not inconsistent [**36] with this opinion.

See also MESHWERKS, INC. v. Toyota, 528 F.3d 1258 (CA10 2008)


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