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Case or Controversy Questionable

April 13, 2004

Decision icon Decision

Last Month at the Federal Circuit - May 2004

Judges: Michel (author), Gajarsa, and Dyk

In Sierra Applied Sciences, Inc. v. Advanced Energy Industries, Inc., No. 03-1356 (Fed. Cir. Apr. 13, 2004), the Federal Circuit reversedin- part, vacated-in-part, affirmed-in-part, and remanded a dismissal of a DJ action that was based on lack of subject matter jurisdiction.

Sierra Applied Sciences, Inc. (“Sierra”) sued Advanced Energy Industries, Inc. (“AEI”), seeking a declaration that AEI’s U.S. Patent No. 5,718,813 (“the ‘813 patent”) is invalid and not infringed by Sierra’s 2 kilowatt and 150 kilowatt reactive-sputtering power supplies. The district court dismissed the action for lack of a case or controversy.

The Federal Circuit, in reviewing the record, decided on its own initiative that three power sources were actually at issue— the 2 kW device and two prototype versions of the 150 kW device. The Court then separately addressed whether a case or controversy existed as to each of the three power supplies. It asked whether, for each device, there was (a) an explicit threat or other action by the patentee creating a reasonable apprehension of an infringement suit, and (b) present activity by the alleged infringer that could constitute infringement or concrete steps taken with intent to conduct such activity.

The Federal Circuit found the first prong satisfied for all three devices because AEI’s letters to Sierra threatening suit were broad enough to create a reasonable apprehension that AEI would assert the ‘813 patent against all of Sierra’s power supplies for all of Sierra’s activities. For the second prong of the test, the Court reached a different conclusion for each of the three power supplies.

The Federal Circuit noted that assurances by AEI’s counsel in the district court proceedings that AEI would not sue for Sierra’s in-house use of the 2 kW device alleviated any controversy as to the use. Those assurances were not, however, broad enough to alleviate Sierra’s apprehension of suit for several sales of the 2 kW device, which though de minimis and occurring several years before the complaint, were within the six-year limitations period and, thus, supported jurisdiction.

The Court found that the first of the two 150 kW prototypes was destroyed before or during testing, then abandoned. The record was unclear as to whether the first 150 kW prototype was used before it was destroyed. The Court remanded, instructing that if the device worked, even briefly, the testing was sufficient to satisfy the “infringing activity” prong of the case or controversy test.

As to the second 150 kW prototype, the Court found that, because it was undisputed that Sierra had not engaged in infringing activity with the second 150 kW prototype before the filing of the complaint, jurisdiction depended on whether Sierra had taken “concrete steps” with the intent to engage in infringing activity with respect to the second 150 kW prototype. The Court focused on two necessary factors: “immediacy,” i.e., the period of time between the date the complaint was filed and the date on which the infringing activity will begin, and “reality,” i.e., whether the design of the potentially infringing device is substantially fixed on the date of the complaint. The one-year period between the complaint and the completion of the second 150 kW prototype was too long to show “immediacy” at the time of the filing. Furthermore, Sierra was unable to show “reality,” since at the time of the complaint, the design of the second 150 kW prototype was fluid and indeterminate. As a result, no case or controversy existed as to the second 150 kW prototype.