the '351 patent was due June 25, 1988, with a grace period until December 25, 1988. For reasons that apparently are in dispute, neither Vitrophage nor its predecessors in interest paid the fee, and the grace period expired. On June 13, 1990, Vitrophage's counsel wrote his client and stated that "with respect to the U.S. patent, there is no chance, in my opinion, of revival at this late date." Plaintiff's Memorandum in Opposition, Affidavit of Marc S. Gross, Exhibit A1.
Subsequently, in 1990 and 1991, Infinitech and its predecessor in interest began to develop a liquid perflourocarbon product known by the trademark name of Perflouron. In the meantime, the then-holder of the '351 patent petitioned the PTO for reinstatement of the patent, and on May 15, 1991, the PTO reinstated the patent and accepted delayed payment of the maintenance fee. Then the fur began to fly.
Vitrophage's counsel "notified Infinitech with respect to infringement" of the '351 patent as early as June 13, 1991, and Vitrophage subsequently referred to Infinitech's application for FDA approval of Perflouron as "an act of infringement" in a letter dated August 12, 1992. See id., Exhibit B. Another letter from Vitrophage's counsel, dated February 12, 1993, referred to putting Infinitech and Dr. Stanley Chang, a Cornell University researcher with whom Infinitech had been working, "on notice with respect to their infringing activities." Id., Exhibit C. Vitrophage sent a letter to the dean of Cornell's medical school, stating that Dr. Chang "and others at Cornell University, as employees of the University, may be engaged in an infringement of the rights of Vitrophage . . . embodied in the above U.S. patent by using or supplying perflourocarbons to others in violation of the above patent." Id., Exhibit D.
In response, Infinitech's counsel informed Vitrophage on March 2, 1993, that Infinitech had invested "hundreds of thousands of dollars" in the development of Perflouron since the lapse of the '351 patent. Id., Exhibit E. Infinitech's counsel also outlined its equitable intervening rights argument and its argument that the '351 patent was wrongly reinstated and thus unenforceable. Id. Although Infinitech offered to enter into negotiations over a possible license, id., Vitrophage responded on March 22, 1993, that it was "not interested" in licensing discussions. Id., Exhibit F. Vitrophage further stated that Infinitech's letter "does not make out a case for Infinitech's equitable right to continue to infringe upon the ['351] patent rights. Rather than argue about it on the basis of limited facts, and your client's unwillingness for business reasons to get into details which would enable a more enlightened evaluation, it looks like this issue will be held over until sometime in the future." Id.
The future arrived on May 11, 1993, when Infinitech brought suit in this court for a declaratory judgment. Vitrophage's motion to dismiss under Rule 12(b)(1) requires the court to consider whether it may exercise subject-matter jurisdiction by authority of the Declaratory Judgment Act, 28 U.S.C. § 2201.
I. Requirements for Jurisdiction under the Act
The Declaratory Judgment Act provides that "in a case of actual controversy," the district court, upon the filing of an appropriate pleading, "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. In patent litigation, the Act's sole requirement for jurisdiction "is that the conflict be real and immediate, i.e., that there be a true, actual 'controversy' required by the Act." Cardinal Chem. Co. v. Morton Intern., Inc., 124 L. Ed. 2d 1, 113 S. Ct. 1967, 1975 (1993). Of course, the federal judicial power may never extend beyond "cases" or "controversies." U.S. Const., art. III, § 2, cl. 1. In patent litigation, the Supreme Court has recognized that an actual controversy may exist even before a patent holder sues for infringement. Cardinal, 113 S. Ct. at 1974. The Declaratory Judgment Act was intended to address, in the patent context, "the sad and saddening scenario" in which "a patent owner engages in a danse macabre, brandishing a Damoclean threat with a sheathed sword." Id.
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 potential liability 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.