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DOW CHEM. CO. v. VISKASE CORP.

May 25, 1995

THE DOW CHEMICAL COMPANY, Plaintiff,
v.
VISKASE CORPORATION, Defendant.



The opinion of the court was delivered by: JAMES B. MORAN

 The Dow Chemical Company (Dow) brings this action against Viskase Corporation (Viskase) seeking a declaratory judgment that seven of Viskase's patents either are invalid or are not infringed by Dow or its customers. Viskase has moved to dismiss the complaint, arguing that this court lacks subject matter jurisdiction. For the reasons set forth below, the motion is granted.

 FACTS1

 Among Dow's products are various families of ethylene polymers, including the Attane family and several families created using Insite Technology, including the Affinity family. Dow's customers use these polymers to create assorted end products, including thermoplastic single-layer and multi-layer films used in packaging. At issue here are certain packaging films known as biaxially-stretched shrink films.

 Viskase makes and sells its own line of single-layer and multi-layer films formed into bags for the packaging of food. These include biaxially-stretched shrink films. Viskase owns seven patents for biaxially-stretched shrink films made from very low density polyethylene (VLDPE). *fn2" Viskase previously sued Cryovac, one of Dow's major customers, on five of the seven patents, and that case was settled out of court. While the terms of the settlement agreement are confidential, Dow believes that the agreement requires Cryovac to disclose any new biaxially-stretched shrink films it produces. Once it does so, Viskase must announce whether it considers such films to infringe on its patents.

 In part because of the Cryovac-Viskase litigation, Dow has worked with Cryovac to develop an Insite Technology polymer that both believed could be used to make biaxially-stretched shrink film that would not infringe Viskase's patents. Dow claims it helped Cryovac so that Dow could recover the sales business it lost as a result of the Cryovac-Viskase lawsuit.

 Cryovac made bags from the biaxially-stretched shrink film Dow developed after the Cryovac-Viskase litigation. Dow believes that when those bags were submitted for review under the settlement agreement, Viskase challenged them, claiming that they infringed its patents. *fn3"

 In addition to ANC and Cryovac, Dow has other customers and prospective customers with whom it is working to design polymers which can be used to make biaxially-stretched shrink film. At least one of those customers has sought Dow's assistance in avoiding infringement on the Viskase patents and has sought indemnification from Dow against any charge of infringement made by Viskase.

 Based on the above facts, Dow claims that Viskase believes that Cryovac, ANC, and other Dow customers who make biaxially-stretched shrink films have infringed its patents and intends to enforce its patents against them. Dow also believes that Viskase will sue Dow for inducing its customers to infringe the patents. It therefore seeks a declaratory judgment that Viskase's patents either are invalid or are not infringed by biaxially-stretched shrink film whose polyethylene component is one of Dow's Affinity or Insite Technology polymers. Viskase has moved to dismiss Dow's complaint, arguing that this court lacks subject matter jurisdiction because the complaint raises no case or controversy.

 DISCUSSION

 The Declaratory Judgment Act (the Act) permits federal courts to "declare the rights and legal obligations of an interested party 'in a case of actual controversy.' 28 U.S.C. ยง 2201. The Act enables a person who is reasonably at legal risk because of an unresolved dispute to obtain judicial resolution of the dispute without having to wait for commencement of litigation by the other side." Applexion S.A. v. The Amalgamated Sugar Co., 1995 U.S. Dist. LEXIS 4957, No. 95 C 858, 1995 WL 229049, at *3 (N.D.Ill. Apr. 17, 1995).

 The Act's only jurisdictional requirement is that there be an "actual controversy" between the parties. Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 239-41, 81 L. Ed. 617, 57 S. Ct. 461 (1937). The main issue here is what constitutes an actual controversy -- specifically, whether a raw materials manufacturer can sue a patentee for declaratory judgment based on the activities of customers who use its raw materials to create potentially infringing products.

 The actual controversy test has two core elements: the plaintiff must allege (a) "acts of [the] defendant indicating an intent to enforce its patent" and (b) "present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity." Arrowhead Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 737 (Fed. Cir. 1988); BP Chemicals Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed. Cir. 1993). The first element depends on the conduct of the patentee; the second refers to the conduct of the asserted infringer. BP Chemicals, 4 F.3d at 978. The parties do not dispute that Viskase has acted to enforce its patents against ANC and Cryovac and that it intends to continue to enforce its patents, nor do they dispute that ANC and Cryovac are engaged in activity that could constitute infringement. But ANC and Cryovac are not the ...


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