Danisco US Inc. v. Novozymes A/S
Addressing the issue of when a justiciable controversy arises for the purpose of declaratory judgment jurisdiction, the U.S. Court of Appeals for the Federal Circuit reversed a district court’s dismissal of a declaratory judgment action, finding that a controversy existed based on pre-issuance events at the patent office. Danisco US Inc. v. Novozymes A/S, Case No. 13-1214 (Fed. Cir., Mar. 11, 2014) (Lourie, J.).
Danisco and Novozymes develop genetically-modified enzymes used to convert corn into ethanol. Both hold patents for improving enzyme performance in liquefying starch by substituting certain amino acids in a-amylase enzymes. Since 2001, Novozymes has sued Danisco or Danisco’s predecessor-in-interest for patent infringement numerous times.
Danisco holds a patent which claims an a-amylase enzyme with a specific amino acid substitution called “E188P.” The modified enzyme is the active ingredient in Danisco’s products. Novozymes holds a patent that Novozymes argued covered similar subject matter, which issued later than Danisco’s patent.
During prosecution of Danisco’s patent, Novozymes amended its then-pending application to claim an a-amylase enzyme with an E188P substitution and sought an interference proceeding. The examiner rejected Novozymes’ interference request. After Danisco’s patent issued, Novozymes sought continued examination, challenging the examiner’s conclusions and arguing for priority over the Danisco patent. After the examiner rejected Novozymes’ request, Novozymes submitted public comments to the Patent and Trademark Office (PTO), stating that it refused to “acquiesce” to or be “estopped” by the examiner’s decision.
The day before Novozymes’ patent issued, Danisco filed a declaratory judgment action. The district court dismissed the case, finding no justiciable controversy existed because Danisco had challenged Novozymes’ patent before Novozymes took, or even could have taken, any affirmative action to enforce its patent rights. The district court stated that there is no precedent for finding jurisdiction based on such pre-patent issuance events alone. Danisco appealed.
The Federal Circuit reversed, finding that the fact that Novozymes had not accused Danisco’s products of infringing was not dispositive of the existence of explaining a controversy. The question instead was whether Danisco had demonstrated a substantial risk that the harm will occur: “the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of declaratory judgment.”
The Federal Circuit found that the record showed a definite and concrete patent dispute existed between the parties. Novozymes’ E188P a-amylase claim issued as the sole claim of the Novozymes patent and was the same claim that prompted Novozymes to seek the interference. Novozymes insisted on multiple occasions that its patent reads on the active ingredient in Danisco’s products. Novozymes had sued Danisco over related liquefaction products in the past.
The Court faulted the district court’s categorical distinction between pre- and post-issuance conduct as not irreconcilable with the Supreme Court’s flexible totality-of-the-circumstances test and Federal Circuit precedent: “we have never held that pre-issuance conduct cannot constitute an affirmative act, nor have we held that the only affirmative acts sufficient to create justiciable controversies are implied or express enforcement threats.”
The Court concluded that the parties have “plainly been at war over patents involving genetically modified a-amylase enzymes” and have adverse legal interests capable of conclusive resolution through a declaratory judgment.