Cat in the Vat

Cat Tech LLC v. TubeMaster, Inc.

Look at that!  Look at that!  Prong Two just stepped in on the mat-or, perhaps more precisely, it showed up in the Federal Circuit's decision in Cat Tech LLC v. TubeMaster, Inc.   Specifically, in Cat Tech, the Federal Circuit reviewed whether the changes the Supreme Court decision in MedImmune v. Genentech made to the first prong of the test for declaratory judgment jurisdiction in actions brought by potential infringers impacted the second prong of the same jurisdictional test.  The test prior to MedImmune required that the declaratory judgment plaintiff (1) have a reasonable apprehension that the patentee will file suit and (2) conduct "meaningful preparation" to conduct potentially infringing activity.  In MedImmune, the Supreme Court rejected the test's first prong in favor of a more lenient "totality of the circumstances" review.  Until Cat Tech, however, no decision addressed MedImmune's impact on the second prong.  Would it, too, have to go?

The answer- "No! No! It does not have to go!"

Instead, Cat Tech found that the second prong of "meaningful preparation" is still intact - at least as a factor working to determine whether a dispute is immediate and real, even under MedImmune's more lenient standards.  Meaningful preparation toward potential infringing activity is important (but perhaps not a required element) in this fundamental inquiry because actual steps taken toward infringement are indicators of both "immediacy and reality."

Here, potential infringer TubeMaster had designed four different configurations of a system for loading catalyst into multi-tube chemical reactors similar to that used by patent holder Cat Tech.  The patented system used unique spacing to prevent broken catalyst and dust from falling into the catalyst tubes-thereby preventing uneven or incompletely loaded reactor tubes.  TubeMaster's designs also used spacing to prevent uneven loading but the spaces were of a different size.  

In addition to generating AutoCAD drawings for each of its four configurations, TubeMaster had successfully manufactured one of its configurations and was ready to deliver products under any configuration "within a normal delivery schedule" after receiving an order.  Further, the company did not expect to make substantial modifications to its loading device designs after the beginning of production.  The court found these actions to be significant, concrete steps sufficient to satisfy the test's second prong.  The fact that TubeMaster had not created any sales literature or begun advertising its alternate configurations was a factor to be considered, but did not negate the immediacy and reality of the controversy.

In Cat Tech the Federal Circuit makes clear that declaratory judgment jurisdiction isn't automatic even when immediacy and reality prerequisites are met.  Rather, a district court has discretion in deciding whether to entertain its jurisdiction.  Here, the court found most persuasive the fact that, without the exercise of the district court's jurisdiction, TubeMaster would have to "bet the farm"- choose between abandoning its catalyst loaders or risk an award of treble damages in an infringement suit from Cat Tech.   TubeMaster convinced the Federal Circuit that its situation was precisely the type of dilemma the Declaratory Judgment statute was intended to ameliorate.

Cat Tech certainly adds a new dimension to the post-MedImmune declaratory judgment landscape.  Practitioners on both sides of the patent law aisle will want to take its lessons under serious advisement because:

Whether it's a prong or circumstance of the totality,
Expect a DJ when the controversy becomes reality.

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