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Case No. 1:07-cv-01610-OWW-SMS Plaintiffs Memorandum in Support of Motion for
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LAW OFFICES OF BRIAN C. LEIGHTONBRIAN C. LEIGHTON (SBN 090907)701 Pollasky AvenueClovis, CA 93612Phone: (559) 297-6190Fax (559) 297-6194
LAWRENCE M. HADLEY (SBN 157728)[email protected] SALIK (SBN 223056)[email protected], BENNETT & DORMAN LLP865 South Figueroa Street, Suite 2900Los Angeles, California 90017Telephone: (213) 694-1200Facsimile: (213) 694-1234
THE LAW OFFICES OF RALPH B. WEGISRALPH B. WEGIS (SBN 67966)1930 Truxtun AvenueBakersfield, CA 93301Telephone: (661) 635-2100Facsimile: (661) 635-2107
Attorneys for PlaintiffsDELANO FARMS COMPANY; FOUR STAR FRUIT, INC.; GERAWAN FARMING, INC.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF CALIFORNIA
DELANO FARMS COMPANY; FOUR STARFRUIT, INC.; GERAWAN FARMING, INC.,
Plaintiffs,
vs.
THE CALIFORNIA TABLE GRAPECOMMISSION; UNITED STATES OFAMERICA; UNITED STATES DEPARTMENTOF AGRICULTURE; TOM VILSACK,SECRETARY OF THE UNITED STATESDEPARTMENT OF AGRICULTURE (IN HISOFFICIAL CAPACITY)
Defendants.
)))))))))))))))))
Case No. 1:07-cv-01610-OWW-SMS
PLAINTIFFS MEMORANDUM OFPOINTS AND AUTHORITIES INSUPPORT OF MOTION FORCERTIFICATION OF ORDERS FORINTERLOCUTORY APPEAL PURSUANTTO 28 U.S.C. 1292(b)
Date: March 29, 2009Time: 10:00 a.m.Judge: Hon. Oliver W. WangerCrtrm: #3
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TABLE OF CONTENTSPage
I. INTRODUCTION........................................................................................1
II. BACKGROUND..........................................................................................2III. ISSUES FOR INTERLOCUTORY REVIEW..............................................4
IV. LEGAL STANDARD...................................................................................5
V. THE FEBRUARY 18 AND OCTOBER 27 ORDERS SHOULD BECERTIFIED FOR INTERLOCUTORY REVIEW UNDER 28 U.S.C. 1292(B). .......................................................................................................5
A. THE ISSUES PRESENTED INVOLVE CONTROLLINGQUESTIONS OF LAW......................................................................6
B. SUBSTANTIAL GROUNDS EXIST FOR DIFFERINGOPINION AS TO THE RESOLUTION OF THE ISSUESPRESENTED. ....................................................................................7
1. No Settled Authority Holds Whether The UnitedStates Is A Necessary And Indispensable Party ToAn Action For Patent Invalidity Against AnExclusive Licensee.................................................................8
a) There exists substantial grounds for differenceof opinion as to whether the United States is a
necessary party under Rule 19 .....................................8
b) There exist substantial grounds for differingopinion as to whether the United States is anindispensable party under Rule 19(b) .........................10
2. No Settled Authority Holds Whether SovereignImmunity Bars Actions Against The United StatesSeeking Declaratory Judgment Of Patent InvalidityAnd Unenforceability...........................................................12
3. No Settled Authority Holds Whether TheAdministrative Procedure Act Waives SovereignImmunity For Declaratory Judgment Actions OfInvalidity And Unenforceability For Federally-Owned Patents .....................................................................15
4. No Settled Authority Holds Whether The Patent ActAnd The Quiet Title Act Forbid Actions ForDeclaratory Judgment Of Invalidity And
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TABLE OF CONTENTS (CONT.)Page
Unenforceability As To A United States-OwnedPatent ...................................................................................17
5. No Settled Authority Sets Forth The Standard ForPleading A Relevant Market In A Walker ProcessAntitrust Action ...................................................................18
C. ALLOWING AN INTERLOCUTORY APPEAL WILLSUBSTANTIALLY ADVANCE THE ULTIMATETERMINATION OF THE LITIGATION.........................................20
VI. CONCLUSION ..........................................................................................21
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TABLE OF AUTHORITIESPage
Cases
A.L. Smith Iron Co. v. Dickson,141 F.2d 3 (2nd Cir. 1944)..................................................................................... 9
Ashcroft v. Iqbal,129 S. Ct. 1937 (U.S. 2009)................................................................................. 19
Capri Jewelry Inc. v. Hattie Carnegie Jewelry Enter., Ltd.,539 F.2d 846 (2nd Cir. 1976)................................................................................. 9
Dainippon v. Screen Manufacturing Co. v. CMFT, Inc.,142 F.3d 1266 (Fed. Cir. 1998)............................................................................ 11
Garmin Ltd. v. TomTom, Inc.,2007 U.S. Dist. LEXIS 74032 at *10-11 (E.D. Tex. Oct. 3, 2007)....................... 20
Genetech, Inc. v. Regents of University of California,143 F.3d 1446 (Fed. Cir.) vacated 527 U.S. 103 (1998)...................................... 14
Guerrero v. Stone,970 F.2d 626 (9th Cir. 1992)...................................................................... 4, 15, 16
Hallmark Cards Inv. v. Lehman,959 F. Supp. 539 (D.D.C. 1997) .......................................................................... 17
Heck v. Humphrey,512 U.S. 477 (1994)............................................................................................. 18
Hitachi Metals, Ltd. v. Quigg,776 F. Supp. 3 (D.D.C. 1991) .............................................................................. 17
In re Cement Antitrust Litig.,673 F.2d 1020 (9th Cir. 1982).......................................................................... 6, 20
In re KGK Synergize, Inc.,2009 U.S. App. LEXIS 24835 (Oct. 9, 2009)....................................................... 11
Jaffe v. United States,
592 F.2d 712 (3d Cir. 1979)................................................................................. 16
Klinghoffer v. S.N.C. Achille Laura Ed Altri-Gestione Motonave Achille Lauro inAdministrazione Straordinaria,921 F.2d 21 (2nd Cir. 1990)............................................................................... 6, 7
McGillicudy v. Clements,746 F.2d 76 (1st Cir. 1984).................................................................................... 7
MedImmune, Inc. v. Genentech, Inc.,549 U.S. 118 (2007)..............................................................................4, 10, 14, 15
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TABLE OF AUTHORITIES (CONT.)Page
New Star Lasers, Inc. v. Regents of the University of California,63 F. Supp.2d 1240 (E.D. Cal. 1999) ............................................................. 13, 14
Pennsalt Chemical Corp. v. Dravo Corp.,240 F. Supp. 837 (E.D. Pa. 1965) .......................................................................... 9
Pension Benefit Guar. Corp. v. Ouimet Corp.,630 F.2d 4 (1st Cir. 1980)...................................................................................... 7
Regents of the Univ. of Cal. v. Dako N. Am., Inc.,477 F.3d 1335 (Fed. Cir. 2007)............................................................................ 21
Republic of Philippines v. Pimentel,128 S.Ct. 2180 (2008).......................................................................................... 12
Schwarz Pharam, Inc. v. Paddock Labs., Inc.,504 F.3d 1371 (Fed. Cir. 2007).............................................................................. 9
Sokaogon Gaming Enterprise Corp. v. Tushie-Montgomery Ass.,86 F.3d 656 (7th Cir. 1996)................................................................................ 6, 7
SourceOne Global Partners, LLC v. KGK Synergize, Inc.,2009 WL 1346250 (N.D. Ill. May 13, 2009).................................................. 11, 12
State of Utah v. United States,624 F. Supp. 622 (D. Ut. 1982)............................................................................ 16
Symbol Techs., Inc. v. Lemleson Med., Educ. & Research Found., Ltd. Pship.,
56 USPQ2d 1381 (Fed. Cir. 2000) ......................................................................... 5Syntex v. U.S. Patent and Trademark Office,
882 F.2d 1570 (Fed. Cir. 1989)............................................................................ 17
Taylor v. PPG Indus.,256 F.3d 1315 (Fed. Cir. 2002).............................................................................. 7
Tegic Communications Corp. v. Bd. Of Regents of Univ. of Texas Sys. ,458 F.3d 1335 (Fed. Cir. 2006)...................................................................... 14, 15
United States v. Woodbury,263 F.2d 784 (9th Cir. 1959).................................................................................. 6
Waterman v. McKenzie,138 U.S. 252 (1890)............................................................................................... 8
Xerox Corp. v. Media Sciences Intl,511 F. Supp. 2d 372 (S.D.N.Y. 2007) .................................................................. 20
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TABLE OF AUTHORITIES (CONT.)Page
Statutes
28 U.S.C.Section 1292(b) ......................................................................................... 1, 5, 6, 7
28 U.S.C.Section 2201........................................................................................................ 15
28 U.S.C.Section 2202........................................................................................................ 15
28 U.S.C.Section1331......................................................................................................... 16
35 U.S.C.
Section 102.................................................................................................... 16, 1835 U.S.C.
Section 103.......................................................................................................... 18
35 U.S.C.Section 282.......................................................................................................... 18
Rules
Federal Rules of Civil ProcedureRule 19 ......................................................................................................... passim
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I. INTRODUCTION
Plaintiffs Delano Farms Company; Four Star Fruit, Inc; and Gerawan Farming, Inc.
(collectively Plaintiffs) respectfully ask the Court to certify for review under 28 U.S.C. 1292(b)
the Courts (1) February 18, 2009 Memorandum Decision and Order [Granting in Part and Denying
in Part] Defendants Motion to Dismiss and [Denying] Defendants Motion to Strike (Doc. 42 or
the February 18 Order); and (2) October 27, 2009 Memorandum Decision and Order Re Federal
Defendants (Doc. 69) and California Table Grape Commissions (Doc. 67) Motions to Dismiss
(Doc. 84 or the October 27 Order).
Plaintiffs Complaint (Complaint) and First Amended Complaint (FAC) in this action
alleged that U.S. Patent Nos. PP15,891; PP16,284; and PP16,229 (the patents-in-suit), which
pertain to table grape varieties, are invalid based on prior public use and sale, and unenforceable due
to inequitable conduct before the United States Patent and Trademark Office (PTO). These
patents were issued as a result of a joint effort between the California Table Grape Commission
(the Commission) and the United States Department of Agriculture (USDA). The USDA owns
the patents-in-suit and the Commission is the exclusive licensee to the patents-in-suit. Plaintiffs,
among other table grape growers, were threatened with enforcement of the patents-in-suit by the
California Table Grape Commission acting at the direction of the USDA. As a result, Plaintiffs
entered into a license agreement with the Commission for the patents-in-suit.
Plaintiffs alleged claims for declaratory relief of patent invalidity and unenforceability
directly and under the Administrative Procedure Act (APA). In response to defendants motions
to dismiss, the Court has dismissed all claims challenging the validity and enforceability of the
patents-in-suit, but has allowed Plaintiffs to proceed with some of its other claims against the
Commission and the USDA. The Courts dismissal of Plaintiffs declaratory judgment claims for
patent invalidity and unenforceability reached several controlling questions of law for which there is
no direct authority on point. These issues include questions regarding necessary and indispensable
parties under Rule 19, the applicability of sovereign immunity to claims against the USDA
regarding the validity of patents it owns, and whether waiver of sovereign immunity under the APA
applies to patent-related claims. The parties extensive briefing and the Courts thorough Orders
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demonstrate the absence of direct authority on these issues. Accordingly, each of the issues present
novel and important questions of first impression for which Federal Circuit guidance would benefit
not only the parties to this litigation, but the public in general.
Aside from the invalidity and unenforceability claims, Plaintiffs also alleged a Walker
Process antitrust cause of action against the Commission for enforcing patent rights and collecting
royalties while knowing that the patent could not be enforced due to inequitable conduct. Despite
alleging a relevant market defined by the novel characteristics of the patented grapevine, this Court
dismissed Plaintiffs antitrust action with prejudice because Plaintiffs did not allege a plausible
basis for the asserted relevant market. This decision raises a legal question that the Federal Circuit
has not address: What is the standard for pleading a relevant market in a Walker Process antitrust
action?
Allowing interlocutory appeal would expedite resolution of the parties dispute. Plaintiffs
intend to pursue their invalidity and unenforceability claims through appeal and, if successful, on
remand. Likewise, Plaintiffs intend to pursue theirWalker Process antitrust action through appeal
and on any remand. Both the parties and the Court would benefit from a prompt resolution of the
legal issues that led to the dismissal of these claims, rather than postponing those issues until a final
judgment on Plaintiffs other claims. Therefore, Plaintiffs respectfully request that the Court certify
for interlocutory appeal its orders dismissing Plaintiffs claims for patent invalidity and
unenforceability, and Plaintiffs Walker Process antitrust claim.
II. BACKGROUND
This Courts February 18 Order granted the Commissions motion to dismiss Plaintiffs
claims against the Commission seeking a declaratory judgment that patents-in-suit were invalid for
prior public use and sale, and unenforceable for inequitable conduct, on the ground that the USDA
(which owns the patents-in-suit) was a necessary and indispensable party under Rule 19 of the
Federal Rules of Civil Procedure. Although the USDA had granted an exclusive license to the
Commission transferring substantial rights in the patents-in-suit to the Commission, the February 18
Order held that a license provision requiring the Commission to obtain the USDAs permission
before suing an alleged infringer retained sufficient rights with the USDA to make it a necessary
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party to the action. Additionally, balancing the four factors set forth in Rule 19(b), the February 18
Order held the USDA was an indispensable party. Finally, the February 18 Order granted the
Commissions motion to dismiss Plaintiffs Walker Process antitrust claim based on Plaintiffs
description of the relevant market.
While this Court dismissed Plaintiffs declaratory relief and antitrust claims, it did grant
leave to amend. Specifically, the Court allowed Plaintiffs to join the USDA to the claims alleging
patent invalidity and unenforceability by way of the APA. The February 18 Order further granted
Plaintiffs leave to amend their antitrust allegations regarding the relevant market. Accordingly,
Plaintiffs amended their Complaint to name the United States, the USDA, and Tom Vilsak,
Secretary of the USDA (in his official capacity). Plaintiffs FAC alleged four causes of action for
declaratory relief under the APA going to the validity and unenforceability of the patents-in-suit.
Plaintiffs FAC also restated their antitrust claim by more particularly defining the relevant market.
Both the Commission and USDA moved to dismiss the FAC. On October 27, 2009, this
Court granted the Commissions and the USDAs motion to dismiss Plaintiffs APA and antitrust
claims with prejudice. The October 27 Order held that the USDA had sovereign immunity from
declaratory judgment suits challenging the validity and enforceability of federally-owned patents,
and that the APA did not waive sovereign immunity for such suits. Specifically, this Court held that
the APA did not waive sovereign immunity for Plaintiffs patent invalidity claims, because the
Patent Act and the Quiet Title Act impliedly prohibits suits seeking declarations that government-
owned patents are invalid or unenforceable even when the government demands licenses for the
use of the inventions claimed in government-owned patents. Accordingly, under this holding, the
only way a private party can challenge the validity or enforceability of government-owned patents is
to breach any license agreement, infringe the patent, trigger a lawsuit for patent infringement, then
challenge the patent as part of a defense or counterclaim. Finally, the Court dismissed Plaintiffs
antitrust cause of action with prejudice because Plaintiffs could not allege a plausible basis for a
relevant market defined by the characteristics of the patented grapevine variety.
By dismissing with prejudice each of Plaintiffs challenges to the validity and enforceability
of the patents-in-suit, as well as Plaintiffs antitrust claim, this Court terminated significant portions
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of Plaintiffs case based on the resolution of legal issues that the Federal Circuit has never directly
addressed.
III. ISSUES FOR INTERLOCUTORY REVIEW
This Courts February 18 and October 27 Orders decided five controlling legal questions that
the Court should certify for interlocutory review. These legal questions fall into three categories:
(1) is the United States a necessary and indispensable party to an action seeking declaratory relief
that a government-owned patent is invalid and unenforceable, even though the United States
exclusively licensed the patent to a private enforcement agent; (2) does sovereign immunity bar
actions seeking a declaration that government-owned patents are invalid and unenforceable; and (3)
what is the standard for pleading a relevant market in a Walker Process antitrust action? In the
context of this case, the issues that Plaintiffs seek to present to the Federal Circuit within each
category are as follows:
Necessary and Indispensable Party (February 18 Order)
When the United States exclusively licenses all substantial rights to a patent it owns for
sublicensing and enforcement, but requires that the exclusive licensee obtain
authorization before suing an alleged infringer, is the United States a necessary and
indispensable party under Rule 19 to a MedImmune declaratory judgment action against
the exclusive licensee challenging the validity and enforceability of the patent?
Applicability of Sovereign Immunity (October 27 Order)
1. Where the United States, through an agent, engages in a program to license and
enforce its patents, does sovereign immunity bar actions for declaratory relief of
invalidity or unenforceability, or must a licensee first trigger a lawsuit by infringing the
patent or breaching the license, thereby exposing himself to substantial damages, before
challenging validity and enforceability?
2. Does the Administrative Procedure Act waive sovereign immunity for claims seeking
declaratory judgment of patent invalidity and unenforceability against the United States
as to patents it owns so that a district court may exercise federal question jurisdiction to
hear the action in accordance with Guerrero v. Stone, 970 F.2d 626 (9th Cir. 1992)?
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3. Does the Patent Act or Quiet Title Act forbid a licensee from seeking declaratory
judgment of invalidity and unenforceability as to a United States-owned patent, so that
United States does not waive sovereign immunity for such an action under the
Administrative Procedure Act, because the action would operate as either an
impermissible collateral attack on the Patent Offices decision to grant the patent or an
improper challenge to the United States' title in the patent?
Pleading Relevant Market in Walker Process Action (February 18 Order)
In an action alleging that a patent owner committed a Walker Process violation of the
Sherman Act by enforcing patent rights and collecting royalties while knowing the
patent is unenforceable due to inequitable conduct, can a plaintiff state a claim that is
plausible on its face by pleading that the relevant market consists of all items having the
characteristics of the patented item and that items without those characteristics are
neither reasonably interchangeable nor effective substitutes?
IV. LEGAL STANDARD
28 U.S.C. 1292(b) provides that [w]hen a district judge, in making in a civil action an
order not otherwise appealable under this section, shall be of the opinion that such order involves a
controlling question of law as to which there is substantial ground for difference of opinion and that
an immediate appeal from the order may materially advance the ultimate termination of the
litigation, he shall so state in writing in such order. The Federal Circuit has held that granting a
petition to appeal pursuant to 28 U.S.C. 1292(b) is appropriate in patent cases where legal
questions affects not only the Plaintiffs case, but potentially many other cases as well. See Symbol
Techs., Inc. v. Lemleson Med., Educ. & Research Found., Ltd. Pship., 56 USPQ2d 1381 (Fed. Cir.
2000) (unpublished).
V. THE FEBRUARY 18 AND OCTOBER 27 ORDERS SHOULD BE CERTIFIED FOR
INTERLOCUTORY REVIEW UNDER 28 U.S.C. 1292(b).
Each issue for interlocutory review involves controlling questions of law for which there is
substantial grounds for a difference of opinion. Resolution of these legal issues by the Federal
Circuit will guide district courts in other cases involving government-owned patents. Moreover,
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allowing an interlocutory appeal will substantially advance the ultimate termination of this litigation.
Thus, the issues meet the criteria set forth in 28 U.S.C. 1292(b), and should be certified for
interlocutory review.
A. The Issues Presented Involve Controlling Questions of Law
Under section 1292(b), all that must be shown for a question to be controlling is that
resolution of the issue on appeal could materially affect the outcome of litigation in the district
court. In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982); Sokaogon Gaming
Enterprise Corp. v. Tushie-Montgomery Ass., 86 F.3d 656, 659 (7th Cir. 1996) (A question of law
may be deemed controlling if its resolution is quite likely to affect the further course of the
litigation, even if not certain to do so.). The question need not be outcome determinative to be
controlling under 1292(b). United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959).
Moreover, in determining whether an issue is controlling, the Court may consider the system-wide
benefits of allowing the appeal. Klinghoffer v. S.N.C. Achille Laura Ed Altri-Gestione Motonave
Achille Lauro in Administrazione Straordinaria, 921 F.2d 21, 25 (2nd Cir. 1990).
The questions presented here easily meet the controlling question of law requirement. The
Courts determination of these five issues resulted in Plaintiffs action for declaratory judgment of
invalidity unenforceability, and action under the Sherman Act, to be dismissed with prejudice.
Overturning these determinations will unquestionably affect the further course of the litigation.
Moreover, an appellate decision providing immediate clarity on these legal issues will serve
the public interest. First, a resolution on Plaintiffs specific invalidity claims will resolve the rights
of other local table grape growers who have licensed the patented table grape varieties from the
Commission. Second, the resolution of these issues will have significant implications to litigants
seeking to challenge the validity of United States-owned patents after receiving demands for a
license. Third, the antitrust issue will provide much needed guidance over the proper standard for
pleading a relevant market in a Walker Process action. Regardless of whether the District Courts
determinations are affirmed or reversed, resolution of these issues will provide clarity on important
issues of patent and antitrust law, particularly in the context of federally-owned patents.
Accordingly, prompt guidance from the Federal Circuit on these issues will provide system-wide
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benefits.
Federal appellate courts have agreed that controlling question of law exist under
circumstances similar to those presented here. For example, in Sogaogon Gaming, the Seventh
Circuit held that the District Courts decision that a Native American tribe had not waived sovereign
immunity was appropriately the subject of an interlocutory appeal. Sogaogon Gaming, 86 F.3d at
658-659;see also Taylor v. PPG Indus., 256 F.3d 1315 (Fed. Cir. 2002) (District Court decision that
federal patent law did not preempt plaintiffs state law claims involved controlling question of law
as to which there was substantial ground of difference of opinion and was thus immediately
appealable).
B. Substantial Grounds Exist for Differing Opinion As To The Resolution Of The
Issues Presented.
For each of the issues raised in this Courts February 18 and October 27 Orders, substantial
grounds for difference of opinion exist. Courts commonly find a substantial ground for differing
opinions when the issue raised is one of first impression. Klinghoffer, 921 F. 2d at 23 (substantial
ground for difference of opinion under section 1292(b) where the issue was difficult one of first
impression);Pension Benefit Guar. Corp. v. Ouimet Corp., 630 F.2d 4, 6 (1st Cir. 1980)
(interlocutory review appropriate where issue one of first impression). An issue need not be one of
first impression, however, for there to be substantial grounds for difference of opinion under
1292(b). Certification is also proper where the proposed intermediate appeal presents one or more
difficult and pivotal questions of law not settled by controlling authority. See McGillicudy v.
Clements, 746 F.2d 76, 77 n. 1 (1st Cir. 1984).
Here, the issues each concern ones of first impression, or at a minimum issues for which
there is no controlling authority. The parties and the Court have all acknowledged throughout the
briefing that there is no authority directly addressing the issues raised by Plaintiffs underlying the
February 18 and October 27 Orders. Moreover, these are important and difficult questions regarding
the circumstances under which a party may seek a declaration of rights with respect to patents
owned by the federal government, and the standards for pleading Walker Process causes of action.
Accordingly, a substantial ground for difference of opinion exists as to these issues and certification
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for interlocutory appeal is appropriate.
1. No Settled Authority Holds Whether The United States Is A Necessary
And Indispensable Party To An Action For Patent Invalidity Against An
Exclusive Licensee
The Courts February 18 Order made two separate findings: (1) that the United States is a
necessary party under Rule 19(a) to actions challenging the validity and enforceability of federally-
owned patents, even when the government licenses the patents to a private enforcement agent; and
(2) that the Rule 19(b) factors compel dismissal of the action against the enforcement agent. Neither
issue has been settled by controlling authority.
a) There exists substantial grounds for difference of opinion as to
whether the United States is a necessary party under Rule 19
In holding that the United States is a necessary party under Rule 19(a) to Plaintiffs
declaratory judgment claims of patent invalidity and unenforceability, this Court primarily relied on
the rule set forth in Waterman v. McKenzie, 138 U.S. 252, 255 (1890) and its progeny. Under the
Waterman rule, a patent owner is a necessary party to an infringementaction unless the owner has
assigned all substantial rights, including the right to sue for infringement, to a third party. Because
the exclusive license between the USDA and Commission required USDA approval before the
Commission could sue infringers, this Court reasoned that the USDA, as the owner of the patents-in-
suit, was a necessary party to Plaintiffs declaratory judgment action against the Commission for
patent invalidity and unenforceability.
Neither the Supreme Court nor the Federal Circuit have decided whether the Waterman rule
extends beyond infringement actions to declaratory relief actions for patent invalidity and
unenforceability. Substantial grounds for a difference of opinion exists as to whether the Waterman
rule should apply to such actions. Indeed, the purpose of the Waterman rule would seem to make
the rule inapplicable to actions filed by an accused infringer. The Waterman rule is intended to
protect accused infringers: Unless the patent owner is a party to an infringement lawsuit filed by a
licensee, the accused infringer could face multiple lawsuits arising from the same alleged infringing
act. Waterman, 138 U.S. at 261; Schwarz Pharam, Inc. v. Paddock Labs., Inc., 504 F.3d 1371, 1374
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(Fed. Cir. 2007). But when an accused infringer seeks to have a patent declared invalid or
unenforceable, the need to protect against multiple lawsuits no longer exists. There is no reason to
bar an accused infringer from seeking declaratory relief as to the person charged with licensing the
patent, particularly here, where Plaintiffs have licensed the patents to avoid an infringement
lawsuit.1
If the patent owner wishes to join the declaratory relief action because it does not think its
exclusive licensee will protect the patent adequately, the owner can always do so. In contrast, an
accused infringer may not be able to join a patent owner to an infringement action filed by a licensee
because of personal jurisdiction issues.
For this reason, other courts have applied different requirements in determining whether a
patent owner is a necessary party to a claim for declaratory relief of patent invalidity and
unenforceability. See A.L. Smith Iron Co. v. Dickson, 141 F.2d 3, 6-7 (2nd Cir. 1944); Capri
Jewelry Inc. v. Hattie Carnegie Jewelry Enter., Ltd., 539 F.2d 846, 852-53 (2nd Cir. 1976);Pennsalt
Chemical Corp. v. Dravo Corp., 240 F. Supp. 837 (E.D. Pa. 1965). InA.L. Smith Iron Co., Judge
Learned Hand articulated the differing policy reasons for allowing a declaratory judgment suit
against only an exclusive licensee, without joining the patent owner, even if the patent owner would
have been a necessary party to an infringement suit:
The ordinary case of a suit by a licensee against an infringer is in no
sense the same.it is at least clear that there is no comparison
between that situation and the one at bar. As res integra there can
therefore be no warrant for making the presence of the [patent owner]
a condition upon this action.
A.L. Smith Iron Co., 141 F.2d at 6. Although the Courts February 18 Order finds these cases to be
1 Because Plaintiffs have entered into license agreements with the Commission, it is unclear whetherthe Commission would even require approval from the USDA before suing Plaintiffs. While theexclusive license between the USDA and Commission requires the Commission to obtainpermission from the USDA before filing an infringement lawsuit, any action against the Plaintiffspresumably would be for breach of the license agreement, not for patent infringement. Thus, as toenforcement against the Plaintiffs, the Commission may actually have all substantial rights in thepatents. No settled authority exists as to this issue.
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unpersuasive, these cases at a minimum establish that there exists a substantial ground for a
difference of opinion regarding whether the United States is necessary party to Plaintiffs
declaratory relief claims here.
The Supreme Courts decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007),
also lends support for a rule allowing declaratory relief actions for patent invalidity against a
licensor. UnderMedImmune, a person need not breach a license agreement or infringe a patent,
exposing himself to significant liability, before seeking declaratory relief of patent invalidity.
Rather, an accused infringer may license the patent then challenge validity in a declaratory relief
action. MedImmune, 549 U.S. at 137. While MedImmune did not squarely address the question, the
rule would lack any meaningful value unless the accused infringer could challenge validity against
the person demanding the license whether the patent owner or an exclusive licensee. Otherwise, a
patent owner could circumvent MedImmune by using an exclusive licensee to enforce the patent,
requiring the licensee to obtain permission from the owner before suing an accused infringer, then
locating itself in a place where accused infringers could not obtain personal jurisdiction over it.
b) There exist substantial grounds for differing opinion as to whether
the United States is an indispensable party under Rule 19(b)
Rule 19(b) sets out four factors to determine whether a case must be dismissed for failure to
join an indispensable party. The four factors are (1) prejudice to any party or to the absent party; (2)
whether relief can be shaped to lessen prejudice; (3) whether an adequate remedy, even if not
complete, can be awarded without the absent party; and (4) whether there exists an alternative
forum. In its February 18 Order, this Court found that each of the Rule 19(b) factors weighed in
favor of dismissal. (Feb. 18 Order at 42-47.) Yet the Federal Circuit has never decided whether
(assuming the United States is a necessary party to a declaratory relief claim for invalidity and
unenforceability of a government-owned patent), the United States is an indispensable party
applying the Rule 19(b) factors. As to that issue, substantial grounds for differing opinions exist.
Over the past year, this Court and one other district court considered this issue in the context
of a government-owned patent where the patent rights are divided between the United States and a
private entity. In both this case and the other case, the private entity argued that a declaratory relief
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claim for patent invalidity must be dismissed because the United States is an indispensable party but
cannot be joined based on sovereign immunity. This Court agreed in its October 27 Order.
Weighing the same Rule 19(b) factors, the other district court reached the opposite conclusion.
SourceOne Global Partners, LLC v. KGK Synergize, Inc., 2009 WL 1346250 (N.D. Ill. May 13,
2009). Importantly, the Federal Circuit has provided no settled authority on this issue. Indeed, in
the SourceOne case, the Federal Circuit recently suggested that this issue may be appropriate for
interlocutory review under section 1292(b). In re KGK Synergize, Inc., 2009 U.S. App. LEXIS
24835 (Oct. 9, 2009) (unpublished).
A comparison of this Courts and the SourceOne Courts analysis of the Rule 19(b) factors
reveals the extent of the differing opinions. With respect to the first three factors, both this Court
and the SourceOne Court relied on the Federal Circuits decision inDainippon v. Screen
Manufacturing Co. v. CMFT, Inc., 142 F.3d 1266 (Fed. Cir. 1998). AlthoughDainippon did not
involve a government-owned patent, the Federal Circuit held that the first three Rule 19(b) factors
weighed in favor of maintaining an action for declaratory relief of patent invalidity without joining
an owner of the patent. The SourceOne Court agreed, finding that the factors weighted in favor of
allowing the action to proceed without the Untied States as a party. Specifically, inDainippon and
SourceOne, the Courts found that both the defendant to the declaratory relief action and the absent
owner had a substantial interest in protecting the patent. Further, the Courts noted that prejudice to
the absent owner could be avoided because the absent owner could join the action if it believed the
defendant could not adequately protect the patent.
This Court disagreed. In distinguishingDainippon and SourceOne on the first three factors,
this Court found that the Commission and the USDA had no unity of ownership in the patent,
which existed in theDainippon and SourceOne cases. (Oct. 27 Order at 69.) But neitherDainippon
norSourceOne relied on a unity of ownership as a basis for finding that the first three Rule 19(b)
factors weigh in favor of allowing the action to go forward. Moreover, the absence of a unity of
ownership between the USDA and Commission should have no bearing on the first three Rule
19(b) factors. First, the Commission and the USDA both have a substantial interest in protecting the
validity of the patents-in-suit because both receive licensing royalties. Second, the Commission
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initiated the patenting program and worked closely with the USDA in securing the patents. Third,
the Commission has demonstrated its willingness and ability to aggressively protected the validity of
the patents in prior litigation. Fourth, the USDA could voluntarily join the action if it believe the
Commission did not defend the invalidity charges properly. Thus, there exists a substantial ground
for differing opinions as to whether the Commission has the ability to adequately represent the
USDAs interests.
With respect to the fourth Rule 19(b) factor, the SourceOne Court also reached a different
conclusion on virtually identical facts. The SourceOne Court found the absence of an alternative
forum a compelling factor weighing against dismissal. In doing so, the SourceOne Court
distinguishedRepublic of Philippines v. Pimentel, 128 S.Ct. 2180 (2008). In contrast, this Courts
February 18 and October 27 Orders relied onPimentelin deciding that immunity alone may be
viewed as a compelling factor weighing in favor of dismissal under Rule 19(b). This Court
distinguished the SourceOne analysis ofPimentelagain on the basis that the parties in SourceOne
held a unity of ownership. Yet a unity of ownership should have no bearing on whether the
absence of an alternate forum due to federal sovereign immunity weighs in favor of dismissal. At
the very least, the SourceOne decision underscores the existence of a substantial differences of
opinion on how the fourth Rule 19(b) factors should be weighed in the context of an absent
government patent owner. SourceOnce, 2009 WL 1346250 at *6-7.
2. No Settled Authority Holds Whether Sovereign Immunity Bars Actions
Against The United States Seeking Declaratory Judgment Of Patent
Invalidity And Unenforceability
In its October 27 Order, this Court held that sovereign immunity barred actions against the
United States seeking declaratory judgment of patent invalidity and unenforceability, even though
the United States (through the Commission) has engaged in a program to license and enforce its
patents. In so holding, this Court effectively has required that a target for licensing a government-
owed patent (such as Plaintiffs) cannot directly challenge the validity of the patent at issue. Instead,
the target must trigger a government lawsuit by infringing the patent or breaching the license
agreement, thereby exposing himself to substantial damages, before challenging validity and
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enforceability. Substantial grounds for difference of opinion exist as to this result.
First, federal appellate courts have not addressed whether the federal sovereign immunity
applies to bar declaratory relief actions challenging the validity of federally-owned patents that the
United States seeks to license and enforce. While federal appellate courts have addressed whether
state governments enjoy sovereign immunity under the Eleventh Amendment for declaratory relief
actions challenging the validity of state-owned patents, federal courts have reached different
conclusions. Indeed, courts have recognized inherent inequity and injustice in allowing state
government entities to own and threaten to enforce patents (like a private entity) while, at the same
time, asserting a sovereign immunity from declaratory judgment actions challenging the validity of
the patents at issue. For example, the Eastern District of California recognized the inequity in
allowing a state government entity to use sovereign immunity to shield itself from declaratory
judgment claims for patent invalidity:
The Regents wish to take the good without the bad. The court can
conceive of no other context in which a litigant may lawfully enjoy
all the benefits of a federal property or right, while rejecting its
limitations.
New Star Lasers, Inc. v. Regents of the University of California, 63 F. Supp.2d 1240, 1244 (E.D.
Cal. 1999).
The Federal Circuit has recognized a similar concern, commenting that a state government
could waive Eleventh Amendment sovereign immunity through a pattern of enforcing federal patent
rights:
The University has waived its sovereign immunity from suit in federal
court and has constructively consented to the declaratory judgment
actionIn reaching this conclusion we place weigh on the
Universitys voluntary and deliberate creation of a case or controversy
that can be resolved only in federal courts, concerning federally-
created property rights of national scope that are enforceable only by
federal judicial power. [W]hen the University invokes the systems
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of federal law and federal judicial power for enforcement of federal
property rights, actionable only in federal courtthe state is deemed
to have waived its immunity from federal authority to resolve that
controversy.
Genetech, Inc. v. Regents of University of California, 143 F.3d 1446, 1453 (Fed. Cir.) vacated 527
U.S. 103 (1998). While neitherNew Star Lasers norGenetech control the outcome here, they
demonstrate the existence of substantial grounds for a difference of opinion on these issues.
This Courts October 27 Order cited Tegic Communications Corp. v. Bd. Of Regents of Univ.
of Texas Sys., 458 F.3d 1335 (Fed. Cir. 2006), in finding that sovereign immunity barred Plaintiffs
declaratory judgment claims of patent invalidity and unenforceability against the USDA. But Tegic
involved state government sovereign immunity under the Eleventh Amendment, not federal
sovereign immunity, which remains unresolved. Further, the Tegic decision did not consider the
policy concerns expressed inNew Star Lasers and Genetech of allowing a state to assert Eleventh
Amendment sovereign immunity as a defense to invalidity actions while utilizing the benefits of
federal courts as part of a patent enforcement program. Rather, Tegic only considered whether a
state university waived Eleventh Amendment sovereign immunity as to a declaratory relief action
for patent invalidity by filing a separate infringement action against another alleged infringer in a
different forum. Tegic, 458 F.3d at 1342. In holding that no waiver occurred, the Federal Circuit
appeared concerned with the Plaintiffs obvious forum shopping, and noted that the Plaintiff could
assert its invalidity claims by intervening in the infringement action. Id. at 1344. Here, in contrast,
Plaintiffs have not forum shopped and have no alternative forum for their claims.
Second, federal appellate courts have not addressed the applicability of sovereign immunity
to claims against the federal government for declaratory relief of patent invalidity following the
Supreme Courts decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). As this
Court noted in its October 27 Order, MedImmune contains language suggesting that a private
individual should not be placed in a position of infringing a government-owed patent before
challenging its validity: Our analysis must begin with the recognition that, where threatened action
by government is concerned, we do not require a plaintiff to expose himself to liability before
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bringing suit to challenge the basis for the threat. Id. at 128-129. Yet this Court did not find the
language persuasive because Supreme Court, in support, only cited Eleventh Amendment immunity
cases holding that a person need not risk liability exposure before challenging the basis for
threatened government action. (Oct. 27 Order at 27-28.)
Ironically, this Courts October 27 Order rejects Eleventh Amendment sovereign immunity
cases in one context, but applies such cases in another. On the one hand, this Court declined to
apply the Supreme Courts MedImmune threatened action language to allow Plaintiffs declaratory
relief action against the USDA because the Supreme Court, in support, only discussed Eleventh
Amendment sovereign immunity cases. On the other hand, this Court applied Tegic in holding that
sovereign immunity bars Plaintiffs claims even though that case rested solely on Eleventh
Amendment sovereign immunity. Thus, the extent to which appellate authority applying Eleventh
Amendment sovereign immunity is relevant to Plaintiffs declaratory judgment action against the
United States remains entirely unsettled.
3. No Settled Authority Holds Whether The Administrative Procedure Act
Waives Sovereign Immunity For Declaratory Judgment Actions Of
Invalidity And Unenforceability For Federally-Owned Patents
This Courts Oct. 27 Order held that the federal government did not waive sovereign
immunity through the Administrative Procedure Act (APA) for declaratory judgment actions of
patent invalidity and unenforceability against the United States as to patents it owns. In doing so,
the Court held that it could not exercise federal question jurisdiction to hear Plaintiffs claims of
patent invalidity and unenforceability and dismissed those claims with prejudice. In the context of
declaratory relief claims for patent invalidity as to federally-owned patents, federal appellate courts
have not addressed this question. Moreover, decisions from the Third, Ninth, and Tenth Circuits,
which this Court did not address, demonstrate a substantial ground for differing opinions.
In Guerrero v. Stone, 970 F.2d 626, 627-28 (9th Cir. 1992), the Ninth Circuit held that, while
the Declaratory Judgment Act (28 U.S.C. 2201, 2202) alone does not waive government
sovereign immunity, the APA waives sovereign immunity for declaratory judgment claims,
provided the underlying subject matter at issue in the declaratory relief claim confers federal
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question subject matter jurisdiction. Specifically, the Ninth Circuit held that the APA waives
sovereign immunity for equitable civil actions when a district courts federal question subject matter
jurisdiction is invoked under 28 U.S.C. 1331:
We hold that the district court had jurisdiction essentially for the
reasons set forth inNeal v. Secretary of Navy, 639 F.2d 1029, 1036-37
(3d Cir. 1981), andJaffee v. United States, 592 F.2d 712This
provision [the APA] waives sovereign immunity for equitable actions
brought pursuant to 28 U.S.C. 1331.
Guerrero, 970 F.2d at 627-28.
The Ninth Circuits decision in Guerrero followed the Third Circuits decision inJaffe v.
United States, 592 F.2d 712, 718-19 (3d Cir. 1979). InJaffe, the Third Circuit held that the APA
waives sovereign immunity in nonstatutory review of agency action under [28 U.S.C. 1331].
According to the Third Circuit, Congress amended section 702 with a specific purpose of waiving
sovereign immunity in equitable actions brought under section 1331. Id. Similarly, a district court
in Utah held that State of Utah could assert a declaratory judgment action against the United States
under the APA in seeking a legal interpretation of the 1889 Withdrawal Order on Utah Lake. State
of Utah v. United States, 624 F. Supp. 622, 624-25 (D. Ut. 1982). Accordingly, section 702 waives
sovereign immunity for a declaratory judgment action in which subject matter jurisdiction also is
based on a federal question under 28 U.S.C. 1331. State of Utah, 624 F. Supp. at 625.
Here, Plaintiffs sought a declaratory judgment under the Patent Act that the patents at issue
fail the conditions of patentability set forth in 35 U.S.C. 102. Plaintiffs claims for declaratory
relief based on a failure of the patents to satisfy section 102 of the Patent Act indisputably confer
upon this Court federal question jurisdiction under 28 U.S.C. 1331. Under the holdings ofJaffe,
Guerrero, and State of Utah, the APA waives the USDA defendants sovereign immunity for
Plaintiffs declaratory judgment claims based on the federal question of whether the patents fail to
satisfy the conditions of patentability under the Patent Act. Thus, there exists a substantial ground
for differing opinion as to whether this Court has jurisdiction to adjudicate and declare whether the
patents at issue satisfy the conditions for patentability under section 102 of the Patent Act, and
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whether the APA waives the USDAs sovereign immunity for the adjudication of those claims.
4. No Settled Authority Holds Whether The Patent Act And The Quiet Title
Act Forbid Actions For Declaratory Judgment Of Invalidity And
Unenforceability As To A United States-Owned Patent
This Courts October 27 Order held that the Patent Act and the Quiet Title Act forbid APA
claims seeking a declaratory judgment of patent invalidity and unenforceability against the United
States with respect to patents it owns. In doing so, this Court ruled that the APA does not waive
federal sovereign immunity for such actions because the action would operate as either an
impermissible collateral attack on the Patent Offices decision to grant the patent or an improper
challenge to the United States title in the patent. (Oct. 27 Order at 29-36.)
In reaching this conclusion, this Court relied on three cases: Hitachi Metals, Ltd. v. Quigg,
776 F. Supp. 3, 7 (D.D.C. 1991), Syntex v. U.S. Patent and Trademark Office, 882 F.2d 1570, 1573-
74 (Fed. Cir. 1989) andHallmark Cards Inv. v. Lehman, 959 F. Supp. 539, 542-43 (D.D.C. 1997).
Each of these cases involved suits against the United States Patent and Trademark Office (PTO)
challenging decisions it made during the patent examination process. For example, inHitachi, a
third party filed suit against the PTO challenging its decision to grant a re-issue patent application.
Id. at 9. None of these cases, nor any other case, addresses whether the Patent Act or Quiet Title Act
expressly or impliedly forbid claims against the United States government for its activities as a
patent owner (i.e., actions seeking to invalidate patents it owns), as opposed to claims against the
United States government for its activities in deciding whether to issue patent applications.
In opposing the USDAs motion to dismiss, Plaintiffs argued that cases such asHitachi do
not apply because the Patent Act only bars claims against the government for its patent-issuing
activities, and not its patent-owning activities. Although this Court rejected this distinction on the
grounds that whether a cause of action operates as a collateral attack does not turn upon the parties
named to the lawsuit, (Oct. 27 Order at 32), substantial grounds for a difference of opinion exist.
Indeed, theHitachi Court expressly recognized that the specific parties are important to determining
whether an attack is deemed collateral: The Patent Statute is addressed topatent owners
Hitachi, 776 F. Supp. at 8 (emphasis added). Here, the USDA is the patent owner to which the
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Patent Statute is addressed and Plaintiffs claims were a direct challenge against that owner, as
opposed to a collateral challenge against the PTO for its decisions in issuing the patents.
While this Court also citedHeck v. Humphrey, 512 U.S. 477, 486 (1994), in holding that the
named party lacks relevance to whether claims amount to impermissible collateral attacks,Heck
does not address the issue of collateral attacks to PTO decisions. Indeed,Heckdid not even
involve an APA claim, and the cause of action was not rejected as a collateral attack. Rather, in
Heckthe Supreme Court held only that to bring a civil rights claim for damages caused by a
wrongful criminal conviction, the plaintiff must first prove that the conviction was reversed. Heck,
512 U.S. at 486-487. Thus,Heckprovides no binding authority on the question of whether the
Patent Act or Quiet Title Act expressly or impliedly forbid claims against the United States
government for declaratory relief of patent invalidity as to patents it owns.
Furthermore, no law expressly limits actions challenging the validity or enforceability of
patents to those between private parties. (Oct. 27 Order at 33.) Causes of action for declaratory
judgment claims for patent invalidity arise under the Declaratory Judgment Act, the patentability
requirements contained in 35 U.S.C. 102 and 103, and the availability of invalidity as a defense
to patent infringement claims under 35 U.S.C. 282. None of these laws pertain to only private
parties. Thus, this Courts ruling that claims for declaratory relief of patent invalidity are limited to
disputes between private parties, and that such suits against the United States challenging the
validity of federally-owned patents are barred by the Patent and Quiet Title Acts, are issues of first
impression for which a substantial difference of opinion exists.
5. No Settled Authority Sets Forth The Standard For Pleading A Relevant
Market In A Walker Process Antitrust Action
In an antitrust action, a plaintiff must plead a relevant product market that supports a claim
of exclusionary power. As expressed by this Court in the October 27 Order, it is necessary to
appraise the exclusionary power of the illegal patent claim in terms of the relevant market for the
product involved. (Oct. 27 Order at 60 (citing Walker Process Equipment, Inc., v. Food Machinery
& Chemical Corp., 382 U.S. 172, 177-78 (1965)). Yet, as this Court recognized, pleading standards
in antitrust actions are evolving. (Oct. 27 Order at 61 (citingAshcroft v. Iqbal, 129 S. Ct. 1937,
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1949 (U.S. 2009)). While a complaint must contain sufficient factual matter, accepted as true, to
state a claim for relief that is plausible on its face (Oct. 27 Order at 61), federal appellate courts
have not articulated what must be plead under the evolving standards to allege an appropriate
relevant market in the context of a Walker Process antitrust case. Besides the lack of settled law
on the appropriate pleading standard for the relevant market in a Walker Process case, a substantial
difference of opinion exists in the lower courts.
Here, Plaintiffs alleged a relevant market defined by the unique characteristics of the
patented grapevine variety at issue. Plaintiffs described the grapevine characteristics in terms of
(among other things) plant type, fruit shape, fruit taste, fruit color, growing season, and growing
characteristics. Based on these unique factors, Plaintiffs alleged that no effective substitute for the
patented varieity and that no other known varieties were reasonably interchangeable with grapevines
having the defined characteristics. For example, other grapevine varieties may produce grapes with
similar color, shape and taste, but do not produce the fruit during the same growing season as the
patented variety. Unless a grapevine produced grapes during the same growing season as the
patented variety, it would not be reasonably interchangeable. Despite these allegations, this Court
held that Plaintiffs alleged no plausible basis to conclude growers regard the Patented Varieties as
irreplaceable, nor do they allege that growers would not substitute other crops for the Patented
Varieties.2
(Oct. 27 Order at 61-62.)
In contrast, district courts in other jurisdictions, applying the same evolving pleading
standard, have found that similar relevant market allegations suffice in a Walker Process action. For
example, in a Walker Process action involving a patent on solid ink sticks used in color printers, the
2 The Courts reference to Patented Varieties is curious. Plaintiffs FAC defined PatentedVarieties as the three varieties for which the USDA has obtained United States patents. Plaintiffs,
however, did not use the term Patented Varieties to define the relevant market for the antitrustclaim in their FAC. Nor did Plaintiffs define the relevant market by the collective characteristics ofthe three Patented Varieties. Rather, Plaintiffs FAC defined the relevant market by the uniquecharacteristics of only one patented variety namely, the Sweet Scarlett variety. (See FAC 159-160.) For this reason, Plaintiffs did not allege (as the Court found) that growers would notsubstitute other crops for the Patented Varieties. (Oct. 27 Order at 62.) On the other hand,Plaintiffs expressly alleged that growers would not substitute other crops for grapevines having thecharacteristics of Sweet Scarlett as set forth in paragraphs 159-160 of the FAC.
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Southern District of New York held that a relevant market defined as the sale of replacement solid
ink sticks for use in Xerox phase change color printers defined a plausible product market. Xerox
Corp. v. Media Sciences Intl, 511 F. Supp. 2d 372, 384 (S.D.N.Y. 2007). Like this case, the
plaintiffs inXerox only alleged that the defined ink sticks were not interchangeable with
replacement sticks for other color printers, and that other ink sticks were not acceptable
substitutes. Id.
Similarly, the Eastern District of Texas considered whether a plaintiff alleging a Walker
Process antitrust violation had properly pled a relevant market defined as the market for portable
handheld navigation devices in the United States. Garmin Ltd. v. TomTom, Inc., 2007 U.S. Dist.
LEXIS 74032 at *10-11 (E.D. Tex. Oct. 3, 2007). In rejecting a motion to dismiss, the district court
found that the plaintiff had adequately alleged a relevant market in accordance with the scope of
coverage claimed in the patents at issue. Id. Because this Court took the opposite approach, and the
Federal Circuit has not addressed this issue in the context of a Walker Process claim, a substantial
question on the proper relevant market pleading standard exists.
C. Allowing an Interlocutory Appeal Will Substantially Advance The Ultimate
Termination of the Litigation
Immediate interlocutory review of the February 18 and October 27 Orders will
unquestionably advance the termination of this litigation. Interlocutory appeal under 1292(b) is
appropriate to avoid protracted and expensive litigation. In Re Cement Antitrust Litig., 673 F.2d
at 1026. Here, appellate review of the Courts dismissal of Plaintiffs declaratory judgment claims
for patent invalidity and unenforceability, and antitrust claims, would dramatically expedite
resolution of the parties dispute.
This Court has allowed Plaintiffs to continue with its APA claims based on the USDAs
actions under the Bayh-Dole Act and for unfair competition. Much of the discovery and likely
motion practice as to those claims, including documents and required testimony, will overlap with
the patent invalidity/unenforceability and antitrust claims dismissed by this Court. Accordingly, it is
likely that significant discovery, motion practice, and trial preparation will need to be duplicated if
the Federal Circuit reverses any part of this Courts February 18 and October 27 Orders after final
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adjudication of the remaining claims. Thus, both judicial and party resources would be dramatically
saved if issued raised in the Courts February 18 and October 27 Orders were resolved through an
interlocutory appeal, rather than forcing the Court and the parties to litigate Plaintiffs claims
piecemeal. Regents of the Univ. of Cal. v. Dako N. Am., Inc., 477 F.3d 1335, 1336 (Fed. Cir. 2007).
VI. CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request that the Court certify the February
18 and October 27 Orders for immediate interlocutory appeal under 28 U.S.C. 1292(b).
DATED: January 8, 2010 HENNIGAN, BENNETT & DORMAN LLP
By /s/ Lawrence M. Hadley _Lawrence M. Hadley
Omer Salik
Attorneys for PlaintiffsDELANO FARMS COMPANY; FOUR STARFRUIT, INC.; GERAWAN FARMING, INC.
