Demand Letter without Accusing a Particular Product Creates DJ Jurisdiction

Asia Vital v. Asetek Danmark (Fed. Cir. 2016),

Article III Federal Courts only have jurisdiction over caess where a substantial and current controversy exists between the parties.  in 2014, Asia Vital (AVC) sued Asetek in E.D. Virginia – asking the district court for a declaratory judgment of non-infringement of the claims of Asetek’s U.S. Patent Nos. 8,240,362 and 8,245,764. The district court dismissed the case for lack of subject matter jurisdiction — finding no substantial controversy.  On appeal, however, the Federal Circuit has reversed that opinion – finding a substantial controversy.

The Asetek patents cover liquid cooling systems used to cool integrated circuits (such as those on a computer).  Over the past several years, Asetek has sued several competitors for infringing the patents including CoolIT and Cooler Master. In 2014, Asetek sent AVC a letter accusing the company of infringing — however the letter mistakenly accuesd AVC of manufacturing the Liqmax 120s (it does not). After some letters back-and-forth, Asetek eventually sent a letter that it “believes that AVC is likely selling other infringing products in the United States.”  After an unsuccessful meeting, AVC filed its declaratory judgment action.  The question is whether these facts are sufficient to show an actual controversy between the parties.

The leading precedent actual-controversy precedent for patent cases is the Supreme Court’s 2007 decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) In MedImmune, the Court explained the test as “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 a declaratory judgment.”  The ongoing principle is that the controversy must be based upon a “real and immediate injury or threat of future injury that is caused by the [DJ] defendants.”

In the patent context, the court has held that jurisdiction does not arise merely based upon learning of the existence of a patent or by a perception of a risk of infringement unless there is an affirmative act by the patentee.

Here, the Federal Circuit found ample evidence of action by the patentee. The one missing element was the lack of evidence that Asetek directed its accusations toward AVC’s actual products (the K9 and K7 products).  The court noted the lack of product specific accusation, but still found Asetek’s actions “sufficient to conclude that a substantial controversy between the parties existed at the time of the complaint.”  The court writes:

Asetek relies heavily on the fact that it never referenced AVC’s particular products or product line as potentially infringing, and, in fact, did not even know of AVC’s products at the time of the complaint. . . . The question of jurisdiction does not turn on Asetek’s knowledge of the specific AVC products or whether Asetek specifically alleged that the K7 and K9 products infringed the asserted patents; instead, the question is whether, under all the circumstances, Asetek’s actions can be reasonably inferred as demonstrating intent to enforce a patent.

Id. (internal citations omitted).