Matthews International Corp. v. Biosafe Engineering, LLC , 695 F.3d 1322 ( 2012 )


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  •   United States Court of Appeals
    for the Federal Circuit
    __________________________
    MATTHEWS INTERNATIONAL CORPORATION,
    Plaintiff-Appellant,
    v.
    BIOSAFE ENGINEERING, LLC AND DIGESTOR,
    LLC,
    Defendants-Appellees.
    __________________________
    2012-1044
    __________________________
    Appeal from the United States District Court for the
    Western District of Pennsylvania in case no. 11-CV-0269,
    Judge Nora Barry Fischer.
    __________________________
    Decided: September 25, 2012
    __________________________
    KEVIN P. ALLEN, Thorp, Reed & Armstrong, LLP, of
    Pittsburgh, Pennsylvania, argued for plaintiff-appellant.
    With him on the brief was DAVID W. ENGSTROM. Of
    counsel on the brief was JOHN W. MCILVAINE, III, The
    Webb Law Firm, Pittsburgh, Pennsylvania.
    SPIRO BEREVESKOS, Woodard, Emhardt, Moriarty
    McNett & Henry, LLP, of Indianapolis, Indiana, argued
    for defendants-appellees.
    __________________________
    MATTHEWS INTL   v. BIOSAFE                               2
    Before RADER, Chief Circuit Judge, MAYER and SCHALL,
    Circuit Judges.
    MAYER, Circuit Judge.
    Matthews International Corporation (“Matthews”)
    appeals from the final order of the United States District
    Court for the Western District of Pennsylvania dismissing
    its claims for declaratory and injunctive relief. See Mat-
    thews Int’l Corp. v. Biosafe Eng’g, LLC, No. 11-CV–0269,
    
    2011 WL 4498935
    (W.D. Pa. Sept. 27, 2011) (“District
    Court Decision”). Because we conclude that the district
    court correctly determined that Matthews’ claims lacked
    sufficient immediacy and reality to support the exercise of
    declaratory judgment jurisdiction, we affirm.
    I. BACKGROUND
    Matthews is a leader in the “death care” industry. It
    manufactures cremation equipment, caskets, and bronze
    memorials and sells them to funeral homes. Matthews is
    currently marketing a Bio Cremation™ product, which
    uses an alkaline hydrolysis 1 process, rather than incin-
    eration, to cremate human remains. According to Mat-
    thews, the Bio Cremation™ equipment offers an
    “environmentally friendly” alternative to traditional
    flame-based cremation.
    Resomation Ltd. (“Resomation”) is a Scottish company
    that manufactures and licenses equipment that employs
    an alkaline hydrolysis process to dispose of human re-
    mains. Resomation has granted Matthews an exclusive
    license to market and sell its alkaline hydrolysis equip-
    ment in the United States.
    1   The term “alkaline hydrolysis” generally refers to
    a method of subjecting materials to sodium or potassium
    hydroxide and heat, thereby allowing such materials to be
    disposed of in a safer and more efficient manner.
    3                                 MATTHEWS INTL   v. BIOSAFE
    In 2007, Biosafe Engineering, LLC and Digestor, LLC
    (collectively “Biosafe”) were formed to operate the busi-
    ness acquired from a bankrupt company, Waste Reduction
    by Waste Reduction, Inc. (“WR2”), and to hold the patents
    acquired from WR2. Biosafe ultimately acquired several
    patents related to the application of alkaline hydrolysis to
    the disposal of various types of waste, such as medical
    waste, infectious agents, and hazardous materials. These
    patents include five method patents, U.S. Patent Nos.
    5,332,532, 6,437,211, 6,472,580, 7,183,453, and 7,829,755
    (collectively the “Method Patents”), and one system pat-
    ent, U.S. Patent No. 7,910,788 (the “System Patent”).
    On February 28, 2011, Matthews filed suit against
    Biosafe, seeking a declaratory judgment of non-
    infringement, invalidity, and unenforceability of the
    Method Patents. Matthews also asserted state-law claims
    of trade libel, defamation, and tortious interference with
    contractual relations. On March 22, 2011, the System
    Patent issued. On May 13, 2011, Matthews filed an
    amended complaint, which included a request that the
    System Patent be declared invalid and unenforceable. At
    the time it filed its amended complaint, Matthews had
    sold three Bio Cremation™ units, but none of these units
    had been installed in customers’ facilities.
    In its amended complaint, Matthews alleged that Bio-
    safe had “wrongly accused Matthews of patent infringe-
    ment, and ha[d] made false accusations about Matthews
    to [Matthews’] customers, potential customers, and em-
    ployees.” Matthews asserted that during a December
    2008 telephone conversation, Biosafe’s president, Bradley
    Crain, told Steven Schaal, an official at Matthews’ crema-
    tion division, “that [Matthews’] sale of Resomation/Bio
    Cremation™ equipment would infringe [Biosafe’s] alleged
    intellectual property rights.” Matthews’ attorney thereaf-
    ter sent Biosafe a letter, dated December 31, 2008, re-
    MATTHEWS INTL   v. BIOSAFE                              4
    questing that Biosafe “detail [its] concerns in writing”
    regarding possible patent infringement by Matthews’
    cremation products.
    Biosafe’s counsel responded by letter dated February
    2, 2009. This letter raised possible false advertising and
    copyright infringement claims, asserting that Matthews
    was distributing sales literature marketing the Resoma-
    tion alkaline hydrolysis equipment using a picture that
    actually depicted one of Biosafe’s units instead of one of
    the Resomation units. The letter further stated that
    Biosafe could pursue “a variety of remedies for disputes
    involving intellectual property rights,” including a claim
    for patent infringement if it were “determined that a new
    installation by Resomation [was] operated in a manner
    covered by any of Biosafe’s patents.” Matthews responded
    by stating that while Biosafe’s letter made “vague, gen-
    eral references to certain patent claims and process
    parameters, [its] allegations [were] so vague and incom-
    plete” that Matthews was “at a loss to respond.”
    Matthews’ amended complaint further alleged that
    Biosafe had “launched a bad faith whispering campaign in
    the funeral home marketplace, by making accusations
    and veiled threats to potential customers that [Matthews’]
    Bio Cremation™ equipment” infringed Biosafe’s patents.
    Matthews asserted, moreover, that one of its customers,
    Stewart Enterprises, Inc., told Matthews that it was
    reluctant to buy the Bio Cremation™ equipment because
    of the accusations made by Biosafe.
    On May 27, 2011, Biosafe moved to dismiss all counts
    of Matthews’ amended complaint for lack of declaratory
    judgment jurisdiction and for failure to adequately plead
    state-law claims. On September 27, 2011, the district
    court granted Biosafe’s motion to dismiss. The court
    concluded that Matthews had not made “meaningful
    5                                MATTHEWS INTL   v. BIOSAFE
    preparation” to conduct potentially infringing activity,
    District Court Decision, 
    2011 WL 4498935
    , at *6 (citations
    and internal quotation marks omitted), since the “pa-
    rameters used in the operation of Matthews’ devices
    [were] not settled” and those devices could “be operated
    with parameters outside of the various ones specified” in
    the Method Patents, 
    id. at *8 (citations
    and internal
    quotation marks omitted). Because the potentially in-
    fringing features of the Bio Cremation™ system were
    “fluid and indeterminate,” Matthews’ claim “lack[ed] the
    necessary reality to satisfy the constitutional require-
    ments for declaratory judgment jurisdiction.” 
    Id. (cita- tions and
    internal quotation marks omitted). Given that
    it had no information regarding the operating parameters
    of Matthews’ Bio Cremation™ equipment, the district
    court declined to provide “an advisory opinion specifying
    what combinations of parameters are infringing and what
    combinations of parameters are noninfringing.” 
    Id. at *9. The
    court likewise dismissed, pursuant to Federal
    Rule of Civil Procedure 12(b)(6), Matthews’ state-law
    claims alleging trade libel, defamation, and tortious
    interference with contractual relations. It noted that “bad
    faith” was a required element of Matthews’ state-law
    claims, but that Matthews had failed to adequately plead
    the bad faith element. The court concluded that a finding
    of bad faith could not be premised on the dissemination of
    information that was “objectively accurate,” and that
    Matthews’ “bald assertions” were insufficient to support
    its claim that Biosafe’s infringement allegations were
    made in bad faith. District Court Decision, 
    2011 WL 4498935
    , at *11-12 (citations and internal quotation
    marks omitted).
    Matthews then filed a timely appeal with this court.
    We have jurisdiction under 28 U.S.C. § 1295(a)(1).
    MATTHEWS INTL   v. BIOSAFE                                6
    II. DISCUSSION
    A. Standard of Review
    “Whether an actual controversy exists under the De-
    claratory Judgment Act, 28 U.S.C. § 2201(a), is a question
    of law that is subject to plenary appellate review.” Cat
    Tech LLC v. TubeMaster, Inc., 
    528 F.3d 871
    , 878 (Fed.
    Cir. 2008). Review of the dismissal of Matthews’ state-
    law claims for failure to state a claim upon which relief
    could be granted is likewise subject to de novo appellate
    review. Xechem Int’l, Inc. v. Univ. of Tex. M.D. Anderson
    Cancer Ctr., 
    382 F.3d 1324
    , 1326 (Fed. Cir. 2004); Boyle v.
    United States, 
    200 F.3d 1369
    , 1372 (Fed. Cir. 2000).
    B. The Declaratory Judgment Act
    The Declaratory Judgment Act does not provide an
    independent basis of subject matter jurisdiction. 2 Skelly
    Oil Co. v. Phillips Petroleum Co., 
    339 U.S. 667
    , 671-72
    (1950). Instead, “[i]ts remedy may lie only if the court has
    jurisdiction from some other source.” Cat 
    Tech, 528 F.3d at 879
    ; see Aetna Life Ins. Co. v. Haworth, 
    300 U.S. 227
    ,
    240 (1937). The party seeking to establish declaratory
    judgment jurisdiction bears the burden of demonstrating
    that an Article III case or controversy exists at the time
    2  In relevant part, the Declaratory Judgment Act
    provides:
    In a case of actual controversy within its ju-
    risdiction . . . any court of the United
    States, upon the filing of an appropriate
    pleading, may declare the rights and other
    legal relations of any interested party seek-
    ing such declaration, whether or not further
    relief is or could be sought.
    28 U.S.C. § 2201(a).
    7                                   MATTHEWS INTL    v. BIOSAFE
    the claim for declaratory relief is filed. 3 Arris Grp., Inc. v.
    British Telecomms., PLC, 
    639 F.3d 1368
    , 1373 (Fed. Cir.
    2011).
    Because Article III of the Constitution restricts the
    judicial power to the adjudication of “Cases” or “Contro-
    versies,” U.S. Const. Art. III, § 2, a court may not adjudi-
    cate “a difference or dispute of a hypothetical or abstract
    character” or “one that is academic or moot.” 
    Aetna, 300 U.S. at 240
    . Instead, a justiciable controversy exists only
    where a dispute is “definite and concrete, touching the
    legal relations of parties having adverse legal interests,”
    and will “admi[t] of specific relief through a decree of a
    conclusive character, as distinguished from an opinion
    advising what the law would be upon a hypothetical state
    of facts.” 
    Id. at 240-41; see
    MedImmune, 549 U.S. at 127
    .
    “There is . . . no facile, all-purpose standard to police
    the line between declaratory judgment actions which
    satisfy the case or controversy requirement and those that
    do not.” Cat 
    Tech, 528 F.3d at 879
    . Accordingly, in de-
    termining whether a justiciable controversy is present,
    the analysis must be calibrated to the particular facts of
    each case, with the fundamental inquiry being “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
    3   “Since its inception, the Declaratory Judgment
    Act has been understood to confer on federal courts
    unique and substantial discretion in deciding whether to
    declare the rights of litigants.” Wilton v. Seven Falls Co.,
    
    515 U.S. 277
    , 286 (1995). Accordingly, even if a case or
    controversy exists, the trial court has significant discre-
    tion in determining whether or not to exercise declaratory
    judgment jurisdiction. See MedImmune, Inc. v. Genentech,
    Inc., 
    549 U.S. 118
    , 136 (2007).
    MATTHEWS INTL   v. BIOSAFE                                    8
    reality to warrant the issuance of a declaratory judg-
    ment.” 
    MedImmune, 549 U.S. at 127
    (footnote omitted)
    (citations and internal quotation marks omitted); see Cat
    
    Tech, 528 F.3d at 879
    . Here, as the trial court correctly
    concluded, Matthews’ dispute with Biosafe lacks the
    requisite immediacy and reality to support the exercise of
    declaratory judgment jurisdiction.
    C. Immediacy
    Matthews’ dispute with Biosafe lacks immediacy be-
    cause there is no evidence as to when, if ever, the Bio
    Cremation™ equipment will be used in a manner that
    could potentially infringe the Method Patents. Matthews
    has taken no steps toward direct infringement of those
    patents. Although it sells the Bio Cremation™ equip-
    ment, it does not practice any of the methods disclosed in
    the Method Patents, and cannot, therefore, be held liable
    for direct infringement. See Ricoh Co. v. Quanta Com-
    puter Inc., 
    550 F.3d 1325
    , 1333 (Fed. Cir. 2008) (“In-
    fringement of a method claim occurs when a party
    performs all of the steps of the process . . . .” (citations and
    internal quotation marks omitted)); Joy Techs., Inc. v.
    Flakt, Inc., 
    6 F.3d 770
    , 773 (Fed. Cir. 1993) (“[A] method
    or process claim is directly infringed only when the proc-
    ess is performed.”).
    Nor is any potential future infringement by Mat-
    thews’ customers sufficiently immediate to support the
    exercise of declaratory judgment jurisdiction. 4 As of May
    4   “[W]here a patent holder accuses customers of di-
    rect infringement based on the sale or use of a supplier’s
    equipment, the supplier has standing to commence a
    declaratory judgment action if (a) the supplier is obligated
    to indemnify its customers from infringement liability, or
    (b) there is a controversy between the patentee and the
    supplier as to the supplier’s liability for induced or con-
    tributory infringement based on the alleged acts of direct
    9                                 MATTHEWS INTL   v. BIOSAFE
    13, 2011, the date it filed its amended complaint, Mat-
    thews had sold three Bio Cremation™ units to customers.
    None of these units, however, had been installed in cus-
    tomers’ facilities. Significantly, the Bio Cremation™
    equipment can be operated using parameters—related to
    such items as temperature and pressure settings as well
    as to pH levels—that do not infringe the Method Patents.
    Given that Matthews has alleged no facts regarding
    whether its customers plan to operate the Bio Crema-
    tion™ equipment in a manner that could even arguably
    infringe the Method Patents, its dispute with Biosafe is
    too remote and speculative to support the exercise of
    declaratory judgment jurisdiction.
    “A party may not obtain a declaratory judgment
    merely because it would like an advisory opinion on
    whether it would be liable for patent infringement if it
    were to initiate some merely contemplated activity.” Cat
    
    Tech, 528 F.3d at 881
    (citations and internal quotation
    marks omitted); see also Public Serv. Comm’n v. Wycoff
    Co., 
    344 U.S. 237
    , 244 (1952) (“The disagreement must
    not be nebulous or contingent but must have taken on
    fixed and final shape so that a court can see what legal
    issues it is deciding, what effect its decision will have on
    the adversaries, and some useful purpose to be achieved
    in deciding them.”). Until some specific and concrete
    evidence regarding how Matthews’ customers plan to use
    the cremation units is available, any judicial determina-
    tion regarding whether such use would infringe the
    infringement by its customers.” 
    Arris, 639 F.3d at 1375
    (footnote omitted). Even assuming arguendo that Mat-
    thews could be held liable for induced or contributory
    infringement, however, its dispute with Biosafe is not ripe
    for review given that, as will be discussed more fully
    below, the parameters under which Matthews’ customers
    plan to operate the Bio Cremation™ equipment are not
    yet known.
    MATTHEWS INTL   v. BIOSAFE                                10
    Method Patents would be premature. See Sierra Applied
    Scis., Inc. v. Advanced Energy Indus., Inc., 
    363 F.3d 1361
    ,
    1379 (Fed. Cir. 2004) (concluding that a dispute lacked
    the required immediacy where a prototype of the product
    in question would not be operational until more than a
    year after the complaint was filed); Telectronics Pacing
    Sys., Inc. v. Ventritex, Inc., 
    982 F.2d 1520
    , 1527 (Fed. Cir.
    1992) (affirming the dismissal of a declaratory judgment
    claim where clinical trials of an allegedly infringing
    product had just begun and it was “years away” from
    being approved by the Food and Drug Administration
    (“FDA”)); Lang v. Pac. Marine & Supply Co., 
    895 F.2d 761
    , 764 (Fed. Cir. 1990) (concluding that the actual
    controversy requirement was not satisfied where the
    allegedly infringing product “would not be finished until
    at least 9 months after the complaint was filed”).
    As Matthews correctly notes, a showing of actual in-
    fringement is not required for a case or controversy to
    exist. See 
    MedImmune, 549 U.S. at 134
    (emphasizing
    that a party need not “bet the farm, or . . . risk treble
    damages . . . before seeking a declaration of its actively
    contested legal rights”). On the other hand, however,
    when it is unclear when any even arguably infringing
    activity will occur, a dispute will lack the immediacy
    necessary to support the exercise of declaratory judgment
    jurisdiction. See 
    Sierra, 363 F.3d at 1379
    . “[A] party
    need not have engaged in the actual manufacture or sale
    of a potentially infringing product to obtain a declaratory
    judgment of non-infringement,” but “the greater the
    length of time before potentially infringing activity is
    expected to occur, the more likely the case lacks the
    requisite immediacy.” Cat 
    Tech, 528 F.3d at 881
    (cita-
    tions and internal quotation marks omitted); see also
    Lujan v. Defenders of Wildlife, 
    504 U.S. 555
    , 564 (1992)
    (“‘[S]ome day’ intentions—without any description of
    11                                 MATTHEWS INTL   v. BIOSAFE
    concrete plans, or indeed even any specification of when
    the some day will be—do not support a finding of the
    ‘actual or imminent’ injury that our cases require.”).
    Here, Matthews’ dispute with Biosafe lacks the requisite
    immediacy because it is unclear when, if ever, Matthews’
    customers will use the Bio Cremation™ equipment in a
    manner that could even arguably infringe the Method
    Patents. See Benitec Austl., Ltd. v. Nucleonics, Inc., 
    495 F.3d 1340
    , 1346 (Fed. Cir. 2007) (concluding that there
    was no declaratory judgment jurisdiction where a generic
    drug manufacturer, who sought declaratory relief in 2005,
    did not anticipate filing a new drug application with the
    FDA until “at least 2010-2012, if ever” (citations and
    internal quotation marks omitted)); see also 
    Arris, 639 F.3d at 1374
    (emphasizing that a party does not obtain
    standing to obtain a declaratory judgment of non-
    infringement simply because it has suffered “economic
    injury” as a result of a patentee’s infringement allega-
    tions); Prasco, LLC v. Medicis Pharm. Corp., 
    537 F.3d 1329
    , 1338 (Fed. Cir. 2008) (“MedImmune does not change
    our long-standing rule that the existence of a patent is not
    sufficient to establish declaratory judgment jurisdiction.”).
    D. Reality
    Matthews’ dispute with Biosafe likewise fails to meet
    constitutionally-mandated reality requirements. “In the
    context of patent litigation, the reality requirement is
    often related to the extent to which the technology in
    question is ‘substantially fixed’ as opposed to ‘fluid and
    indeterminate’ at the time declaratory relief is sought.”
    Cat 
    Tech, 528 F.3d at 882
    (citations omitted). Thus, “[t]he
    greater the variability of the subject of a declaratory-
    judgment suit, particularly as to its potentially infringing
    features, the greater the chance that the court’s judgment
    will be purely advisory, detached from the eventual,
    actual content of that subject—in short, detached from
    MATTHEWS INTL   v. BIOSAFE                              12
    eventual reality.” 
    Sierra, 363 F.3d at 1379
    . As both
    Biosafe and Matthews acknowledge, the Bio Cremation™
    equipment can be operated using a variety of process
    parameters, some of which would not infringe the Method
    Patents. See Br. of Defendants-Appellees at 8-9 (“Each of
    the independent claims of the Method Patents has clearly
    stated operating parameters that can be avoided to per-
    form alkaline hydrolysis of a deceased human.”); Br. of
    Plaintiff-Appellant at 26-27 (“[I]t is the essence of Mat-
    thews’s case that Bio Cremation™ does operate outside of
    [Biosafe’s] patents.”). Since Matthews has never provided
    information regarding the specific parameters under
    which its units will likely be operated, it would be impos-
    sible to determine whether such operation could meet the
    claim limitations contained in the Method Patents. As we
    explained in Benitec, a party has no right to obtain de-
    claratory relief when it provides “insufficient information
    for a court to assess whether [its future activities] would
    be infringing or 
    not.” 495 F.3d at 1349
    .
    Cat Tech, upon which Matthews relies, is inapposite.
    There, we found that there was a justiciable controversy
    where the declaratory judgment plaintiff had finalized the
    design of four different configurations for devices used to
    place catalyst particles into multi-tube chemical 
    reactors. 528 F.3d at 880-82
    . The plaintiff stood ready, moreover,
    to produce such devices upon receiving an order from a
    customer. 
    Id. at 881. Here,
    by contrast, there is no
    indication that Matthews’ customers have settled upon a
    fixed protocol for using the Bio Cremation™ equipment.
    Because Matthews’ technology is “fluid and indetermi-
    nate” rather than “substantially fixed,” its dispute with
    Biosafe lacks the requisite reality to support the exercise
    of declaratory judgment jurisdiction. 
    Id. at 882; see
    Sierra, 363 F.3d at 1379
    -80 (concluding that declaratory
    relief was not available where development of the device
    13                                 MATTHEWS INTL   v. BIOSAFE
    in question was “at an early stage” and its design was
    “fluid and indeterminate” when the complaint was filed);
    
    Telectronics, 982 F.2d at 1527
    (affirming the dismissal of
    a complaint where “[t]here was no certainty that the
    device when approved would be the same device that
    began clinical trials”); see also Int'l Harvester Co. v. Deere
    & Co., 
    623 F.2d 1207
    , 1216 (7th Cir. 1980) (“Our concern
    is not that the [product in question] will never be pro-
    duced, but rather that because of the relatively early
    stage of its development, the design which is before us
    now may not be the design which is ultimately produced
    and marketed.”). Simply put, because the operating
    protocols for the Bio Cremation™ units are unknown, any
    judicial determination as to whether operation of those
    units could infringe the Method Patents would constitute
    an advisory opinion based upon a hypothetical set of facts.
    See Arctic Corner, Inc. v. United States, 
    845 F.2d 999
    ,
    1000 (Fed. Cir. 1988) (“At the heart of the ‘case or contro-
    versy’ requirement is the prohibition against advisory
    opinions.”).
    E. The System Patent
    The district court likewise correctly determined that it
    had no jurisdiction over the System Patent. That patent
    did not issue until nearly a month after Matthews filed its
    complaint. There is no doubt that, under certain circum-
    stances, a litigant is allowed to supplement his pleadings
    to include events occurring after a complaint is filed. See
    Fed. R. Civ. P. 15(d) (“On motion and reasonable notice,
    the court may, on just terms, permit a party to serve a
    supplemental pleading setting out any transaction, occur-
    rence, or event that happened after the date of the plead-
    ing to be supplemented.”). Here, however, because the
    trial court had no jurisdiction over the Method Patents at
    issue in Matthews’ original complaint, it was without
    authority to consider the System Patent which issued
    MATTHEWS INTL   v. BIOSAFE                               14
    after that complaint was filed. “It has long been the case
    that the jurisdiction of the court depends upon the state of
    things at the time of the action brought.” Grupo Dataflux
    v. Atlas Global Grp., L.P., 
    541 U.S. 567
    , 570-71 (2004)
    (citations and internal quotation marks omitted); see also
    GAF Bldg. Materials Corp. v. Elk Corp., 
    90 F.3d 479
    , 483
    (Fed. Cir. 1996) (“[L]ater events may not create jurisdic-
    tion where none existed at the time of filing.” (citations
    and internal quotation marks omitted)). Thus, as the
    trial court correctly concluded, absent “predicate jurisdic-
    tion” based upon the Method Patents, it had no authority
    to exercise jurisdiction over the System Patent. District
    Court Decision, 
    2011 WL 4498935
    , at *10.
    F. State-Law Claims
    In addition to seeking a declaratory judgment of non-
    infringement and invalidity with respect to the Method
    and System Patents, Matthews also asserted state-law
    claims for trade libel, defamation, and tortious interfer-
    ence with contractual relations.      Matthews, however,
    failed to plead the bad faith element necessary to support
    its state-law claims.
    “[F]ederal patent law preempts state-law tort liability
    for a patentholder’s good faith conduct in communications
    asserting infringement of its patent and warning about
    potential litigation.” Globetrotter Software, Inc. v. Elan
    Computer Grp., Inc., 
    362 F.3d 1367
    , 1374 (Fed. Cir. 2004).
    Accordingly, Matthews’ state-law claims could “survive
    federal preemption only to the extent that those claims
    [were] based on a showing of ‘bad faith’ action in asserting
    infringement.” 
    Id. Matthews alleges that
    Biosafe officials
    made “thinly-veiled threats of liability” for patent in-
    fringement to both Matthews’ employees and its custom-
    ers.     Even assuming arguendo that Biosafe made
    infringement allegations, however, there is no evidence
    15                                 MATTHEWS INTL   v. BIOSAFE
    that such allegations were objectively baseless. “A plain-
    tiff claiming that a patent holder has engaged in wrongful
    conduct by asserting claims of patent infringement must
    establish that the claims of infringement were objectively
    baseless.” 
    Id. at 1377; Mikohn
    Gaming Corp. v. Acres
    Gaming, Inc., 
    165 F.3d 891
    , 897 (Fed. Cir. 1998) (“In
    general, a threshold showing of incorrectness or falsity, or
    disregard for either, is required in order to find bad faith
    in the communication of information about the existence
    or pendency of patent rights.”). The Method Patents
    disclose the use of an alkaline hydrolysis process to dis-
    pose of various types of waste, such as medical waste and
    hazardous waste, while the Bio Cremation™ equipment
    uses an alkaline hydrolysis process to dispose of human
    remains. Because Matthews points to nothing to indicate
    that Biosafe’s alleged infringement allegations were so
    unreasonable as to be objectively baseless, the trial court
    correctly concluded that Matthews failed to sufficiently
    plead the bad faith element necessary to support its state-
    law claims. 5 See Dominant Semiconductors Sdn. Bhd. v.
    5  Matthews asserts that Gordon I. Kaye and Peter
    B. Weber, the applicants for several of the Method Pat-
    ents, made false statements to the United States Patent
    and Trademark Office when prosecuting their applica-
    tions. Absent any evidence, however, that Biosafe itself
    engaged in inequitable conduct—or had knowledge of
    such conduct on the part of Kaye and Weber—there is no
    showing of the bad faith required to support Matthews’
    state-law claims. In order to survive Biosafe’s motion to
    dismiss under Rule 12(b)(6), Matthews was required to do
    more than make bald assertions that Biosafe acted in
    “bad faith.” See Ashcroft v. Iqbal, 
    556 U.S. 662
    , 678
    (2009) (“Threadbare recitals of the elements of a cause of
    action, supported by mere conclusory statements, do not
    suffice” to state a claim for relief); Bell Atl. Corp. v.
    Twombly, 
    550 U.S. 544
    , 555 (2007) (“While a complaint
    attacked by a Rule 12(b)(6) motion to dismiss does not
    need detailed factual allegations, a plaintiff’s obligation to
    MATTHEWS INTL   v. BIOSAFE                                 16
    OSRAM GmbH, 
    524 F.3d 1254
    , 1260 (Fed. Cir. 2008) (“To
    be objectively baseless, the infringement allegations must
    be such that no reasonable litigant could reasonably
    expect success on the merits.” (citations and internal
    quotation marks omitted)); see also Virtue v. Creamery
    Package Mfg. Co., 
    227 U.S. 8
    , 37-38 (1913) (“Patents
    would be of little value if infringers of them could not be
    notified of the consequences of infringement, or proceeded
    against in the courts. Such action, considered by itself,
    cannot be said to be illegal.”). This court has “uniformly
    upheld a patentee’s right to publicize the issuance of
    patents and to so inform potential infringers.” 
    Mikohn, 165 F.3d at 897
    .
    Furthermore, as the trial court correctly concluded,
    Matthews’ state-law claims would not be ripe for review
    even if it had properly pled the required bad faith ele-
    ment. See District Court Decision, 
    2011 WL 4498935
    , at
    *14 (“[T]here is little hardship in waiting . . . until Mat-
    thews has actually delivered its first units and Matthews’
    customers have used them. Once the facts are actually
    developed, a suit may be appropriate. At present, how-
    ever, it is not.”). As noted previously, in order to ascertain
    whether Biosafe’s infringement allegations were made in
    “bad faith,” the trial court would be required to determine
    whether those allegations were objectively baseless. The
    court would have no basis for determining whether Bio-
    safe’s infringement allegations were objectively baseless,
    however, until it had some particularized knowledge as to
    provide the grounds of his entitle[ment] to relief requires
    more than labels and conclusions, and a formulaic recita-
    tion of the elements of a cause of action will not do.”
    (alteration in original) (citations and internal quotation
    marks omitted)).
    17                               MATTHEWS INTL   v. BIOSAFE
    how Matthews’ customers planned to operate the Bio
    Cremation™ equipment. Thus, until some specific evi-
    dence regarding the operating parameters for the Bio
    Cremation™ units is available, any determination as to
    whether Biosafe acted unreasonably in asserting in-
    fringement would be premature. See Texas v. United
    States, 
    523 U.S. 296
    , 300 (1998) (“A claim is not ripe for
    adjudication if it rests upon contingent future events that
    may not occur as anticipated, or indeed may not occur at
    all.” (citations and internal quotation marks omitted)).
    III. CONCLUSION
    Accordingly, the order of the United States District
    Court for the Western District of Pennsylvania is af-
    firmed.
    AFFIRMED
    

Document Info

Docket Number: 2012-1044

Citation Numbers: 695 F.3d 1322, 104 U.S.P.Q. 2d (BNA) 1393, 2012 U.S. App. LEXIS 20137, 2012 WL 4354663

Judges: Rader, Mayer, Schall

Filed Date: 9/25/2012

Precedential Status: Precedential

Modified Date: 10/19/2024

Authorities (26)

Grupo Dataflux v. Atlas Global Group, L. P. , 124 S. Ct. 1920 ( 2004 )

Wilton v. Seven Falls Co. , 115 S. Ct. 2137 ( 1995 )

Texas v. United States , 118 S. Ct. 1257 ( 1998 )

Benitec Australia, Ltd. v. Nucleonics, Inc. , 495 F.3d 1340 ( 2007 )

thomas-g-lang-and-swath-ocean-systems-inc-v-pacific-marine-and-supply , 895 F.2d 761 ( 1990 )

MedImmune, Inc. v. Genentech, Inc. , 127 S. Ct. 764 ( 2007 )

Virtue v. Creamery Package Manufacturing Co. , 33 S. Ct. 202 ( 1913 )

Cat Tech LLC v. TubeMaster, Inc. , 528 F.3d 871 ( 2008 )

Lujan v. Defenders of Wildlife , 112 S. Ct. 2130 ( 1992 )

Gaf Building Materials Corporation v. Elk Corporation of ... , 90 F.3d 479 ( 1996 )

Joy Technologies, Inc., and A/s Niro Atomizer, Involuntary ... , 6 F.3d 770 ( 1993 )

Bell Atlantic Corp. v. Twombly , 127 S. Ct. 1955 ( 2007 )

Ashcroft v. Iqbal , 129 S. Ct. 1937 ( 2009 )

Aetna Life Insurance v. Haworth , 57 S. Ct. 461 ( 1937 )

Telectronics Pacing Systems, Inc. v. Ventritex, Inc. , 982 F.2d 1520 ( 1992 )

Sierra Applied Sciences, Inc. v. Advanced Energy Industries,... , 363 F.3d 1361 ( 2004 )

Xechem International, Inc. v. The University of Texas M.D. ... , 382 F.3d 1324 ( 2004 )

Dominant Semiconductors Sdn. Bhd. v. Osram GmbH , 524 F.3d 1254 ( 2008 )

Arris Group, Inc. v. British Telecommunications PLC , 639 F.3d 1368 ( 2011 )

John C. Boyle, Paintiff-Appellant v. United States , 200 F.3d 1369 ( 2000 )

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