No Declaratory Judgment Jurisdiction Where Binding Assurances of No Litigation Eliminates Any Possible Justiciable Case or Controversy in Patent Case
Addressing the case and controversy requirement for declaratory judgment jurisdiction, the U.S. Court of Appeals for the Federal Circuit affirmed the dismissal of a declaratory judgment suit for lack of jurisdiction, finding non-justiciable case or controversy where the defendant had made binding assurances that removed any risk of suit against the plaintiffs. Organic Seed Growers and Trade Ass'n v. Monsanto Company, Case No. 12-1298 (Fed. Cir., June 10, 2013) (Dyk, J.).
At issue in the case were 23 patents owned by Monsanto related to various aspects of genetically modified crops. The plaintiffs were growers, seed-selling businesses, and agricultural organizations that grow, use or sell conventional seeds. The plaintiffs did not want to use or sell seeds incorporating Monsanto’s technologies. The plaintiffs alleged a concern that they would be nonetheless liable for inadvertently growing patented seeds due to contamination. The plaintiffs requested a written covenant not to sue from Monsanto. Monsanto did not provide a covenant, but instead directed plaintiffs to an explicit statement posted on Monsanto’s website regarding inadvertent contamination and infringement. The statement said that it is not Monsanto’s policy to “exercise its patent rights where trace amounts of our patented seeds or traits are present in farmer’s fields as a result of inadvertent means.” Further, Monsanto, through its counsel, assured that Monsanto had no intention to sue under the circumstances.
The district court dismissed the suit for lack of subject matter jurisdiction, finding that the circumstances did not amount to a substantial controversy and there was no injury traceable to Monsanto. The plaintiffs appealed.
The Federal Circuit agreed with district court that plaintiffs lacked standing under the Declaratory Judgment Act. The plaintiffs conceded that Monsanto had never or threatened suit against them, relying instead on Monsanto’s past record of enforcing its patent rights. The Federal Circuit’s analysis focused on the question whether Monsanto’s representations that it would not sue for inadvertent infringement were sufficient to “moot any potential controversy” and defeat standing.
The Federal Circuit noted that the Supreme Court held that a covenant not to sue can moot a controversy between the parties. Here, Monsanto did not provide a written covenant not to sue, but the Federal Circuit found that Monsanto’s binding assurances had the same effect, stating that Monsanto’s representations unequivocally disclaimed any intent to sue plaintiffs for inadvertently using or selling trace amounts of genetically modified seeds.
The Court cited three “main factors” that could mitigate in favor of judicial estoppel were Monsanto to file a suit: a party’s later position is “clearly inconsistent” with its prior position, the party successfully persuaded a court to accept its prior position and the party “would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Here, the Federal Circuit concluded that all three factors would warrant application of judicial estoppel. Because plaintiffs had alleged no concrete plans or activities to use or sell greater than trace amounts of modified seeds, the Federal Circuit agreed that district court correctly found that it lacked declaratory judgment jurisdiction.