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From Intellectual Property Law Daily, April 4, 2019

Patent infringement suit dismissed with prejudice where suit filed before patent issued

By Robert B. Barnett Jr., J.D.

A Louisiana federal court has dismissed with prejudice a declaratory judgment claim in a patent infringement suit involving oil drilling equipment filed one day before the patent was issued, ruling that a bright-line rule exists that no case or controversy exists in a declaratory judgment action seeking to have a patent declared invalid until the Patent Office issues the patent.

In a patent infringement-related dispute involving three separate lawsuits between Cajun Services and Benton Energy regarding rights to an elevator roller insert system used in oil drilling, the suit filed by Benton against Cajun seeking declaration that a patent was invalid was dismissed with prejudice because it was filed one day before Cajun’s patent was issued, a Louisiana federal district court has ruled. Although courts look at the "totality of the circumstances" in determining personal jurisdiction under the Declaratory Judgment Act, the one remaining bright-line rule is that a case or controversy involving a declaration that a patent was invalid does not exist until the U.S. Patent and Trademark Office formally issues the patent. Cajun was still free to assert its claims as counterclaims in the ongoing suit filed by Benton against Cajun (Cajun Services Unlimited, LLC v. Benton Energy Service Co., April 3, 2019, Ashe, B.).

Both Cajun (doing business as Spoked Manufacturing) and Benton (doing business as Besco Tubular) claim rights to an elevator roller insert system (ERIS) used in oil drilling. Cajun first filed suit in January 2017 against Benton alleging violations of the Defend Trade Secrets Act and various state laws. Cajun also wanted a declaration that it was the rightful owner to ERIS. The Defend Trade Secrets Act claim was then dismissed by agreement, with an understanding that Cajun would amend to add a patent infringement claim. Meanwhile, in June 2018, one day for Cajun’s ERIS patent was issued, Benton sued Cajun seeking a declaration that the patent was invalid. Ten days later, Cajun sued Benton again, re-alleging the same claims as in the original suit, plus a patent infringement claim. Benton filed counterclaims, essentially re-asserting its same claims, plus deceptive trade practices and related claims. The court then consolidated all three actions. Cajun moved to dismiss the Benton suit, contending that Benton lacked subject matter jurisdiction under the Declaratory Judgment Act to seek its declaratory judgment.

Personal jurisdiction. The question for the court was whether an actual case or controversy existed in a declaratory judgment action seeking to declare a patent invalid, where the action was filed before the patent was issued. Benton argued that a case or controversy existed, if the court considered the "totality of the circumstances," as the Federal Circuit has required (Danisco U.S., Inc. v. Novozymes A/S, 744 F.3d 1325 (Fed. Cir. 2014)). While the Louisiana court acknowledged that the Federal Circuit had discouraged a "bright-line" test in establishing a case or controversy, it also concluded that the one bright-line rule still remaining is the one requiring, in a patent-related claim, that a patent be issued. "Danisco did not dispense with the prerequisite of patent issuance for jurisdiction over patent-related claims made under the Declaratory Judgment Act," the court determined. The court also rejected Benton’s argument that it was seeking relief for pre-patent issuance conduct. Given that the pre-patent issuance conduct here constituted a mere threat on the day the suit was filed, the court said, the totality of the circumstances failed to satisfy the "sufficient immediacy" necessary to create an actual case or controversy. Therefore, the court added, it had no choice but to dismiss the suit with prejudice.

Attorney’s fees. Cajun had sought attorney’s fees for having to file a motion to dismiss what it characterized as a baseless claim. Calling such an award "premature," given that such awards are not typically made until entry of final judgment, the court dismissed the motion.

This case is No. 2:17-cv-00491-BWA-JCW.

Attorneys: Tori S. Bowling (Keogh, Cox & Wilson, Ltd) for Cajun Services Unlimited, LLC. Ted Anthony (Babineaux, Poche, Anthony & Slavich, LLC) for Benton Energy Service Co.

Companies: Benton Energy Service Co.

MainStory: TopStory Patent LouisianaNews

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