Request To Certify Appeal in Table Grape Patent Case

1 LAW OFFICES OF BRIAN C.
LEIGHTON
BRIAN C. LEIGHTON (SBN 090907)
2 701 Pollasky Avenue
Clovis, CA 93612
3 Phone: (559) 297-6190
Fax (559) 297-6194
4 bleighton@arrival.net
5 LAWRENCE M. HADLEY (SBN 157728)

hadleyl@hbdlawyers.com
6 OMER SALIK (SBN 223056)
saliko@hbdlawyers.com
7 HENNIGAN, BENNETT & DORMAN LLP
865 South Figueroa Street, Suite 2900
8 Los Angeles, California 90017
Telephone: (213) 694-1200
9 Facsimile: (213) 694-1234
10 THE LAW OFFICES OF RALPH B. WEGIS
RALPH B. WEGIS (SBN 67966)
11 1930 Truxtun Avenue
Bakersfield, CA 93301
Hennigan, Bennett & Dorman llp
12 Telephone: (661) 635-2100

Facsimile: (661) 635-2107
13
los angeles, california
Attorneys for Plaintiffs

14 DELANO FARMS COMPANY; FOUR STAR FRUIT, INC.; GERAWAN FARMING, INC.
lawyers
15
16 UNITED STATES DISTRICT COURT
17 EASTERN DISTRICT OF CALIFORNIA
18
19 DELANO FARMS COMPANY; FOUR STAR ) Case No. 1:07-cv-01610-OWW-SMS
FRUIT, INC.; GERAWAN FARMING, INC., )
20 ) PLAINTIFFS’ MEMORANDUM OF
Plaintiffs, ) POINTS AND AUTHORITIES IN
21 ) SUPPORT OF MOTION FOR
vs. ) CERTIFICATION OF ORDERS FOR
22 ) INTERLOCUTORY APPEAL PURSUANT
THE CALIFORNIA TABLE GRAPE ) TO 28 U.S.C. §1292(b)
23 COMMISSION; UNITED STATES OF )
AMERICA; UNITED STATES DEPARTMENT ) Date: March 29, 2009
24 OF AGRICULTURE; TOM VILSACK, ) Time: 10:00 a.m.
SECRETARY OF THE UNITED STATES ) Judge: Hon. Oliver W. Wanger
25 DEPARTMENT OF AGRICULTURE (IN HIS ) Crtrm: #3
OFFICIAL CAPACITY) )
26 )
Defendants. )
27 )
28
Case No. 1:07-cv-01610-OWW-SMS Plaintiffs’ Memorandum in Support of Motion for

Certification of Orders for Interlocutory Appeal
769604.1
1 TABLE OF CONTENTS
Page
2
3 I. INTRODUCTION ........................................................................................1
4 II. BACKGROUND ..........................................................................................2
5 III. ISSUES FOR INTERLOCUTORY REVIEW ..............................................4
6 IV. LEGAL STANDARD...................................................................................5
7 V. THE FEBRUARY 18 AND OCTOBER 27 ORDERS SHOULD BE
CERTIFIED FOR INTERLOCUTORY REVIEW UNDER 28 U.S.C. §
8 1292(B). .......................................................................................................5
9 A. THE ISSUES PRESENTED INVOLVE CONTROLLING
QUESTIONS OF LAW ......................................................................6
10 B. SUBSTANTIAL GROUNDS EXIST FOR DIFFERING
OPINION AS TO THE RESOLUTION OF THE ISSUES
11 PRESENTED. ....................................................................................7
12 1. No Settled Authority Holds Whether The United

States Is A Necessary And Indispensable Party To
13
An Action For Patent Invalidity Against An
14 Exclusive Licensee.................................................................8
lawyers
15
a) There exists substantial grounds for difference
16 of opinion as to whether the United States is a
necessary party under Rule 19 .....................................8
17
18 b) There exist substantial grounds for differing
opinion as to whether the United States is an
19 indispensable party under Rule 19(b) .........................10
20 2. No Settled Authority Holds Whether Sovereign
Immunity Bars Actions Against The United States
21
Seeking Declaratory Judgment Of Patent Invalidity
22 And Unenforceability...........................................................12
23 3. No Settled Authority Holds Whether The
24 Administrative Procedure Act Waives Sovereign
Immunity For Declaratory Judgment Actions Of
25 Invalidity And Unenforceability For Federally-
Owned Patents .....................................................................15
26
27 4. No Settled Authority Holds Whether The Patent Act
And The Quiet Title Act Forbid Actions For
28 Declaratory Judgment Of Invalidity And
-i-
Case No. 1:07-cv-01610-OWW-SMS i
769604.1
1 TABLE OF CONTENTS (CONT.)
Page
2
3 Unenforceability As To A United States-Owned
Patent ...................................................................................17
4
5. No Settled Authority Sets Forth The Standard For
5 Pleading A Relevant Market In A “Walker Process”
6 Antitrust Action ...................................................................18
7 C. ALLOWING AN INTERLOCUTORY APPEAL WILL
SUBSTANTIALLY ADVANCE THE ULTIMATE
8 TERMINATION OF THE LITIGATION.........................................20
VI. CONCLUSION ..........................................................................................21
9
10
11
12
13
14
lawyers
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-ii-
769604.1
1 TABLE OF AUTHORITIES
Page
2
3
Cases
4
A.L. Smith Iron Co. v. Dickson,
5 141 F.2d 3 (2nd Cir. 1944)..................................................................................... 9
6 Ashcroft v. Iqbal,
129 S. Ct. 1937 (U.S. 2009)................................................................................. 19
7
Capri Jewelry Inc. v. Hattie Carnegie Jewelry Enter., Ltd.,
8 539 F.2d 846 (2nd Cir. 1976)................................................................................. 9
9 Dainippon v. Screen Manufacturing Co. v. CMFT, Inc.,
142 F.3d 1266 (Fed. Cir. 1998)............................................................................ 11
10
Garmin Ltd. v. TomTom, Inc.,
11 2007 U.S. Dist. LEXIS 74032 at *10-11 (E.D. Tex. Oct. 3, 2007) ....................... 20
12 Genetech, Inc. v. Regents of University of California,

143 F.3d 1446 (Fed. Cir.) vacated 527 U.S. 103 (1998)...................................... 14
13
Guerrero v. Stone,
14 970 F.2d 626 (9th Cir. 1992)...................................................................... 4, 15, 16
lawyers
15 Hallmark Cards Inv. v. Lehman,

959 F. Supp. 539 (D.D.C. 1997) .......................................................................... 17
16
Heck v. Humphrey,
17 512 U.S. 477 (1994)............................................................................................. 18
18 Hitachi Metals, Ltd. v. Quigg,
776 F. Supp. 3 (D.D.C. 1991) .............................................................................. 17
19
In re Cement Antitrust Litig.,
20 673 F.2d 1020 (9th Cir. 1982).......................................................................... 6, 20
21 In re KGK Synergize, Inc.,
2009 U.S. App. LEXIS 24835 (Oct. 9, 2009)....................................................... 11
22
Jaffe v. United States,
23 592 F.2d 712 (3d Cir. 1979)................................................................................. 16
24 Klinghoffer v. S.N.C. Achille Laura Ed Altri-Gestione Motonave Achille Lauro in
Administrazione Straordinaria,
25 921 F.2d 21 (2nd Cir. 1990)............................................................................... 6, 7
26 McGillicudy v. Clements,
746 F.2d 76 (1st Cir. 1984) .................................................................................... 7
27
MedImmune, Inc. v. Genentech, Inc.,
28 549 U.S. 118 (2007)..............................................................................4, 10, 14, 15
-iii-
Case No. 1:07-cv-01610-OWW-SMS iii
769604.1
1 TABLE OF AUTHORITIES (CONT.)
Page
2
New Star Lasers, Inc. v. Regents of the University of California,
3 63 F. Supp.2d 1240 (E.D. Cal. 1999) ............................................................. 13, 14
4 Pennsalt Chemical Corp. v. Dravo Corp.,
240 F. Supp. 837 (E.D. Pa. 1965) .......................................................................... 9
5
Pension Benefit Guar. Corp. v. Ouimet Corp.,
6 630 F.2d 4 (1st Cir. 1980)...................................................................................... 7
7 Regents of the Univ. of Cal. v. Dako N. Am., Inc.,
477 F.3d 1335 (Fed. Cir. 2007)............................................................................ 21
8
Republic of Philippines v. Pimentel,
9 128 S.Ct. 2180 (2008).......................................................................................... 12
10 Schwarz Pharam, Inc. v. Paddock Labs., Inc.,
504 F.3d 1371 (Fed. Cir. 2007).............................................................................. 9
11
Sokaogon Gaming Enterprise Corp. v. Tushie-Montgomery Ass.,
12 86 F.3d 656 (7th Cir. 1996)................................................................................ 6, 7

13 SourceOne Global Partners, LLC v. KGK Synergize, Inc.,
2009 WL 1346250 (N.D. Ill. May 13, 2009).................................................. 11, 12

14
lawyers
State of Utah v. United States,

15 624 F. Supp. 622 (D. Ut. 1982)............................................................................ 16
16 Symbol Techs., Inc. v. Lemleson Med., Educ. & Research Found., Ltd. Pship.,
56 USPQ2d 1381 (Fed. Cir. 2000) ......................................................................... 5
17
Syntex v. U.S. Patent and Trademark Office,
18 882 F.2d 1570 (Fed. Cir. 1989)............................................................................ 17
19 Taylor v. PPG Indus.,
256 F.3d 1315 (Fed. Cir. 2002).............................................................................. 7
20
Tegic Communications Corp. v. Bd. Of Regents of Univ. of Texas Sys.,
21 458 F.3d 1335 (Fed. Cir. 2006)...................................................................... 14, 15
22 United States v. Woodbury,
263 F.2d 784 (9th Cir. 1959).................................................................................. 6
23
Waterman v. McKenzie,
24 138 U.S. 252 (1890)............................................................................................... 8
25 Xerox Corp. v. Media Sciences Int’l,
511 F. Supp. 2d 372 (S.D.N.Y. 2007) .................................................................. 20
26
27
28
-iv-
769604.1
1 TABLE OF AUTHORITIES (CONT.)
Page
2
Statutes
3
28 U.S.C.
4 Section 1292(b) ......................................................................................... 1, 5, 6, 7
5 28 U.S.C.
Section 2201 ........................................................................................................ 15
6
28 U.S.C.
7 Section 2202 ........................................................................................................ 15
8 28 U.S.C.
Section1331 ......................................................................................................... 16
9
35 U.S.C.
10 Section 102 .................................................................................................... 16, 18
11 35 U.S.C.
Section 103 .......................................................................................................... 18
12
35 U.S.C.
13 Section 282 .......................................................................................................... 18
14 Rules
lawyers
15 Federal Rules of Civil Procedure

Rule 19 ......................................................................................................... passim
16
17
18
19
20
21
22
23
24
25
26
27
28
-v-
769604.1
1 I. INTRODUCTION
2 Plaintiffs Delano Farms Company; Four Star Fruit, Inc; and Gerawan Farming, Inc.
3 (collectively “Plaintiffs”) respectfully ask the Court to certify for review under 28 U.S.C. § 1292(b)
4 the Court’s (1) February 18, 2009 Memorandum Decision and Order [Granting in Part and Denying
5 in Part] Defendant’s Motion to Dismiss and [Denying] Defendant’s Motion to Strike (Doc. 42 or
6 “the February 18 Order”); and (2) October 27, 2009 Memorandum Decision and Order Re Federal
7 Defendants’ (Doc. 69) and California Table Grape Commission’s (Doc. 67) Motions to Dismiss
8 (Doc. 84 or “the October 27 Order”).
9 Plaintiffs Complaint (“Complaint”) and First Amended Complaint (“FAC”) in this action
10 alleged that U.S. Patent Nos. PP15,891; PP16,284; and PP16,229 (“the patents-in-suit”), which
11 pertain to table grape varieties, are invalid based on prior public use and sale, and unenforceable due
12 to inequitable conduct before the United States Patent and Trademark Office (“PTO”). These
13 patents were issued as a result of a joint effort between the California Table Grape Commission
14 (“the Commission”) and the United States Department of Agriculture (“USDA”). The USDA owns
lawyers
15 the patents-in-suit and the Commission is the exclusive licensee to the patents-in-suit. Plaintiffs,
16 among other table grape growers, were threatened with enforcement of the patents-in-suit by the
17 California Table Grape Commission acting at the direction of the USDA. As a result, Plaintiffs
18 entered into a license agreement with the Commission for the patents-in-suit.
19 Plaintiffs alleged claims for declaratory relief of patent invalidity and unenforceability
20 directly and under the Administrative Procedure Act (“APA”). In response to defendants’ motions
21 to dismiss, the Court has dismissed all claims challenging the validity and enforceability of the
22 patents-in-suit, but has allowed Plaintiffs to proceed with some of its other claims against the
23 Commission and the USDA. The Court’s dismissal of Plaintiffs’ declaratory judgment claims for
24 patent invalidity and unenforceability reached several controlling questions of law for which there is
25 no direct authority on point. These issues include questions regarding necessary and indispensable
26 parties under Rule 19, the applicability of sovereign immunity to claims against the USDA
27 regarding the validity of patents it owns, and whether waiver of sovereign immunity under the APA
28 applies to patent-related claims. The parties’ extensive briefing and the Court’s thorough Orders
-1-
769604.1
1 demonstrate the absence of direct authority on these issues. Accordingly, each of the issues present
2 novel and important questions of first impression for which Federal Circuit guidance would benefit
3 not only the parties to this litigation, but the public in general.
4 Aside from the invalidity and unenforceability claims, Plaintiffs also alleged a Walker
5 Process antitrust cause of action against the Commission for enforcing patent rights and collecting
6 royalties while knowing that the patent could not be enforced due to inequitable conduct. Despite
7 alleging a relevant market defined by the novel characteristics of the patented grapevine, this Court
8 dismissed Plaintiffs’ antitrust action with prejudice because Plaintiffs did not allege a “plausible
9 basis” for the asserted relevant market. This decision raises a legal question that the Federal Circuit
10 has not address: What is the standard for pleading a relevant market in a Walker Process antitrust
11 action?
12 Allowing interlocutory appeal would expedite resolution of the parties’ dispute. Plaintiffs
13 intend to pursue their invalidity and unenforceability claims through appeal and, if successful, on
14 remand. Likewise, Plaintiffs intend to pursue their Walker Process antitrust action through appeal
lawyers
15 and on any remand. Both the parties and the Court would benefit from a prompt resolution of the
16 legal issues that led to the dismissal of these claims, rather than postponing those issues until a final
17 judgment on Plaintiffs’ other claims. Therefore, Plaintiffs respectfully request that the Court certify
18 for interlocutory appeal its orders dismissing Plaintiffs’ claims for patent invalidity and
19 unenforceability, and Plaintiffs’ Walker Process antitrust claim.
20 II. BACKGROUND
21 This Court’s February 18 Order granted the Commission’s motion to dismiss Plaintiffs’
22 claims against the Commission seeking a declaratory judgment that patents-in-suit were invalid for
23 prior public use and sale, and unenforceable for inequitable conduct, on the ground that the USDA
24 (which owns the patents-in-suit) was a necessary and indispensable party under Rule 19 of the
25 Federal Rules of Civil Procedure. Although the USDA had granted an exclusive license to the
26 Commission transferring substantial rights in the patents-in-suit to the Commission, the February 18
27 Order held that a license provision requiring the Commission to obtain the USDA’s permission
28 before suing an alleged infringer retained sufficient rights with the USDA to make it a necessary
-2-
769604.1
1 party to the action. Additionally, balancing the four factors set forth in Rule 19(b), the February 18
2 Order held the USDA was an indispensable party. Finally, the February 18 Order granted the
3 Commission’s motion to dismiss Plaintiffs’ Walker Process antitrust claim based on Plaintiffs’
4 description of the relevant market.
5 While this Court dismissed Plaintiffs’ declaratory relief and antitrust claims, it did grant
6 leave to amend. Specifically, the Court allowed Plaintiffs to join the USDA to the claims alleging
7 patent invalidity and unenforceability by way of the APA. The February 18 Order further granted
8 Plaintiffs leave to amend their antitrust allegations regarding the relevant market. Accordingly,
9 Plaintiffs amended their Complaint to name the United States, the USDA, and Tom Vilsak,
10 Secretary of the USDA (in his official capacity). Plaintiffs’ FAC alleged four causes of action for
11 declaratory relief under the APA going to the validity and unenforceability of the patents-in-suit.
12 Plaintiffs’ FAC also restated their antitrust claim by more particularly defining the relevant market.
13 Both the Commission and USDA moved to dismiss the FAC. On October 27, 2009, this
14 Court granted the Commission’s and the USDA’s motion to dismiss Plaintiffs’ APA and antitrust
lawyers
15 claims with prejudice. The October 27 Order held that the USDA had sovereign immunity from
16 declaratory judgment suits challenging the validity and enforceability of federally-owned patents,
17 and that the APA did not waive sovereign immunity for such suits. Specifically, this Court held that
18 the APA did not waive sovereign immunity for Plaintiffs’ patent invalidity claims, because the
19 Patent Act and the Quiet Title Act impliedly prohibits suits seeking declarations that government-
20 owned patents are invalid or unenforceable – even when the government demands licenses for the
21 use of the inventions claimed in government-owned patents. Accordingly, under this holding, the
22 only way a private party can challenge the validity or enforceability of government-owned patents is
23 to breach any license agreement, infringe the patent, trigger a lawsuit for patent infringement, then
24 challenge the patent as part of a defense or counterclaim. Finally, the Court dismissed Plaintiffs’
25 antitrust cause of action with prejudice because Plaintiffs could not allege a “plausible basis” for a
26 relevant market defined by the characteristics of the patented grapevine variety.
27 By dismissing with prejudice each of Plaintiffs’ challenges to the validity and enforceability
28 of the patents-in-suit, as well as Plaintiffs’ antitrust claim, this Court terminated significant portions
-3-
769604.1
1 of Plaintiffs’ case based on the resolution of legal issues that the Federal Circuit has never directly
2 addressed.
3 III. ISSUES FOR INTERLOCUTORY REVIEW
4 This Court’s February 18 and October 27 Orders decided five controlling legal questions that
5 the Court should certify for interlocutory review. These legal questions fall into three categories:
6 (1) is the United States a necessary and indispensable party to an action seeking declaratory relief
7 that a government-owned patent is invalid and unenforceable, even though the United States
8 exclusively licensed the patent to a private enforcement agent; (2) does sovereign immunity bar
9 actions seeking a declaration that government-owned patents are invalid and unenforceable; and (3)
10 what is the standard for pleading a relevant market in a Walker Process antitrust action? In the
11 context of this case, the issues that Plaintiffs seek to present to the Federal Circuit within each
12 category are as follows:
13 Necessary and Indispensable Party (February 18 Order)

14 When the United States exclusively licenses all substantial rights to a patent it owns for
lawyers
15 sublicensing and enforcement, but requires that the exclusive licensee obtain
16 authorization before suing an alleged infringer, is the United States a necessary and
17 indispensable party under Rule 19 to a MedImmune declaratory judgment action against
18 the exclusive licensee challenging the validity and enforceability of the patent?
19 Applicability of Sovereign Immunity (October 27 Order)
20 1. Where the United States, through an agent, engages in a program to license and
21 enforce its patents, does sovereign immunity bar actions for declaratory relief of
22 invalidity or unenforceability, or must a licensee first trigger a lawsuit by infringing the
23 patent or breaching the license, thereby exposing himself to substantial damages, before
24 challenging validity and enforceability?
25 2. Does the Administrative Procedure Act waive sovereign immunity for claims seeking
26 declaratory judgment of patent invalidity and unenforceability against the United States
27 as to patents it owns so that a district court may exercise federal question jurisdiction to
28 hear the action in accordance with Guerrero v. Stone, 970 F.2d 626 (9th Cir. 1992)?
-4-
769604.1
1 3. Does the Patent Act or Quiet Title Act forbid a licensee from seeking declaratory
2 judgment of invalidity and unenforceability as to a United States-owned patent, so that
3 United States does not waive sovereign immunity for such an action under the
4 Administrative Procedure Act, because the action would operate as either an
5 impermissible “collateral attack” on the Patent Office’s decision to grant the patent or an
6 improper challenge to the United States' title in the patent?
7 Pleading Relevant Market in Walker Process Action (February 18 Order)
8 In an action alleging that a patent owner committed a “Walker Process” violation of the
9 Sherman Act by enforcing patent rights and collecting royalties while knowing the
10 patent is unenforceable due to inequitable conduct, can a plaintiff state a claim that is
11 plausible on its face by pleading that the relevant market consists of all items having the
12 characteristics of the patented item and that items without those characteristics are
13 neither reasonably interchangeable nor effective substitutes?

14 IV. LEGAL STANDARD

lawyers
15 28 U.S.C. § 1292(b) provides that “[w]hen a district judge, in making in a civil action an
16 order not otherwise appealable under this section, shall be of the opinion that such order involves a
17 controlling question of law as to which there is substantial ground for difference of opinion and that
18 an immediate appeal from the order may materially advance the ultimate termination of the
19 litigation, he shall so state in writing in such order.” The Federal Circuit has held that granting a
20 petition to appeal pursuant to 28 U.S.C. § 1292(b) is appropriate in patent cases where legal
21 questions affects not only the Plaintiffs’ case, but potentially many other cases as well. See Symbol
22 Techs., Inc. v. Lemleson Med., Educ. & Research Found., Ltd. Pship., 56 USPQ2d 1381 (Fed. Cir.
23 2000) (unpublished).
24 V. THE FEBRUARY 18 AND OCTOBER 27 ORDERS SHOULD BE CERTIFIED FOR
25 INTERLOCUTORY REVIEW UNDER 28 U.S.C. § 1292(b).
26 Each issue for interlocutory review involves controlling questions of law for which there is
27 substantial grounds for a difference of opinion. Resolution of these legal issues by the Federal
28 Circuit will guide district courts in other cases involving government-owned patents. Moreover,
-5-
769604.1
1 allowing an interlocutory appeal will substantially advance the ultimate termination of this litigation.
2 Thus, the issues meet the criteria set forth in 28 U.S.C. § 1292(b), and should be certified for
3 interlocutory review.
4 A. The Issues Presented Involve Controlling Questions of Law
5 Under section 1292(b), “all that must be shown for a question to be ‘controlling’ is that
6 resolution of the issue on appeal could materially affect the outcome of litigation in the district
7 court.” In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982); Sokaogon Gaming
8 Enterprise Corp. v. Tushie-Montgomery Ass., 86 F.3d 656, 659 (7th Cir. 1996) (“A question of law
9 may be deemed ‘controlling’ if its resolution is quite likely to affect the further course of the
10 litigation, even if not certain to do so.”). The question need not be outcome determinative to be
11 “controlling” under §1292(b). United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959).
12 Moreover, in determining whether an issue is controlling, the Court may consider the system-wide
13 benefits of allowing the appeal. Klinghoffer v. S.N.C. Achille Laura Ed Altri-Gestione Motonave
14 Achille Lauro in Administrazione Straordinaria, 921 F.2d 21, 25 (2nd Cir. 1990).
lawyers
15 The questions presented here easily meet the “controlling question of law” requirement. The
16 Court’s determination of these five issues resulted in Plaintiffs’ action for declaratory judgment of
17 invalidity unenforceability, and action under the Sherman Act, to be dismissed with prejudice.
18 Overturning these determinations will unquestionably affect the further course of the litigation.
19 Moreover, an appellate decision providing immediate clarity on these legal issues will serve
20 the public interest. First, a resolution on Plaintiffs’ specific invalidity claims will resolve the rights
21 of other local table grape growers who have licensed the patented table grape varieties from the
22 Commission. Second, the resolution of these issues will have significant implications to litigants
23 seeking to challenge the validity of United States-owned patents after receiving demands for a
24 license. Third, the antitrust issue will provide much needed guidance over the proper standard for
25 pleading a relevant market in a Walker Process action. Regardless of whether the District Court’s
26 determinations are affirmed or reversed, resolution of these issues will provide clarity on important
27 issues of patent and antitrust law, particularly in the context of federally-owned patents.
28 Accordingly, prompt guidance from the Federal Circuit on these issues will provide system-wide
-6-
769604.1
1 benefits.
2 Federal appellate courts have agreed that controlling question of law exist under
3 circumstances similar to those presented here. For example, in Sogaogon Gaming, the Seventh
4 Circuit held that the District Court’s decision that a Native American tribe had not waived sovereign
5 immunity was appropriately the subject of an interlocutory appeal. Sogaogon Gaming, 86 F.3d at
6 658-659; see also Taylor v. PPG Indus., 256 F.3d 1315 (Fed. Cir. 2002) (District Court decision that
7 federal patent law did not preempt plaintiff’s state law claims involved controlling question of law
8 as to which there was substantial ground of difference of opinion and was thus immediately
9 appealable).
10 B. Substantial Grounds Exist for Differing Opinion As To The Resolution Of The
11 Issues Presented.
12 For each of the issues raised in this Court’s February 18 and October 27 Orders, substantial
13 grounds for difference of opinion exist. Courts commonly find a substantial ground for differing
14 opinions when the issue raised is one of first impression. Klinghoffer, 921 F. 2d at 23 (“substantial
lawyers
15 ground for difference of opinion” under section 1292(b) where the issue was difficult one of first
16 impression); Pension Benefit Guar. Corp. v. Ouimet Corp., 630 F.2d 4, 6 (1st Cir. 1980)
17 (interlocutory review appropriate where issue one of first impression). An issue need not be one of
18 first impression, however, for there to be substantial grounds for difference of opinion under
19 §1292(b). Certification is also proper “where the proposed intermediate appeal presents one or more
20 difficult and pivotal questions of law not settled by controlling authority.” See McGillicudy v.
21 Clements, 746 F.2d 76, 77 n. 1 (1st Cir. 1984).
22 Here, the issues each concern ones of first impression, or at a minimum issues for which
23 there is no controlling authority. The parties and the Court have all acknowledged throughout the
24 briefing that there is no authority directly addressing the issues raised by Plaintiffs underlying the
25 February 18 and October 27 Orders. Moreover, these are important and difficult questions regarding
26 the circumstances under which a party may seek a declaration of rights with respect to patents
27 owned by the federal government, and the standards for pleading Walker Process causes of action.
28 Accordingly, a substantial ground for difference of opinion exists as to these issues and certification
-7-
769604.1
1 for interlocutory appeal is appropriate.
2 1. No Settled Authority Holds Whether The United States Is A Necessary
3 And Indispensable Party To An Action For Patent Invalidity Against An
4 Exclusive Licensee
5 The Court’s February 18 Order made two separate findings: (1) that the United States is a
6 necessary party under Rule 19(a) to actions challenging the validity and enforceability of federally-
7 owned patents, even when the government licenses the patents to a private enforcement agent; and
8 (2) that the Rule 19(b) factors compel dismissal of the action against the enforcement agent. Neither
9 issue has been settled by controlling authority.

10 a) There exists substantial grounds for difference of opinion as to
11 whether the United States is a necessary party under Rule 19

12 In holding that the United States is a necessary party under Rule 19(a) to Plaintiffs’
13 declaratory judgment claims of patent invalidity and unenforceability, this Court primarily relied on
14 the rule set forth in Waterman v. McKenzie, 138 U.S. 252, 255 (1890) and its progeny. Under the
lawyers
15 Waterman rule, a patent owner is a necessary party to an infringement action unless the owner has
16 assigned all substantial rights, including the right to sue for infringement, to a third party. Because
17 the exclusive license between the USDA and Commission required USDA approval before the
18 Commission could sue infringers, this Court reasoned that the USDA, as the owner of the patents-in-
19 suit, was a necessary party to Plaintiffs’ declaratory judgment action against the Commission for
20 patent invalidity and unenforceability.
21 Neither the Supreme Court nor the Federal Circuit have decided whether the Waterman rule
22 extends beyond infringement actions to declaratory relief actions for patent invalidity and
23 unenforceability. Substantial grounds for a difference of opinion exists as to whether the Waterman
24 rule should apply to such actions. Indeed, the purpose of the Waterman rule would seem to make
25 the rule inapplicable to actions filed by an accused infringer. The Waterman rule is intended to
26 protect accused infringers: Unless the patent owner is a party to an infringement lawsuit filed by a
27 licensee, the accused infringer could face multiple lawsuits arising from the same alleged infringing
28 act. Waterman, 138 U.S. at 261; Schwarz Pharam, Inc. v. Paddock Labs., Inc., 504 F.3d 1371, 1374
-8-
769604.1
1 (Fed. Cir. 2007). But when an accused infringer seeks to have a patent declared invalid or
2 unenforceable, the need to protect against multiple lawsuits no longer exists. There is no reason to
3 bar an accused infringer from seeking declaratory relief as to the person charged with licensing the
4 patent, particularly here, where Plaintiffs have licensed the patents to avoid an infringement
5 lawsuit.1 If the patent owner wishes to join the declaratory relief action because it does not think its
6 exclusive licensee will protect the patent adequately, the owner can always do so. In contrast, an
7 accused infringer may not be able to join a patent owner to an infringement action filed by a licensee
8 because of personal jurisdiction issues.
9 For this reason, other courts have applied different requirements in determining whether a
10 patent owner is a necessary party to a claim for declaratory relief of patent invalidity and
11 unenforceability. See A.L. Smith Iron Co. v. Dickson, 141 F.2d 3, 6-7 (2nd Cir. 1944); Capri
12 Jewelry Inc. v. Hattie Carnegie Jewelry Enter., Ltd., 539 F.2d 846, 852-53 (2nd Cir. 1976); Pennsalt
13 Chemical Corp. v. Dravo Corp., 240 F. Supp. 837 (E.D. Pa. 1965). In A.L. Smith Iron Co., Judge
14 Learned Hand articulated the differing policy reasons for allowing a declaratory judgment suit
lawyers
15 against only an exclusive licensee, without joining the patent owner, even if the patent owner would
16 have been a necessary party to an infringement suit:
17 The ordinary case of a suit by a licensee against an infringer is in no
18 sense the same….it is at least clear that there is no comparison

19 between that situation and the one at bar. As res integra there can
20 therefore be no warrant for making the presence of the [patent owner]
21 a condition upon this action.
22 A.L. Smith Iron Co., 141 F.2d at 6. Although the Court’s February 18 Order finds these cases to be
23
24 1
Because Plaintiffs have entered into license agreements with the Commission, it is unclear whether
the Commission would even require approval from the USDA before suing Plaintiffs. While the
25 exclusive license between the USDA and Commission requires the Commission to obtain
permission from the USDA before filing an infringement lawsuit, any action against the Plaintiffs
26 presumably would be for breach of the license agreement, not for patent infringement. Thus, as to
enforcement against the Plaintiffs, the Commission may actually have all substantial rights in the
27 patents. No settled authority exists as to this issue.
28
-9-
769604.1
1 unpersuasive, these cases at a minimum establish that there exists a substantial ground for a
2 difference of opinion regarding whether the United States is necessary party to Plaintiffs’
3 declaratory relief claims here.
4 The Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007),
5 also lends support for a rule allowing declaratory relief actions for patent invalidity against a
6 licensor. Under MedImmune, a person need not breach a license agreement or infringe a patent,
7 exposing himself to significant liability, before seeking declaratory relief of patent invalidity.
8 Rather, an accused infringer may license the patent then challenge validity in a declaratory relief
9 action. MedImmune, 549 U.S. at 137. While MedImmune did not squarely address the question, the
10 rule would lack any meaningful value unless the accused infringer could challenge validity against
11 the person demanding the license – whether the patent owner or an exclusive licensee. Otherwise, a
12 patent owner could circumvent MedImmune by using an exclusive licensee to enforce the patent,
13 requiring the licensee to obtain permission from the owner before suing an accused infringer, then
14 locating itself in a place where accused infringers could not obtain personal jurisdiction over it.
lawyers
15 b) There exist substantial grounds for differing opinion as to whether
16 the United States is an indispensable party under Rule 19(b)
17 Rule 19(b) sets out four factors to determine whether a case must be dismissed for failure to
18 join an indispensable party. The four factors are (1) prejudice to any party or to the absent party; (2)
19 whether relief can be shaped to lessen prejudice; (3) whether an adequate remedy, even if not
20 complete, can be awarded without the absent party; and (4) whether there exists an alternative
21 forum. In its February 18 Order, this Court found that each of the Rule 19(b) factors weighed in
22 favor of dismissal. (Feb. 18 Order at 42-47.) Yet the Federal Circuit has never decided whether
23 (assuming the United States is a necessary party to a declaratory relief claim for invalidity and
24 unenforceability of a government-owned patent), the United States is an indispensable party
25 applying the Rule 19(b) factors. As to that issue, substantial grounds for differing opinions exist.
26 Over the past year, this Court and one other district court considered this issue in the context
27 of a government-owned patent where the patent rights are divided between the United States and a
28 private entity. In both this case and the other case, the private entity argued that a declaratory relief
-10-
769604.1
1 claim for patent invalidity must be dismissed because the United States is an indispensable party but
2 cannot be joined based on sovereign immunity. This Court agreed in its October 27 Order.
3 Weighing the same Rule 19(b) factors, the other district court reached the opposite conclusion.
4 SourceOne Global Partners, LLC v. KGK Synergize, Inc., 2009 WL 1346250 (N.D. Ill. May 13,
5 2009). Importantly, the Federal Circuit has provided no settled authority on this issue. Indeed, in
6 the SourceOne case, the Federal Circuit recently suggested that this issue may be appropriate for
7 interlocutory review under section 1292(b). In re KGK Synergize, Inc., 2009 U.S. App. LEXIS
8 24835 (Oct. 9, 2009) (unpublished).
9 A comparison of this Court’s and the SourceOne Court’s analysis of the Rule 19(b) factors
10 reveals the extent of the differing opinions. With respect to the first three factors, both this Court
11 and the SourceOne Court relied on the Federal Circuit’s decision in Dainippon v. Screen
12 Manufacturing Co. v. CMFT, Inc., 142 F.3d 1266 (Fed. Cir. 1998). Although Dainippon did not
13 involve a government-owned patent, the Federal Circuit held that the first three Rule 19(b) factors
14 weighed in favor of maintaining an action for declaratory relief of patent invalidity without joining
lawyers
15 an owner of the patent. The SourceOne Court agreed, finding that the factors weighted in favor of
16 allowing the action to proceed without the Untied States as a party. Specifically, in Dainippon and
17 SourceOne, the Courts found that both the defendant to the declaratory relief action and the absent
18 owner had a substantial interest in protecting the patent. Further, the Courts noted that prejudice to
19 the absent owner could be avoided because the absent owner could join the action if it believed the
20 defendant could not adequately protect the patent.
21 This Court disagreed. In distinguishing Dainippon and SourceOne on the first three factors,
22 this Court found that the Commission and the USDA had no “unity of ownership” in the patent,
23 which existed in the Dainippon and SourceOne cases. (Oct. 27 Order at 69.) But neither Dainippon
24 nor SourceOne relied on a “unity of ownership” as a basis for finding that the first three Rule 19(b)
25 factors weigh in favor of allowing the action to go forward. Moreover, the absence of a “unity of
26 ownership” between the USDA and Commission should have no bearing on the first three Rule
27 19(b) factors. First, the Commission and the USDA both have a substantial interest in protecting the
28 validity of the patents-in-suit because both receive licensing royalties. Second, the Commission
-11-
769604.1
1 initiated the patenting program and worked closely with the USDA in securing the patents. Third,
2 the Commission has demonstrated its willingness and ability to aggressively protected the validity of
3 the patents in prior litigation. Fourth, the USDA could voluntarily join the action if it believe the
4 Commission did not defend the invalidity charges properly. Thus, there exists a substantial ground
5 for differing opinions as to whether the Commission has the ability to adequately represent the
6 USDA’s interests.
7 With respect to the fourth Rule 19(b) factor, the SourceOne Court also reached a different
8 conclusion on virtually identical facts. The SourceOne Court found the absence of an alternative
9 forum a compelling factor weighing against dismissal. In doing so, the SourceOne Court
10 distinguished Republic of Philippines v. Pimentel, 128 S.Ct. 2180 (2008). In contrast, this Court’s
11 February 18 and October 27 Orders relied on Pimentel in deciding that immunity alone may be
12 viewed as a compelling factor weighing in favor of dismissal under Rule 19(b). This Court
13 distinguished the SourceOne analysis of Pimentel again on the basis that the parties in SourceOne
14 held a “unity of ownership.” Yet a “unity of ownership” should have no bearing on whether the
lawyers
15 absence of an alternate forum due to federal sovereign immunity weighs in favor of dismissal. At
16 the very least, the SourceOne decision underscores the existence of a substantial differences of
17 opinion on how the fourth Rule 19(b) factors should be weighed in the context of an absent
18 government patent owner. SourceOnce, 2009 WL 1346250 at *6-7.

19 2. No Settled Authority Holds Whether Sovereign Immunity Bars Actions
20 Against The United States Seeking Declaratory Judgment Of Patent
21 Invalidity And Unenforceability
22 In its October 27 Order, this Court held that sovereign immunity barred actions against the
23 United States seeking declaratory judgment of patent invalidity and unenforceability, even though
24 the United States (through the Commission) has engaged in a program to license and enforce its
25 patents. In so holding, this Court effectively has required that a target for licensing a government-
26 owed patent (such as Plaintiffs) cannot directly challenge the validity of the patent at issue. Instead,
27 the target must trigger a government lawsuit by infringing the patent or breaching the license
28 agreement, thereby exposing himself to substantial damages, before challenging validity and
-12-
769604.1
1 enforceability. Substantial grounds for difference of opinion exist as to this result.
2 First, federal appellate courts have not addressed whether the federal sovereign immunity
3 applies to bar declaratory relief actions challenging the validity of federally-owned patents that the
4 United States seeks to license and enforce. While federal appellate courts have addressed whether
5 state governments enjoy sovereign immunity under the Eleventh Amendment for declaratory relief
6 actions challenging the validity of state-owned patents, federal courts have reached different
7 conclusions. Indeed, courts have recognized inherent inequity and injustice in allowing state
8 government entities to own and threaten to enforce patents (like a private entity) while, at the same
9 time, asserting a sovereign immunity from declaratory judgment actions challenging the validity of
10 the patents at issue. For example, the Eastern District of California recognized the inequity in
11 allowing a state government entity to use sovereign immunity to shield itself from declaratory
12 judgment claims for patent invalidity:
13 The Regents wish to take the good without the bad. The court can
14 conceive of no other context in which a litigant may lawfully enjoy

lawyers
15 all the benefits of a federal property or right, while rejecting its
16 limitations.
17 New Star Lasers, Inc. v. Regents of the University of California, 63 F. Supp.2d 1240, 1244 (E.D.
18 Cal. 1999).
19 The Federal Circuit has recognized a similar concern, commenting that a state government
20 could waive Eleventh Amendment sovereign immunity through a pattern of enforcing federal patent
21 rights:
22 The University has waived its sovereign immunity from suit in federal
23 court and has constructively consented to the declaratory judgment
24 action…In reaching this conclusion we place weigh on the
25 University’s voluntary and deliberate creation of a case or controversy
26 that can be resolved only in federal courts, concerning federally-
27 created property rights of national scope that are enforceable only by
28 federal judicial power…. [W]hen the University invokes the systems

-13-
769604.1
1 of federal law and federal judicial power for enforcement of federal
2 property rights, actionable only in federal court…the state is deemed
3 to have waived its immunity from federal authority to resolve that
4 controversy.
5 Genetech, Inc. v. Regents of University of California, 143 F.3d 1446, 1453 (Fed. Cir.) vacated 527
6 U.S. 103 (1998). While neither New Star Lasers nor Genetech control the outcome here, they
7 demonstrate the existence of substantial grounds for a difference of opinion on these issues.
8 This Court’s October 27 Order cited Tegic Communications Corp. v. Bd. Of Regents of Univ.
9 of Texas Sys., 458 F.3d 1335 (Fed. Cir. 2006), in finding that sovereign immunity barred Plaintiffs’
10 declaratory judgment claims of patent invalidity and unenforceability against the USDA. But Tegic
11 involved state government sovereign immunity under the Eleventh Amendment, not federal
12 sovereign immunity, which remains unresolved. Further, the Tegic decision did not consider the
13 policy concerns expressed in New Star Lasers and Genetech of allowing a state to assert Eleventh
14 Amendment sovereign immunity as a defense to invalidity actions while utilizing the benefits of
lawyers
15 federal courts as part of a patent enforcement program. Rather, Tegic only considered whether a
16 state university waived Eleventh Amendment sovereign immunity as to a declaratory relief action
17 for patent invalidity by filing a separate infringement action against another alleged infringer in a
18 different forum. Tegic, 458 F.3d at 1342. In holding that no waiver occurred, the Federal Circuit
19 appeared concerned with the Plaintiff’s obvious forum shopping, and noted that the Plaintiff could
20 assert its invalidity claims by intervening in the infringement action. Id. at 1344. Here, in contrast,
21 Plaintiffs have not forum shopped and have no alternative forum for their claims.
22 Second, federal appellate courts have not addressed the applicability of sovereign immunity
23 to claims against the federal government for declaratory relief of patent invalidity following the
24 Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). As this
25 Court noted in its October 27 Order, MedImmune contains language suggesting that a private
26 individual should not be placed in a position of infringing a government-owed patent before
27 challenging its validity: “Our analysis must begin with the recognition that, where threatened action
28 by government is concerned, we do not require a plaintiff to expose himself to liability before

-14-
769604.1
1 bringing suit to challenge the basis for the threat.” Id. at 128-129. Yet this Court did not find the
2 language persuasive because Supreme Court, in support, only cited Eleventh Amendment immunity
3 cases holding that a person need not risk liability exposure before challenging the basis for
4 threatened government action. (Oct. 27 Order at 27-28.)
5 Ironically, this Court’s October 27 Order rejects Eleventh Amendment sovereign immunity
6 cases in one context, but applies such cases in another. On the one hand, this Court declined to
7 apply the Supreme Court’s MedImmune “threatened action” language to allow Plaintiffs’ declaratory
8 relief action against the USDA because the Supreme Court, in support, only discussed Eleventh
9 Amendment sovereign immunity cases. On the other hand, this Court applied Tegic in holding that
10 sovereign immunity bars Plaintiffs’ claims even though that case rested solely on Eleventh
11 Amendment sovereign immunity. Thus, the extent to which appellate authority applying Eleventh
12 Amendment sovereign immunity is relevant to Plaintiffs’ declaratory judgment action against the
13 United States remains entirely unsettled.

14 3. No Settled Authority Holds Whether The Administrative Procedure Act

lawyers
15 Waives Sovereign Immunity For Declaratory Judgment Actions Of
16 Invalidity And Unenforceability For Federally-Owned Patents
17 This Court’s Oct. 27 Order held that the federal government did not waive sovereign
18 immunity through the Administrative Procedure Act (“APA”) for declaratory judgment actions of
19 patent invalidity and unenforceability against the United States as to patents it owns. In doing so,
20 the Court held that it could not exercise federal question jurisdiction to hear Plaintiffs claims of
21 patent invalidity and unenforceability and dismissed those claims with prejudice. In the context of
22 declaratory relief claims for patent invalidity as to federally-owned patents, federal appellate courts
23 have not addressed this question. Moreover, decisions from the Third, Ninth, and Tenth Circuits,
24 which this Court did not address, demonstrate a substantial ground for differing opinions.
25 In Guerrero v. Stone, 970 F.2d 626, 627-28 (9th Cir. 1992), the Ninth Circuit held that, while
26 the Declaratory Judgment Act (28 U.S.C. §§ 2201, 2202) alone does not waive government
27 sovereign immunity, the APA waives sovereign immunity for declaratory judgment claims,
28 provided the underlying subject matter at issue in the declaratory relief claim confers federal
-15-
769604.1
1 question subject matter jurisdiction. Specifically, the Ninth Circuit held that the APA waives
2 sovereign immunity for equitable civil actions when a district court’s federal question subject matter
3 jurisdiction is invoked under 28 U.S.C. §1331:
4 We hold that the district court had jurisdiction essentially for the
5 reasons set forth in Neal v. Secretary of Navy, 639 F.2d 1029, 1036-37
6 (3d Cir. 1981), and Jaffee v. United States, 592 F.2d 712…This
7 provision [the APA] waives sovereign immunity for equitable actions
8 brought pursuant to 28 U.S.C. §1331.
9 Guerrero, 970 F.2d at 627-28.

10 The Ninth Circuit’s decision in Guerrero followed the Third Circuit’s decision in Jaffe v.
11 United States, 592 F.2d 712, 718-19 (3d Cir. 1979). In Jaffe, the Third Circuit held that the APA
12 “waives sovereign immunity in ‘nonstatutory’ review of agency action under [28 U.S.C. § 1331].”
13 According to the Third Circuit, “Congress amended section 702 with a specific purpose of waiving
14 sovereign immunity in equitable actions brought under section 1331.” Id. Similarly, a district court
lawyers
15 in Utah held that State of Utah could assert a declaratory judgment action against the United States
16 under the APA in seeking a legal interpretation of the 1889 Withdrawal Order on Utah Lake. State
17 of Utah v. United States, 624 F. Supp. 622, 624-25 (D. Ut. 1982). Accordingly, “section 702 waives
18 sovereign immunity for a declaratory judgment action in which subject matter jurisdiction also is
19 based on a federal question” under 28 U.S.C. § 1331. State of Utah, 624 F. Supp. at 625.
20 Here, Plaintiffs sought a declaratory judgment under the Patent Act that the patents at issue
21 fail the conditions of patentability set forth in 35 U.S.C. § 102. Plaintiffs’ claims for declaratory
22 relief based on a failure of the patents to satisfy section 102 of the Patent Act indisputably confer
23 upon this Court federal question jurisdiction under 28 U.S.C. §1331. Under the holdings of Jaffe,
24 Guerrero, and State of Utah, the APA waives the USDA defendants’ sovereign immunity for
25 Plaintiffs’ declaratory judgment claims based on the federal question of whether the patents fail to
26 satisfy the conditions of patentability under the Patent Act. Thus, there exists a substantial ground
27 for differing opinion as to whether this Court has jurisdiction to adjudicate and declare whether the
28 patents at issue satisfy the conditions for patentability under section 102 of the Patent Act, and
-16-
769604.1
1 whether the APA waives the USDA’s sovereign immunity for the adjudication of those claims.
2 4. No Settled Authority Holds Whether The Patent Act And The Quiet Title
3 Act Forbid Actions For Declaratory Judgment Of Invalidity And
4 Unenforceability As To A United States-Owned Patent
5 This Court’s October 27 Order held that the Patent Act and the Quiet Title Act forbid APA
6 claims seeking a declaratory judgment of patent invalidity and unenforceability against the United
7 States with respect to patents it owns. In doing so, this Court ruled that the APA does not waive
8 federal sovereign immunity for such actions because the action would operate as either an
9 impermissible “collateral attack” on the Patent Office’s decision to grant the patent or an improper
10 challenge to the United States’ title in the patent. (Oct. 27 Order at 29-36.)
11 In reaching this conclusion, this Court relied on three cases: Hitachi Metals, Ltd. v. Quigg,
12 776 F. Supp. 3, 7 (D.D.C. 1991), Syntex v. U.S. Patent and Trademark Office, 882 F.2d 1570, 1573-
13 74 (Fed. Cir. 1989) and Hallmark Cards Inv. v. Lehman, 959 F. Supp. 539, 542-43 (D.D.C. 1997).
14 Each of these cases involved suits against the United States Patent and Trademark Office (“PTO”)
lawyers
15 challenging decisions it made during the patent examination process. For example, in Hitachi, a
16 third party filed suit against the PTO challenging its decision to grant a re-issue patent application.
17 Id. at 9. None of these cases, nor any other case, addresses whether the Patent Act or Quiet Title Act
18 expressly or impliedly forbid claims against the United States government for its activities as a
19 patent owner (i.e., actions seeking to invalidate patents it owns), as opposed to claims against the
20 United States government for its activities in deciding whether to issue patent applications.
21 In opposing the USDA’s motion to dismiss, Plaintiffs argued that cases such as Hitachi do
22 not apply because the Patent Act only bars claims against the government for its patent-issuing
23 activities, and not its patent-owning activities. Although this Court rejected this distinction on the
24 grounds that “whether a cause of action operates as a collateral attack does not turn upon the parties
25 named to the lawsuit,” (Oct. 27 Order at 32), substantial grounds for a difference of opinion exist.
26 Indeed, the Hitachi Court expressly recognized that the specific parties are important to determining
27 whether an attack is deemed “collateral”: “The Patent Statute is addressed to patent owners…”
28 Hitachi, 776 F. Supp. at 8 (emphasis added). Here, the USDA is the patent owner to which the
-17-
769604.1
1 Patent Statute is addressed and Plaintiffs’ claims were a direct challenge against that owner, as
2 opposed to a collateral challenge against the PTO for its decisions in issuing the patents.
3 While this Court also cited Heck v. Humphrey, 512 U.S. 477, 486 (1994), in holding that the
4 named party lacks relevance to whether claims amount to impermissible “collateral attacks,” Heck
5 does not address the issue of “collateral attacks” to PTO decisions. Indeed, Heck did not even
6 involve an APA claim, and the cause of action was not rejected as a “collateral attack.” Rather, in
7 Heck the Supreme Court held only that to bring a civil rights claim for damages caused by a
8 wrongful criminal conviction, the plaintiff must first prove that the conviction was reversed. Heck,
9 512 U.S. at 486-487. Thus, Heck provides no binding authority on the question of whether the
10 Patent Act or Quiet Title Act expressly or impliedly forbid claims against the United States
11 government for declaratory relief of patent invalidity as to patents it owns.

12 Furthermore, no law expressly limits actions challenging the validity or enforceability of
13 patents to those between “private parties.” (Oct. 27 Order at 33.) Causes of action for declaratory
14 judgment claims for patent invalidity arise under the Declaratory Judgment Act, the patentability
lawyers
15 requirements contained in 35 U.S.C. §§ 102 and 103, and the availability of invalidity as a defense
16 to patent infringement claims under 35 U.S.C. § 282. None of these laws pertain to only “private
17 parties.” Thus, this Court’s ruling that claims for declaratory relief of patent invalidity are limited to
18 disputes between private parties, and that such suits against the United States challenging the
19 validity of federally-owned patents are barred by the Patent and Quiet Title Acts, are issues of first
20 impression for which a substantial difference of opinion exists.
21 5. No Settled Authority Sets Forth The Standard For Pleading A Relevant
22 Market In A “Walker Process” Antitrust Action
23 In an antitrust action, a plaintiff must plead a relevant product market that supports a claim
24 of exclusionary power. As expressed by this Court in the October 27 Order, “it is ‘necessary to
25 appraise the exclusionary power of the illegal patent claim in terms of the relevant market for the
26 product involved.” (Oct. 27 Order at 60 (citing Walker Process Equipment, Inc., v. Food Machinery
27 & Chemical Corp., 382 U.S. 172, 177-78 (1965)). Yet, as this Court recognized, pleading standards
28 in antitrust actions are “evolving.” (Oct. 27 Order at 61 (citing Ashcroft v. Iqbal, 129 S. Ct. 1937,
-18-
769604.1
1 1949 (U.S. 2009)). While a “complaint must contain sufficient factual matter, accepted as true, to
2 ‘state a claim for relief that is plausible on its face’” (Oct. 27 Order at 61), federal appellate courts
3 have not articulated what must be plead under the evolving standards to allege an appropriate
4 relevant market in the context of a “Walker Process” antitrust case. Besides the lack of settled law
5 on the appropriate pleading standard for the relevant market in a Walker Process case, a substantial
6 difference of opinion exists in the lower courts.
7 Here, Plaintiffs alleged a relevant market defined by the unique characteristics of the
8 patented grapevine variety at issue. Plaintiffs described the grapevine characteristics in terms of
9 (among other things) plant type, fruit shape, fruit taste, fruit color, growing season, and growing
10 characteristics. Based on these unique factors, Plaintiffs alleged that no effective substitute for the
11 patented varieity and that no other known varieties were reasonably interchangeable with grapevines
12 having the defined characteristics. For example, other grapevine varieties may produce grapes with
13 similar color, shape and taste, but do not produce the fruit during the same growing season as the
14 patented variety. Unless a grapevine produced grapes during the same growing season as the
lawyers
15 patented variety, it would not be reasonably interchangeable. Despite these allegations, this Court
16 held that Plaintiffs alleged “no plausible basis to conclude growers regard the Patented Varieties as
17 irreplaceable, nor do they allege that growers would not substitute other crops for the Patented
18 Varieties.”2 (Oct. 27 Order at 61-62.)

19 In contrast, district courts in other jurisdictions, applying the same evolving pleading
20 standard, have found that similar relevant market allegations suffice in a Walker Process action. For
21 example, in a Walker Process action involving a patent on solid ink sticks used in color printers, the
22 2
The Court’s reference to “Patented Varieties” is curious. Plaintiffs’ FAC defined “Patented
23 Varieties” 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 antitrust
24 claim in their FAC. Nor did Plaintiffs define the relevant market by the collective characteristics of
the three “Patented Varieties.” Rather, Plaintiffs’ FAC defined the relevant market by the unique
25 characteristics 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 not
26 “substitute 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 the
27 characteristics of Sweet Scarlett as set forth in paragraphs 159-160 of the FAC.
28
-19-
769604.1
1 Southern District of New York held that a relevant market defined as the “sale of replacement solid
2 ink sticks for use in Xerox phase change color printers” defined a plausible product market. Xerox
3 Corp. v. Media Sciences Int’l, 511 F. Supp. 2d 372, 384 (S.D.N.Y. 2007). Like this case, the
4 plaintiffs in Xerox only alleged that the defined ink sticks were not “interchangeable” with
5 replacement sticks for other color printers, and that other ink sticks were not “acceptable
6 substitutes.” Id.
7 Similarly, the Eastern District of Texas considered whether a plaintiff alleging a Walker
8 Process antitrust violation had properly pled a relevant market defined as the market for “portable
9 handheld navigation devices in the United States.” Garmin Ltd. v. TomTom, Inc., 2007 U.S. Dist.
10 LEXIS 74032 at *10-11 (E.D. Tex. Oct. 3, 2007). In rejecting a motion to dismiss, the district court
11 found that the plaintiff had adequately alleged a relevant market in accordance with the scope of
12 coverage claimed in the patents at issue. Id. Because this Court took the opposite approach, and the
13 Federal Circuit has not addressed this issue in the context of a “Walker Process” claim, a substantial
14 question on the proper relevant market pleading standard exists.

lawyers
15 C. Allowing an Interlocutory Appeal Will Substantially Advance The Ultimate
16 Termination of the Litigation
17 Immediate interlocutory review of the February 18 and October 27 Orders will
18 unquestionably advance the termination of this litigation. Interlocutory appeal under § 1292(b) is
19 appropriate to “avoid protracted and expensive litigation.” In Re Cement Antitrust Litig., 673 F.2d
20 at 1026. Here, appellate review of the Court’s dismissal of Plaintiffs’ declaratory judgment claims
21 for patent invalidity and unenforceability, and antitrust claims, would dramatically expedite
22 resolution of the parties’ dispute.
23 This Court has allowed Plaintiffs to continue with its APA claims based on the USDA’s
24 actions under the Bayh-Dole Act and for unfair competition. Much of the discovery and likely
25 motion practice as to those claims, including documents and required testimony, will overlap with
26 the patent invalidity/unenforceability and antitrust claims dismissed by this Court. Accordingly, it is
27 likely that significant discovery, motion practice, and trial preparation will need to be duplicated if
28 the Federal Circuit reverses any part of this Court’s February 18 and October 27 Orders after final
-20-
769604.1
1 adjudication of the remaining claims. Thus, both judicial and party resources would be dramatically
2 saved if issued raised in the Court’s February 18 and October 27 Orders were resolved through an
3 interlocutory appeal, rather than forcing the Court and the parties to litigate Plaintiffs’ claims
4 piecemeal. Regents of the Univ. of Cal. v. Dako N. Am., Inc., 477 F.3d 1335, 1336 (Fed. Cir. 2007).
5 VI. CONCLUSION
6 For the foregoing reasons, Plaintiffs respectfully request that the Court certify the February
7 18 and October 27 Orders for immediate interlocutory appeal under 28 U.S.C. § 1292(b).
8
DATED: January 8, 2010 HENNIGAN, BENNETT & DORMAN LLP
9
10
11 By /s/ Lawrence M. Hadley _
Lawrence M. Hadley
12 Omer Salik
13 Attorneys for Plaintiffs
DELANO FARMS COMPANY; FOUR STAR

14 FRUIT, INC.; GERAWAN FARMING, INC.
lawyers
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-21-
769604.1

Request To Certify Appeal in Table Grape Patent Case

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Request To Certify Appeal in Table Grape Patent Case

Transféré par

Droits d'auteur :

Formats disponibles

1 LAW OFFICES OF BRIAN C.

5 LAWRENCE M. HADLEY (SBN 157728)

12 Telephone: (661) 635-2100

Attorneys for Plaintiffs

Case No. 1:07-cv-01610-OWW-SMS Plaintiffs’ Memorandum in Support of Motion for

12 1. No Settled Authority Holds Whether The United

12 Genetech, Inc. v. Regents of University of California,

15 Hallmark Cards Inv. v. Lehman,

12 86 F.3d 656 (7th Cir. 1996)................................................................................ 6, 7

2009 WL 1346250 (N.D. Ill. May 13, 2009).................................................. 11, 12

State of Utah v. United States,

15 Federal Rules of Civil Procedure

8 (Doc. 84 or “the October 27 Order”).

4 description of the relevant market.

26 relevant market defined by the characteristics of the patented grapevine variety.

3 III. ISSUES FOR INTERLOCUTORY REVIEW

12 category are as follows:

13 Necessary and Indispensable Party (February 18 Order)

17 indispensable party under Rule 19 to a MedImmune declaratory judgment action against

22 invalidity or unenforceability, or must a licensee first trigger a lawsuit by infringing the

24 challenging validity and enforceability?

2 judgment of invalidity and unenforceability as to a United States-owned patent, so that

4 Administrative Procedure Act, because the action would operate as either an

6 improper challenge to the United States' title in the patent?

7 Pleading Relevant Market in Walker Process Action (February 18 Order)

13 neither reasonably interchangeable nor effective substitutes?

14 IV. LEGAL STANDARD

24 V. THE FEBRUARY 18 AND OCTOBER 27 ORDERS SHOULD BE CERTIFIED FOR

25 INTERLOCUTORY REVIEW UNDER 28 U.S.C. § 1292(b).

4 A. The Issues Presented Involve Controlling Questions of Law

21 Clements, 746 F.2d 76, 77 n. 1 (1st Cir. 1984).

2 1. No Settled Authority Holds Whether The United States Is A Necessary

3 And Indispensable Party To An Action For Patent Invalidity Against An

9 issue has been settled by controlling authority.

11 whether the United States is a necessary party under Rule 19

20 patent invalidity and unenforceability.

8 because of personal jurisdiction issues.

16 have been a necessary party to an infringement suit:

17 The ordinary case of a suit by a licensee against an infringer is in no

18 sense the same….it is at least clear that there is no comparison

20 therefore be no warrant for making the presence of the [patent owner]

21 a condition upon this action.

3 declaratory relief claims here.

15 b) There exist substantial grounds for differing opinion as to whether

16 the United States is an indispensable party under Rule 19(b)

24 unenforceability of a government-owned patent), the United States is an indispensable party

8 24835 (Oct. 9, 2009) (unpublished).

20 defendant could not adequately protect the patent.

18 government patent owner. SourceOnce, 2009 WL 1346250 at *6-7.

20 Against The United States Seeking Declaratory Judgment Of Patent

21 Invalidity And Unenforceability

12 judgment claims for patent invalidity:

14 conceive of no other context in which a litigant may lawfully enjoy

15 all the benefits of a federal property or right, while rejecting its

23 court and has constructively consented to the declaratory judgment

24 action…In reaching this conclusion we place weigh on the

25 University’s voluntary and deliberate creation of a case or controversy

26 that can be resolved only in federal courts, concerning federally-

27 created property rights of national scope that are enforceable only by

28 federal judicial power…. [W]hen the University invokes the systems

2 property rights, actionable only in federal court…the state is deemed

3 to have waived its immunity from federal authority to resolve that

26 individual should not be placed in a position of infringing a government-owed patent before