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- NOTICE: This opinion is subject to formal revision before publication in the
- preliminary print of the United States Reports. Readers are requested to
- notify the Reporter of Decisions, Supreme Court of the United States, Wash-
- ington, D.C. 20543, of any typographical or other formal errors, in order that
- corrections may be made before the preliminary print goes to press.
- SUPREME COURT OF THE UNITED STATES
- --------
- No. 92-114
- --------
- CARDINAL CHEMICAL COMPANY, etc., et al., PE-
- TITIONERS v. MORTON INTERNATIONAL, INC.
- on writ of certiorari to the united states court
- of appeals for the federal circuit
- [May 17, 1993]
-
- Justice Stevens delivered the opinion of the Court.
- The question presented is whether the affirmance by the
- Court of Appeals for the Federal Circuit of a finding that
- a patent has not been infringed is a sufficient reason for
- vacating a declaratory judgment holding the patent
- invalid.
- Respondent, Morton International, Inc. (Morton), is the
- owner of two patents on chemical compounds used in
- polyvinyl chloride (PVC). In 1983 Morton filed this
- action in the United States District Court for the District
- of South Carolina alleging that petitioners, Cardinal
- Chemical Company and its affiliates (Cardinal), had
- infringed those patents. Cardinal filed an answer denying
- infringement and a counterclaim for a declaratory judg-
- ment that the patents are invalid. While this case was
- pending in the District Court, Morton filed two other
- actions against other alleged infringers of the same
- patents. One was filed in the Eastern District of Louisi-
- ana, the other in the District of Delaware. The defen-
- dants in both cases, like Cardinal, filed counterclaims for
- declaratory judgments that the patents were invalid. Of
- the three, the Louisiana case was tried first and, in 1988,
- resulted in a judgment for the defendant finding no
- infringement and declaring the patents invalid. On
- appeal, the Federal Circuit affirmed the finding of no
- infringement but vacated the judgment of invalidity.
- The Delaware case is still pending.
- In 1990 this case proceeded to a 5-day bench trial. The
- South Carolina District Court concluded, as had the
- Louisiana District Court, that the patentee had failed to
- prove infringement and that the defendant-counterclaimant
- had proved by clear and convincing evidence that both
- patents were invalid. Accordingly, the Court mandated
- two separate judgments: one dismissing the action for
- infringement with prejudice, and another on the counter-
- claim, declaring the patents invalid.
- Again, Morton appealed to the Federal Circuit, challeng-
- ing both the dismissal of its infringement claim and the
- judgment of invalidity. Cardinal filed a cross-appeal
- contending that it was entitled to an award of fees
- pursuant to 35 U. S. C. 285 and that Morton should be
- sanctioned for prosecuting a frivolous appeal. The defen-
- dant in the third, Delaware, case filed a brief amicus
- curiae urging the Court to affirm the judgment of invalid-
- ity. Again, however, after affirming the dismissal of the
- infringement claim, the Federal Circuit vacated the
- declaratory judgment. It explained:
- -Since we have affirmed the district court's holding
- that the patents at issue have not been infringed, we
- need not address the question of validity. Vieau v.
- Japax, Inc., 823 F. 2d 1510, 1517, 3 USPQ2d 1094,
- 1100 (Fed. Cir. 1987). Accordingly, we vacate the
- holding of invalidity.- 959 F. 2d 948, 952 (CA Fed.
- 1992).
- The court also ruled that Morton was not liable for fees
- because it had advanced an argument that -apparently it
- was not in a position to raise earlier.- Ibid. Judge
- Lourie concurred in the result, but believed the parties
- were entitled to an affirmance of the invalidity holding -so
- that they can plan their future affairs accordingly.- Id.,
- at 954.
- Both parties then filed petitions for rehearing, arguing
- that the court should have decided the validity issue
- instead of vacating the District Court's declaratory judg-
- ment; they also filed suggestions for rehearing en banc,
- urging the Court of Appeals to reconsider its post-1987
- practice of routinely vacating a declaratory judgment of
- invalidity whenever noninfringement is found. Over the
- dissent of three of its judges, the court declined those
- suggestions. Chief Judge Nies filed a thorough explana-
- tion of that dissent; she found no -justification for our
- Vieau decision either legally or as a `policy'. . . . The
- parties can now look only to the Supreme Court for
- correction.- 967 F. 2d 1571, 1578 (CA Fed. 1992).
- Cardinal filed a petition for certiorari asserting that the
- Federal Circuit errs in applying a per se rule to what
- should be a discretionary matter. Pet. for Cert. 13.
- Morton did not oppose the grant of certiorari, but instead
- pointed out that it also had an interest in having the
- validity issue adjudicated. It explained that, after the
- Federal Circuit had twice refused substantive review of
- findings that its two patents were invalid, the patents
- have been
- -effectively stripped of any power in the marketplace.
- If Morton were to proceed against another infringer,
- the district court, in all likelihood would accept the
- twice-vacated invalidity holdings, just as the district
- court below adopted wholesale the [Louisiana] district
- court's invalidity holdings, without any independent
- evaluation as to whether those holdings were correct.
- Further, any future accused infringer would, in all
- likelihood, argue for an award of attorney's fees as
- Cardinal has done here, on the ground that Morton
- should have known better than sue on an `invalid
- patent' . . . . The value of Morton's patents is there-
- fore essentially zero-effectively not enforceable and
- viewed with a jaundiced eye by competitors and
- district courts alike. [Morton] has lost valuable
- property rights . . . without due process of law.-
- Brief for Respondent 16-17.
- Because the Federal Circuit has exclusive jurisdiction
- over appeals from all United States District Courts in
- patent litigation, the rule that it applied in this case, and
- has been applying regularly since its 1987 decision in
- Vieau v. Japax, Inc., 823 F. 2d 1510, is a matter of
- special importance to the entire Nation. We therefore
- granted certiorari. 506 U. S. ___ (1992).
-
- I
- The Federal Circuit's current practice of routinely
- vacating declaratory judgments regarding patent validity
- following a determination of noninfringement originated
- in two cases decided by different panels of that Court on
- the same day. In Vieau, the patentee had appealed
- adverse rulings on damages, infringement, and validity
- and the alleged infringer had filed a cross-appeal asserting
- that the District Court should have declared the patent
- invalid. After affirming the District Court's finding of
- noninfringement, the Federal Circuit concluded:
- -Our disposition on the issue of infringement ren-
- ders moot the appeal of the propriety of a directed
- verdict on the issues of damages and willful infringe-
- ment. There is no indication that Japax's cross-
- appeal on invalidity extends beyond the litigated
- claims or the accused devices found to be
- noninfringing. Accordingly, we also dismiss the cross-
- appeal as moot. The judgment entered by the district
- court with respect to each of the mooted issues is
- therefore vacated. It is affirmed with respect to
- infringement.- Id., at 1517.
-
- Judge Bennett filed a concurring opinion, fleshing out
- this perfunctory holding and explaining that there was no
- need to review the declaratory judgment of invalidity in
- the absence of any -continuing dispute (such as the
- presence or threat of further litigation) regarding other
- claims or other accused devices that remain unresolved by
- the finding of noninfringement.-
- In the second case, Fonar Corp. v. Johnson & Johnson,
- 821 F. 2d 627 (CA Fed. 1987), the District Court had held
- that the patent was not infringed and that the defendant-
- counterclaimant had failed to prove invalidity. On appeal,
- the Court affirmed the noninfringement holding, and
- vacated the judgment on the counterclaim as moot. In his
- opinion for the panel, Chief Judge Markey explained:
- -There being no infringement by J & J of any
- asserted claim, there remains no case or controversy
- between the parties. We need not pass on the valid-
- ity or enforceability of claims 1 and 2. . . . [C]f.
- Altvater v. Freeman, 319 U. S. 359, 363-65 . . . (1943)
- (`To hold a patent valid if it is not infringed is to
- decide a hypothetical case,' but a counterclaim for
- invalidity is not mooted where counterclaim deals
- with additional patent claims and devices not involved
- in the complaint and with license issues.).
- . . . . .
- -The judgment that J & J has not proven claims 1
- and 2 invalid or unenforceable is vacated and the
- appeal from that judgment is dismissed as moot.- Id.,
- at 634.
- A footnote emphasized that there was no longer any
- dispute between the parties beyond the specific charge of
- infringement that had been resolved by the finding of non-
- infringement.
- The three opinions in Vieau and Fonar indicate that the
- Federal Circuit's practice of vacating declaratory judg-
- ments of patent validity (or invalidity) is limited to cases
- in which the court is convinced that the finding of non-
- infringement has entirely resolved the controversy between
- the litigants by resolving the initial complaint brought by
- the patentee. The Federal Circuit has concluded that
- in such cases the declaratory judgment is -moot- in a
- jurisdictional sense, a conclusion that it considers dictated
- by two of our earlier opinions, Electrical Fittings Corp. v.
- Thomas & Betts Co., 307 U. S. 241 (1939) and Altvater
- v. Freeman, 319 U. S. 359 (1943). We therefore begin
- with a comment on those two cases.
-
- II
- In Electrical Fittings, the District Court held one claim
- of a patent valid but not infringed. The patentee was
- content with that judgment, but the successful defendant
- appealed, seeking a reversal of the finding of validity.
- The Court of Appeals dismissed the appeal based on the
- rule that a prevailing party may not appeal from a
- judgment in its favor. We reversed, and held that al-
- though the defendant could not compel the appellate court
- to revisit the finding of validity (which had become
- immaterial to the disposition of the case), it could demand
- that the finding of validity be vacated. That finding, we
- explained, -stands as an adjudication of one of the issues
- litigated. We think the petitioners were entitled to have
- this portion of the decree eliminated, and that the Circuit
- Court of Appeals had jurisdiction, as we have held this
- Court has, to entertain the appeal, not for the purpose of
- passing on the merits, but to direct the reformation of the
- decree.- Electrical Fittings, 307 U. S., at 242 (footnotes
- omitted).
- Our command that the validity decision be eliminated
- was similar to the Federal Circuit's mandate in the Fonar
- case (both cases suggest that an appellate court should
- vacate unnecessary decisions regarding patent validity),
- but the two cases are critically different. The issue of
- invalidity in Electrical Fittings was raised only as an
- affirmative defense to the charge that a presumptively
- valid patent had been infringed, not (as in Fonar, and
- as here) as a basis for a counterclaim seeking a declara-
- tory judgment of patent invalidity. An unnecessary ruling
- on an affirmative defense is not the same as the neces-
- sary resolution of a counterclaim for a declaratory judg-
- ment.
- In Altvater, as here, the defendant did file a counter-
- claim seeking a declaratory judgment that the patent was
- invalid. The District Court found no infringement, but
- also granted the declaratory judgment requested by the
- defendant. The Court of Appeals affirmed the non-in-
- fringement holding but, reasoning that the validity issue
- was therefore moot, vacated the declaratory judgment.
- We reversed. Distinguishing our holding in Electrical
- Fittings, we wrote:
- -To hold a patent valid if it is not infringed is to
- decide a hypothetical case. But the situation in the
- present case is quite different. We have here not only
- bill and answer but a counterclaim. Though the
- decision of non-infringement disposes of the bill and
- answer, it does not dispose of the counterclaim which
- raises the question of validity. . . . [T]he issue of
- validity may be raised by a counterclaim in an in-
- fringement suit. The requirements of a case or
- controversy are of course no less strict under the
- Declaratory Judgments Act (48 Stat. 955, 28 U. S. C.
- 400) than in case of other suits. But we are of the
- view that the issues raised by the present counter-
- claim were justiciable and that the controversy be-
- tween the parties did not come to an end on the
- dismissal of the bill for non-infringement, since their
- dispute went beyond the single claim and the particu-
- lar accused devices involved in that suit.- 319 U. S.,
- at 363-364 (footnotes omitted; citations omitted).
- Presumably because we emphasized, in the last clause
- quoted, the ongoing nature of the Altvater parties' dispute,
- the Federal Circuit has assumed that a defendant's
- counterclaim under the Declaratory Judgment Act should
- always be vacated unless the parties' dispute extends
- beyond the terms of the patentee's charge of infringe-
- ment.
- While both of our earlier cases are consistent with the
- Federal Circuit practice established in Vieau and Fonar,
- neither one required it. Electrical Fittings did not involve
- a declaratory judgment, and Altvater does not necessarily
- answer the question whether, in the absence of an ongo-
- ing dispute between the parties over infringement, an
- adjudication of invalidity would be moot. We now turn
- to that question.
-
- III
- Under its current practice, the Federal Circuit uniformly
- declares that the issue of patent validity is -moot- if it
- affirms the District Court's finding of noninfringement and
- if, as in the usual case, the dispute between the parties
- does not extend beyond the patentee's particular claim of
- infringement. That practice, and the issue before us,
- therefore concerns the jurisdiction of an intermediate
- appellate court-not the jurisdiction of either a trial court
- or this Court. In the trial court, of course, a party
- seeking a declaratory judgment has the burden of estab-
- lishing the existence of an actual case or controversy.
- Aetna Life Ins. Co. v. Haworth, 300 U. S. 227, 240-241
- (1937).
- In patent litigation, a party may satisfy that burden,
- and seek a declaratory judgment, even if the patentee has
- not filed an infringement action. Judge Markey has
- described
- -the sad and saddening scenario that led to enactment
- of the Declaratory Judgment Act (Act), 28 U. S. C.
- 2201. In the patent version of that scenario, a
- patent owner engages in a danse macabre, brandish-
- ing a Damoclean threat with a sheathed sword. . . .
- Before the Act, competitors victimized by that tactic
- were rendered helpless and immobile so long as the
- patent owner refused to grasp the nettle and sue.
- After the Act, those competitors were no longer
- restricted to an in terrorem choice between the incurr-
- ence of a growing potential liability for patent in-
- fringement and abandonment of their enterprises; they
- could clear the air by suing for a judgment that
- would settle the conflict of interests. The sole re-
- quirement for jurisdiction under the Act is that the
- conflict be real and immediate, i.e., that there be a
- true, actual `controversy' required by the Act.- Arrow-
- head Industrial Water, Inc. v. Ecolochem, Inc. 846
- F. 2d 731, 734-735 (CA Fed. 1988) (citations omitted).
- Merely the desire to avoid the threat of a -scarecrow-
- patent, in Learned Hand's phrase, may therefore be
- sufficient to establish jurisdiction under the Declaratory
- Judgment Act. If, in addition to that desire, a party has
- actually been charged with infringement of the patent,
- there is, necessarily, a case or controversy adequate to
- support jurisdiction of a complaint, or a counterclaim,
- under the Act. In this case, therefore, it is perfectly clear
- that the District Court had jurisdiction to entertain
- Cardinal's counterclaim for a declaratory judgment of
- invalidity.
- It is equally clear that the Federal Circuit, even after
- affirming the finding of noninfringement, had jurisdiction
- to consider Morton's appeal from the declaratory judgment
- of invalidity. A party seeking a declaratory judgment of
- invalidity presents a claim independent of the patentee's
- charge of infringement. If the District Court has jurisdic-
- tion (established independently from its jurisdiction over
- the patentee's charge of infringement) to consider that
- claim, so does (barring any intervening events) the Feder-
- al Circuit.
- There are two independent bases for this conclusion.
- First, the Federal Circuit is not a court of last resort. If
- that court had jurisdiction while the case was pending
- before it, the case remains alive (barring other changes)
- when it comes to us. The Federal Circuit's determination
- that the patents were not infringed is subject to review
- in this Court, and if we reverse that determination, we
- are not prevented from considering the question of validity
- merely because a lower court thought it superfluous. As
- a matter of practice, the possibility that we would grant
- certiorari simply to review that Court's resolution of an
- infringement issue is extremely remote, but as a matter
- of law we could do so, and if we did, we could also reach
- the declaratory judgment, as long as the parties continued
- to dispute the issue of validity, as they do here. As
- this case demonstrates, nothing prevents us, as a jurisdic-
- tional matter, from reviewing the Federal Circuit's disposi-
- tion (even its vacatur) of the District Court's resolution of
- the declaratory judgment counterclaim.
- Second, while the initial burden of establishing the trial
- court's jurisdiction rests on the party invoking that
- jurisdiction, once that burden has been met courts are
- entitled to presume, absent further information, that
- jurisdiction continues. If a party to an appeal suggests
- that the controversy has, since the rendering of judgment
- below, become moot, that party bears the burden of
- coming forward with the subsequent events that have
- produced that alleged result. See United States v. W. T.
- Grant Co., 345 U. S. 629, 633 (1953). In this case
- Cardinal properly invoked the original jurisdiction of the
- District Court, and Morton properly invoked the appellate
- jurisdiction of the Federal Circuit. That court unquestion-
- ably had the power to decide all the issues raised on
- Morton's appeal. If, before the Court had decided the
- case, either party had advised it of a material change in
- circumstances that entirely terminated their controversy,
- it would have been proper either to dismiss the appeal or
- to vacate the entire judgment of the District Court. Cf.
- United States v. Munsingwear, Inc., 340 U. S. 36, 39
- (1950). In fact, however, there was no such change in
- this case. The Federal Circuit's decision to rely on one
- of two possible alternative grounds (noninfringement
- rather than invalidity) did not strip it of power to decide
- the second question, particularly when its decree was
- subject to review by this Court. Even if it may be good
- practice to decide no more than is necessary to determine
- an appeal, it is clear that the Federal Circuit had jurisdic-
- tion to review the declaratory judgment of invalidity. The
- case did not become moot when that Court affirmed the
- finding of noninfringement.
-
- IV
- The Federal Circuit's practice is therefore neither
- compelled by our cases nor supported by the -case or
- controversy- requirement of Article III. Of course, its
- practice might nevertheless be supported on other
- grounds. The Courts of Appeal have significant authority
- to fashion rules to govern their own procedures. See, e.g.,
- Ortega-Rodriguez v. United States, 507 U. S. ___, ___
- (1993) (slip op., at 10); Thomas v. Arn, 474 U. S. 140,
- 146-148 (1985). Just as we have adhered to a practice
- of deciding cases on statutory rather than constitutional
- grounds when both alternatives are available, see, e.g.,
- DeBartolo Corp. v. Florida Gulf Coast Building and
- Construction Trades Council, 485 U. S. 568, 575 (1988),
- there might be a sufficient reason always to address the
- infringement issue before passing on the patent's validity.
- If, for example, the validity issues were generally more
- difficult and time-consuming to resolve, the interest in the
- efficient management of the Court's docket might support
- such a rule.
- Although it is often more difficult to determine whether
- a patent is valid than whether it has been infringed, there
- are even more important countervailing concerns. Perhaps
- the most important is the interest of the successful
- litigant in preserving the value of a declaratory judgment
- that, as Chief Judge Nies noted, -it obtained on a valid
- counterclaim at great effort and expense.- A company
- once charged with infringement must remain concerned
- about the risk of similar charges if it develops and
- markets similar products in the future. Given that the
- burden of demonstrating that changed circumstances
- provide a basis for vacating the judgment of patent
- invalidity rests on the party that seeks such action, there
- is no reason why a successful litigant should have any
- duty to disclose its future plans to justify retention of the
- value of the judgment that it has obtained.
- Moreover, our prior cases have identified a strong public
- interest in the finality of judgments in patent litigation.
- In Sinclair & Carroll Co. v. Interchemical Corp., 325 U. S.
- 327 (1945), we approved of the District Court's decision
- to consider the question of validity even though it had
- found that a patent had not been infringed. Criticizing
- the contrary approach taken by other courts, we stated
- that -of the two questions, validity has the greater public
- importance, Cover v. Schwartz, 133 F. 2d 541 [CA2 1943)],
- and the District Court in this case followed what will
- usually be the better practice by inquiring fully into the
- validity of this patent.- Id., at 330.
- We also emphasized the importance to the public at
- large of resolving questions of patent validity in Blonder-
- Tongue Laboratories, Inc. v. University of Illinois Founda-
- tion, 402 U. S. 313 (1971). In that case we overruled
- Triplett v. Lowell, 297 U. S. 638 (1936), which had held
- that a determination of patent invalidity does not estop
- the patentee from relitigating the issue in a later case
- brought against another alleged infringer. We also
- commented at length on the wasteful consequences of
- relitigating the validity of a patent after it has once been
- held invalid in a fair trial, and we noted the danger
- that the opportunity to relitigate might, as a practical
- matter, grant monopoly privileges to the holders of invalid
- patents. As this case demonstrates, the Federal
- Circuit's practice of routinely vacating judgments of
- validity after finding noninfringement creates a similar
- potential for relitigation and imposes ongoing burdens on
- competitors who are convinced that a patent has been
- correctly found invalid.
- Indeed, as Morton's current predicament illustrates, see
- supra, at 5, the Federal Circuit's practice injures not only
- the alleged infringer, and the public; it also may unfairly
- deprive the patentee itself of the appellate review that is
- a component of the one full and fair opportunity to have
- the validity issue adjudicated correctly. If, following a
- finding of noninfringement, a declaratory judgment on
- validity is routinely vacated, whether it invalidated the
- patent (as in Vieau) or upheld it (as in Fonar), the
- patentee may have lost the practical value of a patent
- that should be enforceable against different infringing
- devices. The Federal Circuit's practice denies the patentee
- such appellate review, prolongs the life of invalid patents,
- encourages endless litigation (or at least uncertainty) over
- the validity of outstanding patents, and thereby vitiates
- the rule announced in Blonder-Tongue.
- In rejecting the Federal Circuit's practice we acknow-
- ledge that factors in an unusual case might justify that
- Court's refusal to reach the merits of a validity determina-
- tion-a determination which it might therefore be appro-
- priate to vacate. A finding of noninfringment alone,
- however, does not justify such a result. Nor does any-
- thing else in the record of this case. The two patents at
- issue here have been the subject of three separate law-
- suits, and both parties have urged the Federal Circuit to
- resolve their ongoing dispute over the issue of validity; it
- would be an abuse of discretion not to decide that ques-
- tion in this case. Accordingly, the judgment of the Court
- of Appeals is vacated, and the case is remanded to that
- Court for further proceedings consistent with this opinion.
-
- It is so ordered.
-