Asia Vital Components Co., Ltd. v. Asetek Danmark A/S

Docket No. 2015-1597

September 8, 2016

Brief Summary: DC dimissal DJ action of noninfringement for not pleading sufficient facts to show there was a substantial controversy reversed since Asetek, e.g., “demonstrate[ed] intent to enforce” its patents.

Summary: AVC appealed DC dismissal of its DJ action of noninfringement of Asetek’s US 8,240,362 and 8,245,764 relating to cooling systems used to cool integrated circuits for not pleading sufficient facts to show a substantial controversy between the parties. In April 2014, Asetek sent AVC a letter accusing it of infringing the patents but the letter “was based on Asetek’s mistaken belief that AVC manufactures a particular product, the Liqmax 120s” (the letter “specifically referenced the Liqmax 120s product and provided an exemplary infringement claim chart for that product”). AVC then informed Asetek that it did not manufacture that product but requested a meeting with Asetek “‘to discuss various related matters,’ which AVC considered ‘of importance concerning future cooperation’ with Avetek”. Avetek responded it saw no reason to meet if AVC was not making the Liqmax 120s product but also that it “believes AVC is likely selling other infringing products in the [US].” In September 2014 AVC filed the complaint against Asetek seeking a declaration that its K7 and K9 liquid cooling products did not infringe the ‘362 and ‘764 patents, which was dimissed since “there was never any discussion between the parties as to whether AVC’s products were infringing and crediting Asetek’s declarations that it was unaware of the existence of those products” and resulted in this appeal. The FC panel opinion explained that while MedImmune “relaxed the test for establishing jurisdiction” under the Declaratory Judgment Act (disagreeing “with the stricter ‘reasonable apprehension of imminent suit’ test”, to “substantial controversy…of sufficient immediacy and reality to warrant the issuance of a” DJ), it “did not change the bedrock rule that a case or controversy must be based on a real and immediate injury or threat of future injury that is caused by the defendants-an objective standard that cannot be met by a purely subjective or speculative fear of future harm”, or “merely on the basis that a party learns of the existence of a patent…or even perceives…a risk of infringement without some affirmative act by the patentee” (MedImmune, US 2007; Prasco, FC 2008; SanDisk, FC 2007; HP, FC 2009 (“demonstrating intent to enforce”)). The FC panel “agree[d] with AVC that the totality of the circumstances indicates an actual controversy existed…at the time of the [DJ] complaint” (e.g., Asetek’s April 2014 letter was “a demand letter that referenced a product that AVC contends is similar to its own K7 and K9 products” and its email response to AVC’s request for a meeting “contained a number of statements that indicate an actual controversy between the parties existed” (e.g., that AVC is “likely selling other infringing products”)). And “[f]urther interactions…confirm[ed]” (e.g., threats to customers) the FC panel’s conclusion. It also noted that a reference to specific products is not required; only the reasonable inference that a party is “demonstrating intent to enforce a patent” and a “real and immediate” “threat of suit” (e.g., “AVC…has a sufficiently immediate interest to request a license”) are required. Thus, the DC dismissal was reversed.

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