May 16, 2017

Failure to Provide an Unconditional Covenant Not to Sue Kept Case and Controversy Alive

By Bryan K. Wheelock, Principal

In ArcelorMittal v. AK Steel Corp., [2016-1357] (May 16, 2017), the Federal Circuit affirmed the summary judgment invalidating claims 24 and 25 of U.S. Patent No. RE44153.

On appeal, ArcelorMittal argued it never asserted claim 24 and 25, noting that ArcelorMittal never contested Defendant’s statements that the validity of claims 24 and 25 was at issue.  The Federal Circuit found this tacit acceptance of Defendants’ representations about the litigation status of claims 24 and 25 reflected ArcelorMittal’s continued attempt to assert those claims.

ArcelorMittal also argued that the dispute became moot when ArcelorMittal conditionally tendered its covenant not to sue to Defendants.  The Federal Circuit said that although a patentee’s grant of a covenant not to sue a potential infringer can sometimes deprive a court of subject matter jurisdiction, the patentee “bears the formidable burden of showing” “that it ‘could not reasonably be expected’ to resume its enforcement efforts against” the covenanted, accused infringer.  The Federal Circuit said that this that requires ArcelorMittal to show that it actually granted a covenant not to sue to Defendants, and that the covenant enforceably extinguished any real controversy between the parties related to infringement of the RE’153 patent.  The Federal Circuit found that at no time before the court entered summary judgment did ArcelorMittal unconditionally assure Defendants and their customers that it would never assert RE’153 claims 24 and 25 against them.  The Federal Circuit noted that this result was entirely within ArcelorMittal’s control — it could have, but never did delivered an unconditional, executed covenant not to sue.

Turning to the merits of the case, the Federal Circuit found that the district court correctly implemented its mandate by limiting the analysis to noninfringement and commercial success of RE’153 claims 24 and 25.