The Federal Circuit Puts Another Nail In The Coffin Of Declaratory Judgment Actions

Matthews International Corporation ("Matthews") filed an action for declaratory judgment and injunctive relief based on an accusation that its product infringed certain patents of a third-party. Matthews provides products in the so-called "death care" industry, including manufacturing cremation equipment, caskets and memorials, which it sells to funeral homes. One of the products, marketed as "Bio Cremation," uses an alkaline hydrolysis process rather than incineration to cremate human remains. Matthews advertises Bio Cremation as an environmentally friendly alternative to traditional incineration based cremation. Resomation manufactures and licenses equipment that employs an alkaline hydrolysis process to dispose of human remains. Resomation granted Matthews an exclusive license to market and sell its alkaline hydrolysis equipment in the United States.

A third company, Biosafe Engineering , LLC ("Biosafe") acquired several patents pertaining to the application of alkaline hydrolysis to the disposal of various types of wastes, such as medical waste, infectious agents and hazardous materials. After Biosafe accused Matthews of violating its patents and for false advertising, Matthews filed suit against Biosafe seeking a declaration of non-infringement, invalidity and unenforceability as well as claims of trade libel, defamation and tortious interference with contractual relations.

As explained by the Federal Circuit, Matthews' amended complaint made the following allegations "[i]n its amended complaint, Matthews alleged that Biosafe had 'wrongly accused Matthews of patent infringement, and ha[d] made false accusations about Matthews to [Matthews'] customers, potential customers, and employees.' Matthews asserted that during a December 2008 telephone conversation, Biosafe's president, Bradley Crain, told Steven Schaal, an official at Matthews' cremation division, 'that [Matthews'] sale of Resomation/Bio Cremation" equipment would infringe [Biosafe's ] alleged intellectual property rights.' Matthews' attorney thereafter sent Biosafe a letter, dated December 31, 2008, requesting that Biosafe 'detail [its] concerns in writing' regarding possible patent infringement by Matthews' cremation products." The complaint also included these additional allegations: "Matthews' amended complaint further alleged that Biosafe had 'launched a bad faith whispering campaign in the funeral home marketplace, by making accusations and veiled threats to potential...