Writing about patents usually makes my brain hurt. Tech patents and the finicky schematics that are supposed to show what the invention does are gibberish to my English-major mind. Grapes, however, are something I don't have to decipher. So when the patent mavens at the U.S. Court of Appeals for the Federal Circuit put out a 27-page ruling Wednesday addressing patents on three varieties of table grapes-Sweet Scarlet, Scarlet Royal, and Autumn King-I waded right in.
The patented grapes were developed by the U.S. Department of Agriculture, although the California Table Grape Commission bore much of the cost. Under their agreement, the USDA was awarded the patents on Sweet Scarlet, Scarlet Royal, and Autumn King grapes and the Table Grape Commission retained the right to sublicense the grapes to growers. The Commission would keep 60 percent of the sublicense fees. The other 40 percent went to the USDA.
Three California farms signed deals with the Commission that granted them exclusive rights to grow the patented grapes. But it turned out, according to them, that those rights weren't so exclusive at all. In a declaratory judgment suit, the farms claimed grape skullduggery. The grapes' co-inventor, they said, had been showing off the new varieties before the critical dates for each patent. He had also distributed Sweet Scarlet vines to at least nine growers on a test basis, and three of them had sold the fruits of those vines. Even worse, according to the three farms, the Table Grape Commission knew what was going on. In 2004-before Sweet Scarlet was patented-the Commission sent letters to California grape growers, informing them that if they wanted to avoid being sued for growing grapes on those vines, they had to pay fees and stop propagating the vines. Supposedly, 17 growers admitted to possessing Sweet Scarlet vines, but the USDA didn't disclose that information to the U.S. Patent & Trademark Office when it applied for the patent.
The farms' declaratory judgment suit asked for a ruling that all of the USDA grape patents were invalid because of prior use and that Sweet Scarlet's patent was unenforceable because the USDA committed inequitable conduct when it failed to tell the PTO about the Commission's pre-patent deals with growers.
Those are pretty juicy allegations (get it?), but unfortunately for the farms, senior judge Oliver Wanger in the Eastern District of California ruled that the USDA was protected from their suit by sovereign immunity and the case couldn't proceed just against the Table Grape Commission because the USDA, as the owner of the grape patents, was a necessary party. The grape growers were squeezed.
Their lawyer, Lawrence Hadley of Hennigan Dorman, came up with a grape, I mean great, argument on appeal to the Federal Circuit, however. There's a narrow exception to sovereign immunity under the Administrative Procedures Act. Plaintiffs are authorized, under some circumstances, to sue government agencies in federal court as long as they're not seeking money damages. Federal Circuit judges William Bryson, Alvin Schall, and Sharon Prost concluded in an opinion written by Judge Bryson that the grape growers' case-which asked for a declaratory judgment on the validity of the patents-was an exception to sovereign immunity. As Dennis Crouch at the Patently-O blog notes, the ruling appears to mean that federal government agencies are not protected from declaratory judgment patent suits.
USDA was represented by lawyers from the Justice Department's civil division. A DOJ spokesman said they're reviewing the ruling. The Table Grape Commission was represented at oral argument by Randolph Moss of Wilmer Cutler Pickering Hale and Dorr. I left a message at Wilmer but didn't hear back.
(Reporting by Alison Frankel)
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