SourceOne Global Partners, LLC v. KGK Synergize, Inc., No. 08 C 7403, Slip Op. (N.D. Ill. May 13, 2009) (Schenkier, Mag. J.).
Judge Schenkier denied declaratory judgment defendant KGK’s motion to dismiss plaintiff SourceOne’s declaratory judgment claims of noninfringement and invalidity of KGK’s patents. KGK allegedly asserted its patents against SourceOne’s cholesterol fighting drug Cholesstrinol. KGK argued that the Court lacked subject matter jurisdiction because SourceOne did not, and could not name the co-owner of KGK’s patent, the United States government. The Court held that it had subject matter jurisdiction over SourceOne’s patent declaratory judgment claims, reasoning that otherwise the government’s co-ownership of a patent would strip accused infringers of ever seeking declaratory actions.
The Court also held that, while the government was a required party pursuant to Fed. R. Civ. P. 19(a), the Rule 19(b) factors weighed in favor of allowing SourceOne’s case to proceed despite its inability to join the government. The Court held that allowing KGK to prevent a declaratory suit because it was not possible to name the government would give KGK too much power as a patent holder:
The approach urged by KGK (and the Government) would allow KGK to threaten legal action against SourceOne (or others) with impunity. For those who gave into those threats, KGK would receive the benefit of the patent (a cessation of the alleged infringing conduct and perhaps compensation) without the need to do anything more. For those who might rear up and seek a judicial resolution, KGK could retreat behind the Government’s cloak of immunity and prevent the infringement or validity of the ‘125 Patent from ever being tested in court.