Avation Medical, Inc. v. EMKinetics, Inc. — Patent cancellation moots both sides’ claims, requiring dismissal without prejudice

Background

Avation Medical, Inc. and EMKinetics, Inc. filed a joint status report (ECF No. 46) agreeing that their stayed district court case should be dismissed. The dispute concerned U.S. Patent Nos. 11,844,943 (the '943 Patent), 11,224,742 (the '742 Patent), and 9,002,477 (the '477 Patent). According to the parties' quoted agreement, the Patent Trial and Appeal Board found all claims of those three patents unpatentable, EMKinetics did not appeal those decisions, its appeal deadline expired, and all claims of the patents were fully and finally adjudicated unpatentable and cancelled. The parties further agreed that the court should lift the stay in the action and dismiss the case.

The remaining disagreement concerned the form of dismissal and the disposition of potential requests for attorneys' fees and costs. Avation contended the court should dismiss the parties' claims and counterclaims as moot and enter judgment, but proposed different treatment for the two sides: EMKinetics' infringement counterclaims should be dismissed with prejudice because the cancelled claims could never again support an infringement action, while Avation's own declaratory judgment claims should be dismissed without prejudice because cancellation had eliminated the controversy giving rise to them. EMKinetics agreed that all claims and counterclaims must be dismissed as moot, but argued that both should be dismissed without prejudice.

The Court’s Holding

The court agreed with EMKinetics that the exact same jurisdictional defect applied to both sides equally because the underlying patent rights had ceased to exist, and it saw no reason to treat identical moot claims differently. It therefore dismissed both the claims and the counterclaims without prejudice, rejecting Avation's proposal to dismiss only the infringement counterclaims with prejudice.

The court explained that the effect of a dismissal with prejudice upon any enforcement of substantially similar claims in a reissued or other patent was not clear, and it was wary of inadvertently barring future actions that could otherwise properly come before this or other courts, citing Capella Photonics, Inc. v. Cisco Systems Inc., No. 14-cv-03348-EMC, 2019 WL 4242665 (N.D. Cal. Sept. 6, 2019). The court also noted that, as both parties agreed, the dismissal did not operate as an adjudication on the merits: Avation had never sought a dismissal on the merits, and EMKinetics had asserted the court lacked the power to adjudicate the merits.

The order left fee and cost requests open. The court made no determination whether either party may be awarded attorney's fees or costs, and stated that nothing in the order necessarily permits or precludes a motion seeking such relief; any such motion must comply with the Federal Rules of Civil Procedure and the Civil Local Rules. The Clerk was directed to enter judgment dismissing the case on mootness grounds and close the file.

Key Takeaways

• Final PTAB unpatentability decisions, the expiration of EMKinetics' appeal deadline, and cancellation of every claim of the '943, '742, and '477 Patents eliminated the underlying patent rights supporting both sides' district court claims.
• The court applied the same mootness analysis to Avation's declaratory judgment claims and EMKinetics' infringement counterclaims because the identical jurisdictional defect affected both sides equally.
• Both the claims and counterclaims were dismissed without prejudice, and the dismissal did not operate as an adjudication on the merits.
• The court declined a with-prejudice dismissal to avoid the risk of unintentionally barring future enforcement of substantially similar claims in a reissued or other patent.
• The order neither authorized nor barred later motions for attorneys' fees or costs, requiring any such motion to comply with the Federal Rules of Civil Procedure and the Civil Local Rules.

Why It Matters

The decision illustrates how final PTAB unpatentability rulings can moot a stayed patent dispute once the appeal deadline has passed and the asserted patent claims have been cancelled. It also shows that cancellation does not justify treating infringement counterclaims differently from related declaratory judgment claims when the same loss of underlying patent rights affects both sides equally.

The without-prejudice disposition preserves the court's stated concern about the uncertain consequences a prejudicial dismissal could have for substantially similar claims in a reissued or other patent. At the same time, the order resolves no merits issues and makes no fee-entitlement determination, leaving any fee or cost request to a properly filed later motion.