## Facts

- Ecolochem owned U.S. Patent No. 4,556,492 covering a water deoxygenation process and competed with Arrowhead in providing deoxygenation services to industrial customers.
- Ecolochem sued another competitor for infringement of the same patent in a separate action, demonstrating active enforcement of its patent rights.
- Virginia Power issued Arrowhead a purchase order for deoxygenation services.
- Ecolochem’s president sent Virginia Power a letter stating Arrowhead was not licensed, that any use would be considered direct infringement, and that Virginia Power could “possibly” be involved in infringement liability.
- Virginia Power demanded and obtained an indemnity agreement from Arrowhead against any patent liability to Ecolochem.
- Ecolochem’s counsel later wrote Arrowhead enclosing the patent, stating Ecolochem had reason to believe Arrowhead was contemplating or had initiated the patented process, demanding confirmation within 20 days that any unauthorized practice would be immediately discontinued, and referencing that Ecolochem had not hesitated to enforce its rights.
- Arrowhead filed a declaratory-judgment action seeking declarations of noninfringement, invalidity, and unenforceability.
- The district court dismissed for lack of subject-matter jurisdiction, finding no “actual controversy” because Ecolochem had not made a definitive infringement determination as to Arrowhead.

## Issues

1. Whether Ecolochem’s enforcement conduct and communications created an actual controversy under the Declaratory Judgment Act sufficient for subject-matter jurisdiction.
2. Whether Arrowhead showed (a) an objectively reasonable apprehension of an imminent infringement suit and (b) present activity or meaningful preparation to engage in the accused conduct.

## Decision

- The Federal Circuit reversed the dismissal and remanded.
- The court held an actual controversy existed because, under the totality of circumstances, Ecolochem’s actions created an objectively reasonable apprehension that Arrowhead would be sued if it continued the accused activity.
- The court held Arrowhead satisfied the “present activity/meaningful preparation” requirement because it was already providing deoxygenation services, had a customer purchase order, and assumed financial exposure through indemnifying the customer.

## Legal Principles

- Declaratory-judgment jurisdiction in patent cases requires (1) patentee conduct creating a reasonable apprehension of suit and (2) declaratory plaintiff’s present activity or meaningful steps toward the potentially infringing conduct.
- The jurisdictional inquiry is based on the totality of circumstances; an explicit accusation of infringement or a formal “determination” by the patentee is not required.
- Threatening communications to a customer, coupled with demands directed to the supplier and evidence of active enforcement against others, can establish reasonable apprehension of suit.
- A supplier’s indemnity obligations and role in providing the process or steps used by customers can strengthen the immediacy and concreteness of the controversy.

## Conclusion

The Federal Circuit held that Ecolochem’s customer warning, cease-and-desist style demand to Arrowhead, and contemporaneous enforcement activity created a justiciable dispute, allowing Arrowhead to seek declaratory relief on infringement, validity, and enforceability rather than waiting to be sued.


Arrowhead Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731 (Fed. Cir. 1988)