United States Court of Appeals
for the Federal Circuit
__________________________
DELANO FARMS COMPANY,
FOUR STAR FRUIT, INC., AND GERAWAN
FARMING, INC.,
Plaintiffs-Appellants,
v.
THE CALIFORNIA TABLE GRAPE COMMISSION,
Defendant-Appellee,
and
UNITED STATES, DEPARTMENT OF
AGRICULTURE,
AND THOMAS J. VILSACK, SECRETARY OF
AGRICULTURE,
Defendants-Appellees.
__________________________
2010-1546
__________________________
Appeal from the United States District Court for the
Eastern District of California in Case No. 07-CV-1610,
Senior Judge Oliver W. Wanger.
_________________________
Decided: August 24, 2011
_________________________
DELANO FARMS v. CALIFORNIA TABLE 2
LAWRENCE M. HADLEY, Hennigan Dorman, LLP, of
Los Angeles, California, argued for the plaintiffs-
appellants. With him on the brief was OMER SALIK.
RANDOLPH D. MOSS, Wilmer Cutler Pickering Hale
and Dorr, LLP, of Washington, DC, argued for the defen-
dant-appellee The California Table Grape Commission.
With him on the brief were BRIAN M. BOYNTON, STEVEN P.
LEHOTSKY and THOMAS G. SAUNDERS.
SUSAN L.C. MITCHELL, Attorney, Commercial Litiga-
tion Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for the defendants-
appellees United States Department of Agriculture and
Thomas J Vilsack, Secretary of Agriculture. Of counsel
on the brief were TONY WEST, Assistant Attorney General,
and JOHN J. FARGO, Director.
__________________________
Before BRYSON, SCHALL, and PROST, Circuit Judges.
BRYSON, Circuit Judge.
The United States Department of Agriculture
(“USDA”) is the owner by assignment of three patents
issued under the Plant Variety Protection Act for grape-
vines that produce table grapes. The three patented
varieties are known as Sweet Scarlet (U.S. Patent No.
PP15,891), Scarlet Royal (U.S. Patent No. PP16,229), and
Autumn King (U.S. Patent No. PP16,284).
The USDA licensed its rights in the three patents to
the California Table Grape Commission, an agency of the
State of California. The Commission’s mission is to
promote that state’s table-grape industry. The Commis-
sion is funded by a tax levied on each box of table grapes
produced in California.
3 DELANO FARMS v. CALIFORNIA TABLE
The relationship between the Commission and the
USDA is complex. Although the USDA owns the three
patents at issue in this case, the Commission paid much
of the cost of developing the patented varieties. The
licenses for the three patents give the Commission the
right to sublicense the patents and entitle the Commis-
sion to retain 60 percent of all royalties from its sublicens-
ing efforts, with the remaining 40 percent to go to the
USDA. Exercising its sublicensing power, the Commis-
sion authorized three nurseries to serve as exclusive
distributors of the patented varieties. Grape growers who
purchase the patented plants from those nurseries each
sign a “Domestic Grower License Agreement.” That
agreement requires the growers to pay a royalty and
forbids them from propagating the plants. The agreement
also permits the Commission to order the destruction of
the purchased plants if the Commission believes the
growers to be violating the agreement.
The plaintiffs (collectively referred to as “Delano”) are
all California grape growers who purchased grapevines
covered by the patents, signed the Domestic Grower
License Agreement, and paid the licensing fee. They
brought this action in the United States District Court for
the Eastern District of California challenging the validity
and enforceability of the three patents, as well as the
conduct of the Commission and the USDA in licensing
and enforcing the patents.
Delano sought a declaratory judgment that all three
patents are invalid because of prior use and that the
Sweet Scarlet patent is unenforceable because of inequi-
table conduct during prosecution. As outlined in Delano’s
complaint, the USDA began development of the patented
varieties in the early 1990s. Dr. David Ramming, a
USDA employee and one of the co-inventors of each of the
DELANO FARMS v. CALIFORNIA TABLE 4
three varieties, allegedly displayed the fruit of the pat-
ented varieties at public meetings that were held before
the critical dates for each patent. According to the com-
plaint, Dr. Ramming had distributed the Sweet Scarlet
vines to approximately nine growers for “trials” before the
critical date, and at least three of those growers sold the
fruit of those vines. Delano also alleged that a California
grape grower had obtained the other varieties and had
reproduced those varieties in advance of the critical date.
As to its inequitable conduct claim, Delano alleged
that in May 2004 the Commission sent a letter to all
table-grape growers and shippers in California. The
letter informed growers who were in possession of the
Sweet Scarlet variety that they could keep their vines and
avoid a lawsuit if they admitted to the fact of possession,
paid the Commission $2 per vine reproduced, paid the
Commission $2 per box of Sweet Scarlet grapes previously
shipped, and agreed not to take further steps to propagate
the plants. According to Delano’s complaint, 17 growers
responded to the Commission, each acknowledging pos-
session and propagation of the patented variety more
than one year before the patent application was filed.
That information was not disclosed to the Patent and
Trademark Office (“PTO”).
In addition to those claims brought against the USDA
and the Commission jointly, Delano brought claims
against the USDA alone, alleging that it had acted unlaw-
fully in obtaining the patents and entering into the licens-
ing arrangement with the Commission (“the
administrative claims”). Against only the Commission,
Delano brought an antitrust claim and a related state law
unfair competition claim, both stemming from the Com-
mission’s efforts to license the Sweet Scarlet patent.
5 DELANO FARMS v. CALIFORNIA TABLE
The USDA and the Commission moved to dismiss De-
lano’s declaratory judgment claims. They argued that the
action could not proceed because the USDA, as the pat-
entee, is an indispensable party but could not be joined
because it is immune from suit due to sovereign immu-
nity. The district court agreed. The court first held that
the license between the Commission and the USDA did
not transfer to the Commission all substantial rights in
the patents and that because the USDA retained substan-
tial rights in the patents, it had to be joined in order for
the action to proceed.
After concluding that the USDA was a necessary
party to the patent law claims, the district court turned to
the question whether Delano could sue the USDA on
those claims or whether those claims against the USDA
were barred by sovereign immunity. The district court
rejected Delano’s argument that the Administrative
Procedure Act (“APA”) waived sovereign immunity for the
declaratory judgment claims and thus ruled that sover-
eign immunity barred the joinder of USDA as a party
defendant. The court then addressed whether those
claims could go forward without the USDA as a party.
After conducting an analysis under Rule 19(b) of the
Federal Rules of Civil Procedure, the court concluded that
because the USDA was an indispensable party that could
not be joined, the action should be dismissed.
The court also granted the USDA’s motion to dismiss
Delano’s administrative claims. The court held that the
Patent Act provides a comprehensive and exclusive
scheme to test the validity of patents and that Delano
could not properly use administrative law remedies as an
alternative means to challenge the patents. As to De-
lano’s administrative claims relating to the USDA’s
licensing scheme, the court concluded that Delano failed
DELANO FARMS v. CALIFORNIA TABLE 6
to raise its concerns before the USDA when the agency
published the details of the licenses in the Federal Regis-
ter. Accordingly, the court determined that Delano had
not exhausted its administrative remedies. Delano has
not appealed the court’s ruling on the administrative
claims.
Finally, the court granted the Commission’s motion to
dismiss Delano’s antitrust claim and the related state law
unfair competition claim. The court found that Delano
had failed to plead a plausible market for the Sweet
Scarlet grapes and dismissed the antitrust claim on that
ground. As for the state law unfair competition claim, the
court held that the state law claim required a showing
that the Commission had violated some other law. Be-
cause the alleged predicate offense was the asserted
antitrust violation, which the court had dismissed, the
court dismissed the state law claim as well.
I
Delano first contends that the USDA transferred all
substantial rights in the three patents to the Commission
and that the USDA was therefore not a necessary party to
the declaratory judgment claims brought under the Pat-
ent Act. It is well established that a patentee is a neces-
sary party to an action on the patent, whether it be a
coercive action or a declaratory judgment suit. If the
patentee has transferred all substantial rights in the
patent to an exclusive licensee, however, the licensee is
treated as the assignee. In that event, the assignor,
which is no longer regarded as the owner of the patent,
need not be joined in any action brought on the patent.
A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213, 1217-18
(Fed. Cir. 2010); Enzo APA & Son, Inc. v. Geapag A.G.,
134 F.3d 1090, 1093-94 (Fed. Cir. 1998).
7 DELANO FARMS v. CALIFORNIA TABLE
In determining whether a licensee has obtained all
substantial rights in the patent, an important considera-
tion is whether the license grants to the licensee the right
to enforce the patent and divests the licensor of that same
right. E.g., Alfred E. Mann Found. for Scientific Research
v. Cochlear Corp., 604 F.3d 1354, 1361 (Fed. Cir. 2010)
(describing the scope of the licensee’s right to sue infring-
ers as often “the most important consideration”); Vaupel
Textilmaschinen KG v. Meccanica Euro Italia SPA, 944
F.2d 870, 875 (Fed. Cir. 1991). When a licensing agree-
ment restrains or controls the licensee’s sublicensing
power, the licensor is generally regarded as having re-
tained substantial control over patent enforcement, and
the agreement is not treated as having given the licensee
all substantial rights in the patent. Intellectual Prop.
Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333,
1344-45 (Fed. Cir. 2001); Vaupel, 944 F.2d at 875-76.
The license agreement between the USDA and the
Commission gives the Commission the exclusive right to,
among other things, use, propagate, and sell the patented
varieties as well as to grant sublicenses to growers. But
the “Patent Enforcement” section of the license does not
give the Commission any right to enforce the patent
against suspected infringers. Instead, the license antici-
pates that the USDA “may grant the right of enforcement
to the Commission, pursuant to Title 35, Section
207(a)(2).” That section of the code allows federal agen-
cies to transfer all substantial rights to licensees and to
permit those licensees to sue infringers without joining
the federal patent owner. Nothing in the license curtails
the USDA’s right as a patentee to sue on the patent. And
the USDA is at liberty to decline to enforce the patent: the
Commission “shall continue to pay royalties and fees
accruing to USDA until such time as the Agreement is
terminated by either party, even if the U.S. Government
DELANO FARMS v. CALIFORNIA TABLE 8
elects not to enforce the Licensed Patents . . . against
infringers.” The most natural reading of the license is
that the USDA did not transfer any right of enforcement
to the Commission but left open the possibility that it
might elect to do so at a later date.
Moreover, the USDA retained at least some control
over the Commission’s sublicensing program. Besides
reserving for itself a royalty-free right to practice the
invention and making the format of the Commission’s
sublicense agreements subject to prior submission to and
approval by the USDA, the USDA expressly reserved the
right to require that the Commission issue sublicenses,
such as licensing arrangements that the USDA deter-
mines are necessary to fulfill health or safety needs or to
ensure that the patented varieties are available in geo-
graphic areas outside the Commission’s marketing and
distribution area. In light of all the provisions preserving
for the USDA various forms of control over the licensing
and enforcement of the patents, we agree with the district
court that the license agreement did not transfer to the
Commission all substantial rights in the patents. For
that reason, the district court correctly held that the
USDA was a necessary party to Delano’s declaratory
judgment claims based on the Patent Act.
II
Delano next argues that sovereign immunity does not
bar its Patent Act claims against the USDA. 1 In address-
1 The Commission argues that Delano has not pre-
served its argument that the USDA can be joined in the
patent law claims, because Delano took the position in the
district court that it could proceed on those claims against
the Commission alone and that it could proceed sepa-
rately against the USDA under the APA. We do not
9 DELANO FARMS v. CALIFORNIA TABLE
ing the issue of sovereign immunity, we apply our own
law in light of the special importance of ensuring national
uniformity on such questions. See Pennington Seed, Inc.
v. Produce Exch. No. 299, 457 F.3d 1334, 1338 (Fed. Cir.
2006); Regents of the Univ. of N.M. v. Knight, 321 F.3d
1111, 1124 (Fed. Cir. 2003). While we have not previously
had occasion to decide the particular issue raised by
Delano’s appeal, some of the regional circuits have, and
we are guided by the analysis of those courts. See Fis-
kars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed. Cir.
2002).
It is a fundamental principle that the United States
and its agencies may not be sued in federal court unless
Congress has waived sovereign immunity; if Congress has
not waived the federal government’s immunity for a
particular claim, courts lack jurisdiction over that claim
and must dismiss it. United States v. Dalm, 494 U.S. 596,
608 (1990). Delano asserts that the pertinent waiver of
sovereign immunity can be found in section 10(a) of the
APA, as amended, 5 U.S.C. § 702. 2 As amended, that
section reads:
A person suffering legal wrong because of
agency action, or adversely affected or aggrieved
by agency action within the meaning of a relevant
statute, is entitled to judicial review thereof. An
action in a court of the United States seeking re-
regard Delano’s argument that the USDA is not a neces-
sary party to the patent law claims to constitute an
abandonment of its original contention that the Commis-
sion and the USDA can be sued jointly on those claims.
2 The parties refer to section 10 of the APA by the
section numbers used in the United States Code, so we
use the same convention.
DELANO FARMS v. CALIFORNIA TABLE 10
lief other than money damages and stating a
claim that an agency or an officer or employee
thereof acted or failed to act in an official capacity
or under color of legal authority shall not be dis-
missed nor relief therein be denied on the ground
that it is against the United States or that the
United States is an indispensable party. . . .
Nothing herein
(1) affects other limitations on judicial review
or the power or duty of the court to dismiss any
action or deny relief on any other appropriate le-
gal or equitable ground; or
(2) confers authority to grant relief if any
other statute that grants consent to suit expressly
or impliedly forbids the relief which is sought.
The issue in this case is whether that waiver of sover-
eign immunity applies to Delano’s request for declaratory
relief against the United States on a cause of action
arising under the Patent Act, or whether that waiver of
sovereign immunity applies only to agency actions for
which the APA prescribes a right to judicial review, i.e.,
“[a]gency action made reviewable by statute and final
agency action for which there is no other adequate rem-
edy in a court.” 5 U.S.C. § 704. We hold that section 702
of the APA waives sovereign immunity for non-monetary
claims against federal agencies, subject to the limitations
in subsections (1) and (2). It is not limited to “agency
action” or “final agency action,” as those terms are defined
in the APA. We therefore conclude that the waiver of
sovereign immunity in section 702 is broad enough to
allow Delano to pursue equitable relief against the USDA
on its patent law claims.
11 DELANO FARMS v. CALIFORNIA TABLE
A
The APA can be said to do three things with respect to
judicial review of actions or failures to act by government
agencies or employees: First, it recognizes a right of
judicial review for “agency action” made reviewable by
another statute and provides rules governing such review.
5 U.S.C. §§ 702, 704, 706. Second, it creates a right of
judicial review, even in the absence of a review-
authorizing statute, for “final agency action” for which
there is no other adequate remedy in a court. Id. at § 704.
Third, and most importantly for present purposes, it
waives sovereign immunity for any action stating a claim
against the United States (or its officers or employees)
and seeking relief other than money damages. Id. at
§ 702. The United States and the Commission argue that
the waiver of sovereign immunity is limited to the first
two categories—the types of judicial review recognized or
created by the APA. However, nothing in the text of
section 702 limits its scope to “agency action,” as defined
in section 704 of the APA, or “final agency action,” for
which section 704 of the APA directly provides the right
to judicial review. A review of the background and judi-
cial analysis of the sovereign immunity waiver in section
702 leads us to reject the defendants’ argument.
As originally enacted in 1946, the APA provided a
cause of action for review of certain actions of federal
agencies and officials. It did not, however, expressly
waive sovereign immunity for either causes of action
grounded in section 704 of the APA or for causes of action
brought under other laws, such as a particular statute or
the Constitution. An action that did not fall within an
exception to the general principles of sovereign immunity
was therefore subject to dismissal even though the action
was authorized by the APA. In 1976, Congress amended
DELANO FARMS v. CALIFORNIA TABLE 12
the APA to solve that problem. It did so by amending
section 702 to include what is now the second sentence,
which consists of a broad waiver of sovereign immunity
for actions seeking relief other than money damages
against federal agencies, officers, or employees.
The legislative history of the 1976 amendment to the
APA reinforces the breadth of the statutory language.
The reports of the judiciary committees of both Houses
stated that the 1976 amendment was meant to “with-
draw[] the defense of sovereign immunity in actions
seeking relief other than money damages, such as an
injunction, declaratory judgment, or writ of mandamus.”
S. Rep. No. 94-996, at 4 (1976); H.R. Rep. No. 94-1656, at
4 (1976), reprinted in 1976 U.S.C.C.A.N. 6121, 6124-25. 3
In the past, the reports observed, courts charged with
deciding whether sovereign immunity barred a particular
suit had reached decisions that were unpredictable,
illogical, and overly dependent on artful pleading. H.R.
Rep. No. 94-1656, at 8. In view of the confusion and
perceived unfairness in the application of the doctrine,
the reports concluded that “the time now has come to
eliminate the sovereign immunity defense in all equitable
actions for specific relief against a Federal agency or
officer acting in an official capacity.” Id. at 9.
The Commission argues that the placement of the
waiver of sovereign immunity in section 702 of the APA
suggests that the waiver was meant to be limited to
actions arising under the APA itself or under a statute
directed at the review of “agency action” as that term is
defined in the APA. The legislative history demonstrates,
3 The Senate and the House reports are nearly
identical. For simplicity, we will cite to the House ver-
sion.
13 DELANO FARMS v. CALIFORNIA TABLE
however, that the amendment was meant to be broader
than that. The committee reports broadly describe the
waiver as applying to “actions seeking relief other than
money damages. H.R. Rep. No. 94-1656, at 4. Moreover,
the Administrative Conference of the United States,
which proposed the waiver of sovereign immunity and
suggested that it be included in section 702, explained
that the amendment to section 702 was designed “to
eliminate the defense of sovereign immunity with respect
to any action in a court of the United States seeking relief
other than money damages and based on an assertion of
unlawful official action by a Federal officer or employee.”
Administrative Procedure Act Amendments of 1976:
Hearing Before the Subcomm. on Admin. Practice and
Procedure of the S. Comm. on the Judiciary, 94th Cong.
230 (1976) (statement of Richard K. Berg, executive
secretary of the Administrative Conference of the United
States).
Other courts have held that section 702 waives im-
munity for claims that are not brought pursuant to sec-
tion 704 of the APA. In Trudeau v. Federal Trade
Commission, 456 F.3d 178, 186 (D.C. Cir. 2006), the D.C.
Circuit held that the waiver of immunity in section 702 “is
not limited to APA cases” and applies “regardless of
whether the elements of an APA cause of action are
satisfied.” The plaintiff in that case sued the Federal
Trade Commission (“FTC”), based on the FTC’s issuance
of a press release regarding him. He alleged that the FTC
had acted in excess of its statutory authority in issuing
the press release and that the FTC had violated his First
Amendment rights by using the press release to retaliate
against him for criticizing the agency. Id. at 185. The
D.C. Circuit acknowledged that the press release was not
“agency action” as defined in the APA, let alone “final
agency action.” But that was irrelevant, according to the
DELANO FARMS v. CALIFORNIA TABLE 14
court, because neither of the plaintiff’s causes of actions
sought judicial review under section 704 of the APA. See
also Clark v. Library of Congress, 750 F.2d 89, 102 (D.C.
Cir. 1984) (1976 amendment to section 702 “eliminated
the sovereign immunity defense in virtually all actions for
non-monetary relief against a U.S. agency or official
acting in an official capacity”); Sea-Land Serv., Inc. v.
Alaska R.R., 659 F.2d 243, 244-45 (D.C. Cir. 1981) (R.B.
Ginsburg, J.) (“amended § 702 eliminates the defense of
sovereign immunity in actions for specific, non-monetary
relief”).
The Ninth Circuit reached the same conclusion in The
Presbyterian Church (U.S.A.) v. United States, 870 F.2d
518, 525-26 (9th Cir. 1989). The plaintiffs in that case
alleged that their First and Fourth Amendment rights
were violated when employees of various federal agencies
surreptitiously recorded church services. The court
rejected the government’s argument that section 702
waives immunity only for challenges involving “agency
action” as that term is used in section 704 and defined in
section 551(13). The court pointed to the legislative
history, which refers to waiving sovereign immunity in all
equitable actions against the government, and it noted
that the second sentence in section 702 is not, by its
terms, limited to cases involving “agency action.” Accord-
ingly, the court concluded that the waiver of sovereign
immunity in section 702 is not limited to claims challeng-
ing conduct that constitutes “agency action.” Id. at 525.
Recently, in Veterans for Common Sense v. Shinseki,
644 F.3d 845 (9th Cir. 2011), the Ninth Circuit reaffirmed
that the waiver of sovereign immunity in section 702 is
not limited to actions in which the APA creates the right
to judicial review. In that case, an advocacy group alleged
that the slow pace at which the Department of Veterans
15 DELANO FARMS v. CALIFORNIA TABLE
Affairs processes requests for mental health benefits
violates veterans’ constitutionally protected rights to
those benefits. The district court concluded that the
limitations on the APA cause of action found in section
704, including the requirement for “agency action,” also
restrict the scope of the waiver of sovereign immunity in
section 702. Because the delay in benefits adjudication
constituted neither “agency action” nor “final agency
action” within the meaning of section 704, the district
court ruled that section 702 did not waive sovereign
immunity for the veterans’ action. The Ninth Circuit
reversed; it held that the question whether section 702
waives sovereign immunity for the plaintiffs’ non-APA
cause of action does not turn on whether the challenged
delays constituted “agency action” or “final agency action.”
Instead, the court held, the waiver of sovereign immunity
applies to the plaintiffs’ request for an injunction to
correct a constitutional violation even though the request
for judicial review was not based on the authority granted
by section 704 and did not involve “agency action,” as
defined by the APA. 4
4 Other courts have ruled similarly. See, e.g.,
Blagojevich v. Gates, 519 F.3d 370, 372 (7th Cir. 2008)
(section 702 waives immunity for lawsuit by state gover-
nor alleging that Department of Defense violated a stat-
ute requiring governor’s approval before transferring a
National Guard unit out of state); Commonwealth of P.R.
v. United States, 490 F.3d 50, 57-58 (1st Cir. 2007) (sec-
tion 702 waiver covers all equitable actions for specific
relief against a federal agency or officer acting in an
official capacity); Black Hills Inst. of Geological Research
v. S.D. Sch. of Mines & Tech., 12 F.3d 737, 740 (8th Cir.
1993) (section 702 waives immunity for suit to quiet title
to fossil seized by the Department of Justice, even though
suit not brought as APA action challenging final agency
action); Specter v. Garrett, 995 F.2d 404, 410 (3d Cir.
1993) (“Our cases are also clear that the waiver of sover-
DELANO FARMS v. CALIFORNIA TABLE 16
The Commission argues that in two previous cases
this court has held that the waiver of sovereign immunity
in section 702 applies only to suits based on a cause of
action created by the APA. In the two cited cases—Smith
v. Secretary of the Army, 384 F.3d 1288 (Fed. Cir. 2004),
and Christopher Village, L.P. v. United States, 360 F.3d
1319 (Fed. Cir. 2004)—we considered whether an APA-
based action in district court is barred because the exclu-
sive source of relief was through a suit for damages in the
Court of Federal Claims. Each case held that a plaintiff
cannot invoke the section 702 waiver to obtain judicial
review under section 704 of the APA when Congress has
provided an alternative and exclusive forum for such a
dispute. However, neither case addressed the scope of
Congress’s consent to suit in an equitable action not
brought under the authority of the APA.
The plaintiff in Smith was a retired Army physician
who alleged that the Army had acted unlawfully by failing
to accord him promotional credit for a masters degree.
384 F.3d at 1292. We held that his APA action against
eign immunity contained in § 702 is not limited to suits
brought under the APA.”), rev’d on other grounds, Dalton
v. Specter, 511 U.S. 462 (1994); Sheehan v. Army & Air
Force Exch. Serv., 619 F.2d 1132, 1139 (5th Cir. 1980)
(section 702 waives immunity for causes of action arising
under generally applicable statutes and the Constitution),
rev’d on other grounds, 456 U.S. 728 (1982).
The Commission cites cases such as SEC ex rel.
Glotzer v. Stewart, 374 F.3d 184 (2d Cir. 2004), as holding
that section 702 waives sovereign immunity only for
actions falling within the APA. Those cases hold that
section 702 waives sovereign immunity for non-monetary
claims brought under the APA seeking review of agency
action, but they do not hold that the waiver of sovereign
immunity is inapplicable to non-monetary claims arising
under statutes other than the APA, such as the patent
law claims in this case.
17 DELANO FARMS v. CALIFORNIA TABLE
the Army could not be maintained in district court if
damages and the ancillary equitable relief that was
available in the Court of Federal Claims would provide an
adequate remedy. Id. at 1293-94. Although we character-
ized the waiver of immunity in section 702 as subject to
the limitations of section 704, id. at 1292, we made that
statement in the context of a district court claim arising
under the APA, which is subject to the limitations im-
posed on such claims by section 704. Id. at 1290-91. We
did not hold that the waiver of immunity applies only to a
cause of action based on the APA and does not apply to a
cause of action based on another source, as in this case.
Christopher Village was a complex case in which we
again considered whether a suit for damages in the Court
of Federal Claims is an “adequate remedy” that would
withdraw the APA’s waiver of immunity. 360 F.3d at
1327-29. The Department of Housing and Urban Devel-
opment (“HUD”) held a mortgage on a federally subsi-
dized low-income apartment complex that the plaintiffs
owned. HUD threatened to foreclose. The plaintiffs
brought an APA action in district court against HUD to
block the foreclosure and obtain a decree that HUD had
violated both the applicable regulations and HUD’s con-
tract with the plaintiffs. The district court ruled in favor
of HUD, and the plaintiffs appealed that decision to the
Fifth Circuit. Before the Fifth Circuit decided the appeal,
HUD foreclosed on the property, and the apartment
complex was torn down. The Fifth Circuit acknowledged
that the request to enjoin the foreclosure had become
moot, but it went on to reverse the district court and to
hold that the agency had violated its contractual and
regulatory duties. Id. at 1323-24. The plaintiffs subse-
quently filed an action in the Court of Federal Claims
seeking damages for breach of contract. When the case
reached this court, the question on appeal was whether
DELANO FARMS v. CALIFORNIA TABLE 18
the Fifth Circuit’s judgment on liability had preclusive
effect in the damages action. We held that the answer to
that question depended on whether the district court had
jurisdiction in the earlier case. Id. at 1326-27.
We explained that section 702 would have waived
sovereign immunity as to the plaintiffs’ APA-based action
to block the foreclosure. 360 F.3d at 1326. Once HUD
foreclosed and the property was razed, however, that
request became moot. We characterized plaintiffs’ action
on that point as a “declaratory judgment as to the legality
of HUD’s action.” Id. We held that the waiver of immu-
nity in section 702 did not apply because there was an
adequate remedy available elsewhere, namely, a damages
action in the Court of Federal Claims. Because the Fifth
Circuit had lacked jurisdiction to consider the legality of
HUD’s conduct, its judgment on liability was void. Id. at
1330-31. Again, the discussion of the waiver of sovereign
immunity was in the context of a cause of action brought
pursuant to section 704 of the APA, not in the context of a
cause of action based on a separate statutory source, as in
this case.
Any suggestion that our decisions in Smith and Chris-
topher Village stand for the proposition that the waiver of
sovereign immunity in section 702 is limited to causes of
action created by the APA was dispelled in Nebraska
Public Power District v. United States, 590 F.3d 1357
(Fed. Cir. 2010) (en banc). In that case, we held that
section 702 waived immunity for an action seeking judi-
cial review under section 119 of the Nuclear Waste Policy
Act, 42 U.S.C. § 10139. In so doing, we specifically held
that because the right to judicial review arose under a
statute other than the APA, section 702 waived sovereign
immunity without the need to satisfy the requirements of
section 704. 590 F.3d at 1371 & n.6.
19 DELANO FARMS v. CALIFORNIA TABLE
Our decisions in Smith, Christopher Village, and
other cases dealing with the intersection of actions in
district court under the APA and actions in the Court of
Federal Claims under the Tucker Act have no bearing on
the sovereign immunity question presented in this case.
When Congress amended section 702 in 1976, it made it
clear that it did not intend that amendment to have any
effect on the exclusive jurisdiction of the Court of Claims
over suits for money damages falling within the jurisdic-
tion of that court. H.R. Rep. No. 94-1656, at 12-13; see
also Transohio Sav. Bank v. Dir., Office of Thrift Supervi-
sion, 967 F.2d 598, 608-09 (D.C. Cir. 1992) (because the
Tucker Act impliedly forbids an APA remedy in district
court for breach of contract claims, the waiver of immu-
nity in section 702 does not apply to those claims); 5
U.S.C. § 703 (“The form of proceeding for judicial review
is the special statutory review proceeding relevant to the
subject matter in a court specified by statute or, in the
absence or inadequacy thereof, any applicable form of
legal action . . . .”). 5 Thus, the immunity waiver cannot
5 In a section entitled “Other Exclusive Remedies or
Statutory Limitations,” the House Report explains:
Clause (2) of the third new sentence added to sec-
tion 702 contains a second proviso concerned with
situations in which Congress has consented to suit
and the remedy provided is intended to be the ex-
clusive remedy. For example, in the Court of
Claims Act, Congress created a damage remedy
for contract claims with jurisdiction limited to the
Court of Claims except in suits for less than
$10,000. The measure is intended to foreclose spe-
cific performance of government contracts. In the
terms of the proviso, a statute granting consent to
suit, i.e., the Tucker Act, “impliedly forbids” relief
other than the remedy provided by the Act. Thus,
the partial abolition of sovereign immunity
brought about by this bill does not change existing
DELANO FARMS v. CALIFORNIA TABLE 20
serve as a “backdoor” to use the APA to obtain what
would amount to concurrent district court jurisdiction
over a monetary claim that could be brought in the Court
of Federal Claims. But that principle has no application
to Delano’s Patent Act claims, which are not claims for
damages and are not within the exclusive jurisdiction of
the Court of Federal Claims.
B
The district court noted that Congress has expressly
consented to suit in related areas, including the Quiet
Title Act, 28 U.S.C. § 2409a, and the statute addressing
government infringement of copyrights and patents, 28
U.S.C. § 1498. Because those statutes confer limited
consent to suit, the court concluded that they indicate
that Congress intended to carve out only a narrow excep-
tion to immunity in this area. Therefore, the court con-
cluded that even if the waiver of immunity in section 702
applies broadly as a general matter, it does not apply in
this case. Both defendants urge us to affirm on that
theory, but we do not find it persuasive.
Congress enacted the Quiet Title Act in 1972, four
years before the 1976 amendments to section 702. Before
then, a plaintiff who wished to challenge the govern-
ment’s claim of title to real property had to wait until the
government decided to pursue a quiet title action or had
to request discretionary relief from either Congress or the
President. Block v. N.D. ex rel. Bd. of Univ. & Sch.
Lands, 461 U.S. 273, 280-81 (1983). Alternatively, the
limitations on specific relief, if any, derived from
statutes dealing with such matters as government
contracts, as well as patent infringement, tort
claims, and tax claims.
21 DELANO FARMS v. CALIFORNIA TABLE
plaintiff could surrender the property and sue for com-
pensation in the Court of Claims under a takings theory.
H.R. Rep. No. 92-1559, at 6 (1972). The 1972 Act permit-
ted a district court to hear a quiet title action brought by
a private party. 28 U.S.C. § 2409a; see also id. at § 2410
(pre-1972 statute permitting joinder of the United States
in a quiet title action regarding land over which the
United States holds a security interest). Nothing in the
Quiet Title Act, however, suggests that Congress intended
the subsequent waiver of sovereign immunity in section
702 of the APA to be construed narrowly. In fact, the
House report accompanying the 1976 amendment to the
APA specifically addressed the Quiet Title Act and ex-
plained that the waiver of sovereign immunity in section
702 would extend the policy of that waiver to equitable
actions generally. The report observed:
Just as there is little reason why the United
States as a landowner should be treated any dif-
ferently from other landowners in an action to
quiet title, so too has the time now come to elimi-
nate the sovereign immunity defense in all equi-
table actions for specific relief against a Federal
agency or officer acting in an official capacity.
H.R. Rep. No. 94-1656, at 9. That language makes it
quite clear that Congress intended both landowners and
plaintiffs with an equitable claim against the federal
government to have access to federal courts to vindicate
their claims.
Section 1498 provides no more support for the court’s
sovereign immunity ruling. In section 1498, Congress
consented to pay damages for the unauthorized use or
manufacture of a patented invention “by or for the United
States.” 28 U.S.C. § 1498. Although related to patents,
DELANO FARMS v. CALIFORNIA TABLE 22
this statute provides for the government, as a tortfeasor,
to account in money damages for its unauthorized use of a
patent. That Congress has consented to an action for
money damages for patent infringement by the govern-
ment does not in any way imply that Congress intended
to bar equitable actions related to the validity of govern-
ment-owned patents.
Accordingly, we agree with Delano that in section 702
of the APA Congress waived sovereign immunity for
claims such as Delano’s declaratory judgment claims
under the Patent Act. 6 For that reason, we hold that the
USDA may be joined as a party to the declaratory judg-
ment claims on remand.
6 The Commission makes a separate argument that
section 702 waives immunity for equitable actions alleg-
ing that an agency “acted or failed to act” and that be-
cause the USDA does not collect royalties directly from
plaintiffs, the agency has not “acted or failed to act” and
thus the waiver of sovereign immunity in section 702 does
not apply. To the contrary, USDA’s act of obtaining
ownership of the patents makes it subject to the declara-
tory judgment action seeking to invalidate the patents or
hold them unenforceable. Such an action arises under the
Patent Act, see Franchise Tax Bd. v. Laborers Vacation
Trust, 463 U.S. 1, 19 n.19 (1983); Jacobsen v. Katzer, 535
F.3d 1373, 1377 (Fed. Cir. 2008), and states a claim
against the patent owner for relief under the Declaratory
Judgment Act, 28 U.S.C. § 2201, over which the district
court has jurisdiction under 28 U.S.C. § 1338. Because
that action seeks non-monetary relief based on the
agency’s official acts, section 702 waives the agency’s
sovereign immunity.
23 DELANO FARMS v. CALIFORNIA TABLE
III
As an alternative ground for affirming the district
court’s ruling on Delano’s inequitable conduct claim, the
Commission argues that Delano’s complaint does not
provide an adequate factual basis from which the court
could conclude that anyone at the USDA made a deliber-
ate decision to withhold the fact of prior use with the
intent to deceive the PTO.
A charge of inequitable conduct based on a failure to
disclose will survive a motion to dismiss only if the plain-
tiff’s complaint recites facts from which the court may
reasonably infer that a specific individual both knew of
invalidating information that was withheld from the PTO
and withheld that information with a specific intent to
deceive the PTO. Exergen v. Wal-Mart Stores, Inc., 575
F.3d 1312, 1318, 1330 (Fed. Cir. 2009); see generally
Therasense, Inc. v. Becton, Dickinson & Co., ___F.3d ___,
2011 WL 2028255 (Fed. Cir. May 25, 2011) (en banc).
Delano alleged that Dr. Ramming had detailed
knowledge that the Commission had gone out of its way to
seek out information regarding widespread prior use of
the patented varieties, had learned of multiple instances
of such use, and had encouraged those in possession of the
patented varieties to cease such use. Delano also alleged
that “[t]he Commission and Dr. Ramming discussed the
fact that public uses and sales of new varieties prior to
seeking patent protection could jeopardize the Commis-
sion’s patenting program.” A reasonable jury could infer
that Dr. Ramming knew of the prior use, appreciated that
the prior use was material, and decided not to disclose
that information to the PTO, with deceptive intent.
DELANO FARMS v. CALIFORNIA TABLE 24
The Commission suggests that the general presump-
tion of regularity that attaches to the official acts of a
federal employee, such as Dr. Ramming, counsels against
a conclusion that he may have acted with deceptive
intent. See Hakim v. Cannon Avent Grp., PLC, 479 F.3d
1313, 1317 (Fed. Cir. 2007) (discussing that presumption
as it applies to a patent examiner). Even if relevant, that
presumption is not absolute. If Delano’s complaint is
sufficient to plead inequitable conduct, it is also sufficient
to overcome any presumption of regularity that may apply
to Dr. Ramming.
IV
In its last federal claim, which is directed only at the
Commission, Delano alleges that by entering into subli-
censing arrangements with grape growers for the Sweet
Scarlet patent, the Commission has enforced a fraudu-
lently obtained patent in violation of section 2 of the
Sherman Act. The district court ruled that Delano failed
to plead sufficient facts to define a plausible market over
which the Commission had allegedly exerted its economic
power and therefore dismissed that claim.
A patent owner or assignee that enforces a patent
that was procured by fraud on the PTO loses the exemp-
tion from antitrust liability that ordinarily protects a
patent holder in its enforcement efforts. Walker Process
Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172,
177 (1965). To establish the antitrust portion of a Walker
Process allegation, a plaintiff must show that the defen-
dant held monopoly power in the relevant market and
willfully acquired or maintained that power by anticom-
petitive means. C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d
1340, 1367-68 (Fed. Cir. 1998). A plaintiff must also
define the market within which the defendant engaged in
25 DELANO FARMS v. CALIFORNIA TABLE
the challenged conduct. Without a definition of the rele-
vant market, the anticompetitive effects of an improperly
obtained patent are impossible to measure. Walker
Process, 382 U.S. at 177. Delano pleaded the antitrust
element of its claim under both a monopolization and an
attempted monopolization theory. The market analysis is
the same under both. Newcal Indus., Inc. v. Ikon Office
Solutions, 513 F.3d 1038, 1044 n.3 (9th Cir. 2008).
The product market is defined by reference to the rea-
sonable interchangeability in use among competing
products or by reference to the cross-elasticity of demand
between a product and its substitutes. For instance, if an
increase in the price of Sweet Scarlet would lead its
purchasers to switch to a different variety, Sweet Scarlet
and that substitute can be regarded as part of the same
market. Brown Shoe Co. v. United States, 370 U.S. 294,
325 (1962); United States v. E.I. du Pont de Nemours &
Co., 351 U.S. 377, 395 (1956); see also Coal. for ICANN
Transparency, Inc. v. VeriSign, Inc., 611 F.3d 495, 507
(9th Cir. 2010). The product market can include submar-
kets that form a separate market or markets for antitrust
purposes. Brown, 370 U.S. at 325. In addition to cross-
elasticity of demand, the Supreme Court has identified
other factors that a plaintiff may reference as it defines a
submarket, including “industry or public recognition of
the submarket as a separate economic entity, the prod-
uct’s peculiar characteristics and uses, unique production
facilities, distinct customers, distinct prices, sensitivity to
price change, and specialized vendors.” Id.
Delano alleged that each variety of grapes forms a
distinct submarket within the general market for table-
grape-bearing vines. The Sweet Scarlet submarket,
which is the critical market here, is said to be the market
for grapevines “having the characteristics of late season
DELANO FARMS v. CALIFORNIA TABLE 26
ripening, seedless fruit, attractive pale green coloration,
cylindrical to ovoid fruit shape, firm fruit texture with
neutral sweet flavor, and medium to tight cluster.” Those
characteristics are taken directly from the patent for
Sweet Scarlet. Sweet Scarlet patent, col.4, ll. 22-27.
Delano asserts that those characteristics are “uniquely
valuable and distinct from other grapevine plant materi-
als” and that other grapevines cannot be reasonable
substitutes.
Delano cannot rely on the naked assertion that non-
infringing goods are not an adequate substitute for a
patented product, especially when it is undisputed that
other vines possess at least some of the relevant charac-
teristics. For example, the patent for the Autumn King
variety states that it is “distinguished from other com-
mercial grape cultivars known to us by a combination of
characteristics, including its late season ripening seedless
fruit with attractive pale green coloration, its medium
firm fruit texture with a neutral sweet flavor, its cylindri-
cal to ovoid fruit shape and its medium to tight cluster.”
Autumn King patent, col. 3, ll. 60-66. As in monopoliza-
tion cases not involving a patented product, Delano
needed to make some allegation that, if proved, would
define the market or the submarket with reference to
consumer demand for the product and consumer demand
for its reasonable substitutes. To be sure, at this early
stage in the proceedings, Delano did not have to provide
empirical or statistical evidence that would define the
market with precision. See Newcal Indus., 513 F.3d at
1045. But the aspects of an invention that may have led
the PTO to issue a patent are not per se coterminous with
the features of the patented product that may lead con-
sumers to select that product over other similar ones.
Because Delano failed to point to anything other than the
issuance of a patent for Sweet Scarlet grapes that would
27 DELANO FARMS v. CALIFORNIA TABLE
provide a plausible basis for finding that Sweet Scarlet
grapes form a relevant antitrust market, we uphold the
district court’s decision dismissing Delano’s antitrust
claim. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007).
Each party shall bear its own costs for this appeal.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED