County Materials Corp. v. Allan Block Corp.

This case is one of those nonpatent patent cases that, as we explain more fully below, falls within the jurisdiction of the regional courts of appeals rather than the Federal Circuit. See 28 U.S.C. §§ 1295(a)(1), 1338; Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 829-30 (2002) (applying well-pleaded-complaint rule to § 1338). Two companies, County Materials Corporation and Allan Block Corporation, entered into a production agreement (“the Agreement”) giving exclusive rights to County Materials to manufacture Allan Block’s patented concrete block; the issue is whether County Line was free to sell an allegedly non-infringing product, despite the presence of a covenant not to compete in the Agreement in which County Line promised not to sell competing products for 18 months if it stopped making Allan Block’s product. Following the termination of the Agreement, County Line decied not to wait for the full 18 months before jumping back into the market with a competing product. Allan Block threatened to sue, but County Line beat it to the courthouse with this suit for a declaratory judgment. County Line wanted the district court to declare that the covenant not to compete was unenforceable because it violated federal patent policy, essentially raising an anticipatory patent misuse defense to its planned breach of the Agreement. The district court granted summary judgment to Allan Block, finding no violation of federal patent policy or Minnesota law. We agree with the district court’s conclusions and affirm.

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