Declaratory Judgment - Declaratory-judgment Actions in Patent Litigation

Declaratory-judgment Actions in Patent Litigation

Declaratory judgments are common in patent litigation - as well as in other areas of intellectual property litigation, because declaratory judgments allow an alleged infringer to "clear the air" about a product or service that may be a business's focal point. Take, for example, a typical patent-infringement claim. When a patent owner becomes aware of an infringer, the owner can simply wait until he pleases to bring an infringement suit. Meanwhile, the monetary damages continuously accrue - with no effort expended by the patent owner, apart from marking the patent number on products the patent owner sold or licensed. On the other hand, the alleged infringer could do nothing to rectify the situation if no declaratory judgment existed. The alleged infringer would be forced to continue to operate his business with the cloud of a lawsuit over his head. Fortunately, the declaratory-judgment procedure allows the alleged infringer to proactively bring suit to resolve the situation and eliminate the cloud of uncertainty looming overhead.

Common claims for declaratory judgment in patent cases are non-infringement, patent invalidity, and unenforceability. To bring a claim for declaratory judgment in a situation where a patent dispute may exist or develop, the claimant must establish that an actual controversy exists. If there is a substantial controversy of sufficient immediacy and reality, the court will generally proceed with the declaratory-judgment action. The court may even hear the action if the patentee has not filed a cease and desist letter. The standard for an actual controversy was most recently addressed by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). But even if an actual controversy exists, the declaratory-judgment statute is permissive—a district court, in its discretion, may decline to hear a declaratory-judgment action.

Usually the claimant is actually making, using, selling, offering to sell or importing or is prepared to actually make, use or sell, offer to sell or import an allegedly infringing device or method, and usually the patent owner has claimed that such activities by claimant will result in patent infringement. An express threat of litigation is not needed, nor is it a guarantee that jurisdiction will be granted. Some factors courts have considered in this analysis are whether a patent owner has asserted its rights against an alleged infringer in a royalty dispute, whether the owner has sued a customer of an alleged infringer, or whether an owner has made statements regarding its patents in trade magazines.

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