Declaratory Judgment Actions, Covenants Not to Sue, and Bad Patents: A Call to Allow the Judiciary to Weed out Bad Patents While Adhering to the "Case or Controversy" Requirement

By Tiedeman, Jason Scott; Gorman, Eric D. | The Journal of High Technology Law, January 2013 | Go to article overview

Declaratory Judgment Actions, Covenants Not to Sue, and Bad Patents: A Call to Allow the Judiciary to Weed out Bad Patents While Adhering to the "Case or Controversy" Requirement


Tiedeman, Jason Scott, Gorman, Eric D., The Journal of High Technology Law


This section provides three examples of instances where a CNS does not have the effect of fully removing subject matter jurisdiction from the court. The first two examples involve forms of jurisdiction that may attach because of the specific circumstances of a litigated case. The third example involves a standalone cause of action, which, if plead in the declaratory judgment complaint, has the possibility of allowing the court to retain jurisdiction. This section also provides examples of administrative remedies that may be sought either independent of, or concurrent with an infringement suit, any of which may serve to invalidate an asserted patent in the face of a CNS.

A. Judicial Means of Retaining Jurisdiction

There are four major substantive defenses that an otherwise infringing party may make that will preclude the enforcement of a patent: (259) (1) patent invalidity; (260) (2) inequitable conduct; (261) (3) misuse or violation of antitrust laws; (262) and, (4) delay in filing suit resulting in laches or estoppel. (263) Of these four major defenses, three have direct application to claims brought under the Declaratory Judgment Act and the retention of subject matter jurisdiction--invalidity, unenforceability based on inequitable conduct, and antitrust. The following sections demonstrate instances in which the circumstances of the case and the way in which a purported infringer's defense is structured may provide means by which the court may retain jurisdiction.

1. Jurisdiction Over Invalidity and Unenforceability via 35 U.S.C. [section] 285 Claims of Exceptionality

Claims of exceptionality brought pursuant to the attorney's fees section of 35 U.S.C. [section] 2 8 5 264 have been applied to the question of subject matter jurisdiction. (265) Section 285 governs the fee shifting provisions of Title 35 and allows the court, in exceptional cases, to award "reasonable attorney fees to the prevailing party." (266)

In Highway Equipment Co. v. FECO, Ltd., (267) the Court of Appeals for the Federal Circuit held that exceptionality acts as its own independent basis for jurisdiction over invalidity claims and thus cannot be circumvented by a CNS. (268) In Highway Equipment, the defendant, in its answer to an infringement suit, counterclaimed for a declaratory judgment of non-infringement and invalidity. (269) It also sought costs and attorney fees pursuant to Section 285. (270) After the plaintiff issued a CNS, (271) the district court held that it retained jurisdiction pursuant to Section 285 to determine if exceptionality existed, but found that exceptionality did not exist. (272)

On appeal by the defendant, the plaintiff argued that the district court's jurisdiction to enter a ruling on the validity of the patent was removed once the CNS was issued. (273) The CAFC found that the retention of jurisdiction was proper and that the district court could issue a ruling on the validity of the patent-in-suit based on the jurisdiction inherent in the Section 285 counter claim. (274)

Retention of subject matter jurisdiction under Section 285 was further extended to claims of unenforceability in Monsanto Co. v. Bayer Bioscience N.V. (275) In Monsanto, four patents were initially asserted against the defendant. (276) Later, subject matter jurisdiction was removed from three of the four via a CNS. (277) The district court held that the all of the patents were unenforceable due to inequitable conduct. (278)

On appeal, the patent holder argued that the district court was without jurisdiction to render the removed patents unenforceable. (279) The CAFC held that subject matter jurisdiction was retained pursuant to Highway Equipment; (280) a finding of inequitable conduct pursuant to Section 285 necessarily confers jurisdiction to hold patents unenforceable for inequitable conduct. (281)

It is important to note that exceptionality under Section 285 does not have to be found in order for the court to render a patent invalid or unenforceable.

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Declaratory Judgment Actions, Covenants Not to Sue, and Bad Patents: A Call to Allow the Judiciary to Weed out Bad Patents While Adhering to the "Case or Controversy" Requirement
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