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

Article excerpt

Introduction I. BACKGROUND   A. Declaratory Judgments      1. A Brief History of the Declaratory Judgment Act      2. The Use of the Declaratory Judgment Act in Patent         Litigation      3. The New Justiciability Test and its Impact on         Subject Matter Jurisdiction         a. Immediacy and Reality         b. MedImmune and the New Justiciability            Test.         c. Common Misapplications of Cardinal            Chemical   B. Ex Parte Reexamination, Post-Grant Review, and Inter   Partes Review Before the United States Patent and   Trademark Office      1. A Brief History of Reexamination and Post-Grant      Review      2. Procedural Aspects of Ex Parte Reexamination,      Post-Grant Review, and Inter Partes Review as      They Relate to Declaratory Judgment Actions      3. Using Ex Parte Reexamination, Post-Grant Review,      or Inter Partes Review in the Context of      Litigation         a. Legal Standards         b. Discovery         c. Staying Litigation         d. Estoppel Issues II. ANALYSIS   A. Judicial Means of Retaining Jurisdiction      1. Jurisdiction Over Invalidity and      Unenforceability Via 35 U.S.C. [section] 285 Claims of      Exceptionality      2. Jurisdiction Over Unenforceability Claims Concerning      Interrelated Patents      3. Jurisdiction Based on the Sherman Act      4. Potential Issues with Judicial and         Administrative Remedies   B. Administrative Proceedings and Claims of Invalidity In   Ex Parte Reexamination, Post-Grant Review, and Inter   Partes Review Proceedings Before United States Patent   and Trademark Office      1. Post-Grant Review Proceedings      2. Inter Partes Review Proceedings      3. Ex Parte Reexamination Proceedings III. PROPOSED SOLUTION   A. The Extension of Currently-Accepted Judicial Means   B. Utilizing Administrative Remedies   C. Public Policy Rationale  CONCLUSION 

Cite as 13 J. High. Tech. L. 1 (2012)

Introduction

Suits based on the Declaratory Judgment Act (1) are well-known tools in the world of patent litigation. (2) Such suits allow alleged infringers to obtain a judicial determination of their rights without waiting for a patent owner alleging infringement to sue. (3) A typical patent-related situation involving a declaratory judgment action arises where a patent owner threatens a competitor with infringement of its patent, thus forcing the competitor to either stop producing a product or continue its potentially infringing activity. (4) An even worse situation occurs where the patentee threatens infringement, but never actually brings suit in order to stifle competition. (5)

Absent the declaratory judgment mechanism, this would act as a powerful deterrent to competition. (6) An accused infringer that continues its allegedly infringing actions opens itself up to treble damages because it is on notice and the alleged infringement may now be willful; if it stops, it loses sales. (7) The Declaratory Judgment Act empowers alleged infringers to bring a declaratory judgment action and have a court determine their rights. (8)

For an accused infringer to survive a dismissal of its declaratory judgment action, the court must have subject matter jurisdiction to hear the case. (9) This is established by showing that the patent owner's assertions of infringement are "definite and concrete" and touch on "the legal relations of parties having adverse legal interests." (10) The Court of Appeals for the Federal Circuit ("CAFC") has developed doctrine by which courts may determine whether the level of assertions and actions by the patent owner rise to this level. (11) This typically is proved by showing that the patentee has created "a reasonable apprehension of an infringement suit" in the accused infringer. (12)

Once the court obtains subject matter jurisdiction, the patent owner still has the ability to have the suit dismissed. A patent owner may decide to cut its losses and file a Covenant Not to Sue ("CNS") thereby alleviating the court of subject matter jurisdiction. …