Academic journal article Santa Clara High Technology Law Journal

Declaratory Judgment Practices after SanDisk V. STMicroelectronics

Academic journal article Santa Clara High Technology Law Journal

Declaratory Judgment Practices after SanDisk V. STMicroelectronics

Article excerpt

Abstract

The Declaratory Judgment Act is a procedural device that was enacted in order to define the rights and legal relations of adverse parties. The declaratory judgment procedural device has been used by purported patent infringers as a sword to adjudicate the validity of the patents that they are allegedly infringing. Recent decisions in such cases as SanDisk v. STMicroelectronics, and MedImmune, Inc. v. Genentech, Inc., have given practitioners in patent law further insight into the standards that federal courts will use in granting a declaratory judgment on the validity of a patent in an infringement case. This note provides a brief overview of the declaratory judgment device, its development, and application in hallmark patent cases.

I. INTRODUCTION

The Declaratory Judgment Act is a procedural device that was enacted in order to define the rights and legal relations of adverse parties. The Act states that "[i]n a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." (1) The "cases and controversies" referred to in the Act are the cases and controversies justiciable under Article III of the Constitution. (2)

Under the Declaratory Judgment Act, plaintiffs have the burden of showing that an actual controversy exists. (3) In deciding whether this burden has been met, the court must consider whether there exists an actual case or controversy over which a federal court may exercise jurisdiction and whether proceeding without a case or controversy would result in the court rendering a forbidden advisory opinion. (4) However, there is no absolute right to a declaratory judgment: the Act says that a court may grant one, so the courts have discretion to exercise jurisdiction if a case or controversy exists. (5)

Applied to the patent landscape, the Declaratory Judgment Act relieves defendants who are engaging in an allegedly infringing activity of a Hobson's choice: either pursue the allegedly infringing activity and face damages, or cease an activity that may be a substantial source of revenue. Generally speaking, the Declaratory Judgment Act was intended to "fix the problem[s] that arise[] when the other side does not sue." (6)

II. LEGAL BACKGROUND

A. Early Declaratory Judgment Precedent

Courts have interpreted the requirement of a "case or controversy" in several key decisions that set precedents for later courts interpreting the requirement. In 1937, several years after the Declaratory Judgment Act became law, the Supreme Court in Aetna Life Insurance Co. v. Haworth upheld the constitutionality of the Declaratory Judgment Act and held that a case or controversy under the Act (and Article III) is a dispute that is "definite and concrete, touching the legal relations of parties having adverse legal interests," that is "real and substantial," and that is capable of "specific relief ... [of a] conclusive character." (7) Specific relief of a conclusive character means that a dispute does not require an opinion based on a "hypothetical state of facts." (8) In Maryland Casualty Co. v. Pacific Coal & Oil Co., the court again addressed the case or controversy requirement, determining that the key question to ask in making such a determination is "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." (9) Although these cases outlined key factors to use in determining if a case or controversy exists, they failed to create a bright line rule.

B. Lear v. Adkins

Years later, in Lear, Inc. v. Adkins, (10) the Supreme Court addressed declaratory judgment actions in the context of patent licenses, specifically with regard to the remedies a patent holder has against a licensee who challenges the validity of a patent while refusing to pay royalties as required under the licensing agreement. …

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