Is There Any Limit Left on Declaratory Judgment Jurisdiction?

Last week, the Federal Circuit reversed a district court’s dismissal of a declaratory judgment complaint against a patent holding company in Hewlett-Packard Co. v. Acceleron LLC.

Declaratory Judgment

A party may file a “declaratory judgment” action against a patent owner where it asks the court for a declaration that it does not infringe a patent or that the patent is invalid or unenforceable.  A party may not, however, simply go through the patent database and file such actions against any patent it does not like (at least not yet).  There needs to be an actual “case or controversy” between the parties.  Previously that meant that the patent owner had asserted infringement against the party that files the suit.  The bar to such actions continues to get lower.

HP v. Acceleron

Acceleron, a patent holding company, acquired ownership of U.S. Patent No. 6,948,021.  Acceleron sent a letter to HP to “call [HP's] attention to” the patent.  Acceleron requested to discuss the patent with HP, but asked that HP agree that all information exchanged would not be used for litigation purposes and that HP agree that Acceleron has not asserted the patent against it and no declaratory judgment jurisdiction exists between the parties. 

HP responded by stating that it would agree to a mutual 120-day period when no lawsuit would be filed by either party and that it would send such an agreement to Acceleron.  Finally, Acceleron reponded to this correspondence by stating that it did not believe that any basis for declaratory judgment jurisdiction existed, so no such agreement was necessary.  As if to test this point, HP then filed a declaratory judgment action.

The district court agreed with Acceleron and dismissed the case.  The Federal Circuit, however, reversed.

The court noted that the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., wittingly or not, lowered the bar for declaratory judgment actions.  Although the court did note that there is still a slight bar after that case.

[A] communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more, cannot establish adverse legal interests between the parties, let alone the existence of a “definite and concrete” dispute. More is required to establish declaratory judgment jurisdiction. 

That quotation would seem to support an affirmance, right?  The court spent the remainder of its opinion pointing to facts that fulfilled the “more” requirement.  The circumstances the court noted were that Acceleron had indicated that the patent was “relevant” to a specific HP product line and that Acceleron is solely a licensing entity.  “[W]ithout enforcement it receives no benefits from its patents.”  The court found that this to be an important factor in finding jurisdiction.

Is Anything Left?

In a word–no.  The court did recognize that “[o]ur decision in this case undoubtedly marks a shift from past declaratory judgment cases,” but then blamed this on MedImmune.  The only case left to test seems to be simply putting the patent in an envelope and sending it with no letter whatsoever.  I am not confident that the court would not find jurisdiction in that case either.

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One Response to “Is There Any Limit Left on Declaratory Judgment Jurisdiction?”

  1. A Letter Offering to Discuss Patent Licensing = Ticket to Court (and Not the Court of Your Choosing!) « IP Deals Says:

    [...] to question whether “is there any limit left on Declaratory Judgment jurisdiction”? (http://inventivestep.net/2009/12/08/is-there-any-limit-left-on-declaratory-judgment-jurisdiction/) (concluding “in a word – – no”!).  I am not sure it’s that bad, but it may be getting [...]

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