Chapter 22: DECLARATORY JUDGMENT ACTIONS:
The Declaratory Judgment Act authorizes a court to declare the rights of an interested party "in a case of actual
controversy." 28 U.S.C. 2201 (1994). The purpose of the Act is to enable a person who is reasonably at legal risk
because of an unresolved dispute to obtain judicial resolution of that dispute without having to await commencement of
legal action by the other side. (Appropriate where the delay of commencement of suit may prejudice a party). However,
the controversy must be ACTUAL, not hypothetical or of uncertain prospective occurrence. Kustom Signals Inc.
v Applied Concepts 41 USPQ2d 1048 (District Court case, Kansas). BP Chems. Ltd. V. Union Carvide Corp., 28
USPQ2d 1124 (Fed. Cir. 1993).
The facts must show that there is a substantial controversy between parties having adverse legal interests and of
sufficient immediacy and reality to warrant an issuance of a declaratory judgment action. Arrowhead Indus. Water, 6
USPQ2D 1685 (Fed. Cir. 1988).
In the arena of patents, to be granted a declaratory judgment action, the party must show:
1.explicit threat or action by patentee which creates a reasonable apprehension of an infringement suit; and
2.present steps which could constitute infringement. BP Chems Ltd, 4 F.3d at 977.
A reasonable apprehension is more than a mere nervous state of mind of the possible infringer. Phillips Plastics v.
Kato, 35 USPQ2d 1222 (Fed. Cir. 1995). See Kustom Signals, supra .
For example, these are situations when a controversy is not present:
1.merely being aware of a patent;
2.merely being offered a license on a patent, without more;
The following situations indicate when a controversy is present:
1.Offer for license + threats of infringement;
2.Offer of license + listing infringement suits brought against others (veiled threat).
In summary, the court will look at the totality of the circumstances and determine whether there is a reasonable
apprehension of an infringement suit before granting a declaratory judgment action. Based on the review of the recent
case law, it seems the actual threat of infringement suit by the patentee can only invoke a reasonable
apprehension in the accused infringer. Accordingly, if you, as a patentee, want to make a party aware of your patent
but do not want to risk a declaratory judgment action, merely ask for a license and to not accuse the party of
infringement or give threats thereof.
Note: As discussed in the "Marking" section of this Outline, if you have not adequately marked a patented product with
the patent number, you MAY have to actually give notice of infringement to the accused party to acquire the right to
recover damages (35 U.S.C. 287). This marking "notice" is a separate issue from whether the accused party has been
threatened with patent infringement so as to allow the accused party to bring a declaratory judgment action. See SRI
International v. Advanced Technology Laboratories, Inc. 96-1437 (Oct.23, 1997 Fed. Cir.) where the Court found that a
letter informing a party of a patent was sufficient to meet the notice requirements of 35 U.S.C. 287 even though the
notice was not sufficient to create an "actual controversy" under the Declaratory Judgment Act (28 U.S.C. 2201. "The
criteria for actual notice under section 287(a) are not cextensive with the criteria for filing a declaratory judgment
action.")
Example Scenario:
Patentee obtains a product patent and marks the product with the patent number.
1.The patentee meets the notice requirements of 35 U.S.C. 287 as he has given constructive notice of the patent
by marking. The patentee may collect damages as to infringement from the time of marking;
2.However, the infringing party must have ACTUAL notice of the patent to prove a willful infringement claim, so to
insure the accused has actual notice of the patent, the patentee should write a letter to the accused party
informing him of the the patent and offering a license on that patent;
3.The letter offering a license has not created an "actual controversy" under the Declaratory Judgment Act. Again,
the Declaratory Judgment Act allows the accused party to initiate suit against the patentee where the patentee
has created an actual controversy. (If the patentee writes a threatening letter to the accused party, this may be
enough to create an actual controversy.) |
