What is a patent declaratory judgment lawsuit?
A patent declaratory judgment action is an infringement lawsuit in reverse. The plaintiff is the accused infringer seeking a declaration of noninfringement from the court. The patent owner is the defendant. Instead of asking for money damages or an injunction, the accused infringer is asking the court to render a decision that their products do not infringe a particular patent. A patent declaratory judgment suit may also include business tort claims as well as patent invalidity challenges.
Need to defend a patent infringement claim? Contact US patent attorney Vic Lin at (949) 223-9623 or at vlin@icaplaw.com to explore how we can help.
How does a DJ legal action work?
In order for a federal court to hear a declaratory judgment (DJ) lawsuit, the case must involve a controversy. The plaintiff (accused infringer) must be able to show that a controversy exists with the patent owner. For example, a patent owner sending a cease-and-desist letter or initiating an Amazon infringement report may be sufficient to cause a controversy. Accused infringers cannot file DJ lawsuits simply because they want to challenge particular patents.
What if the patent owner sent a friendly letter inviting you to consider taking a license? Does an invitation to license a patent rise to the level of controversy? Perhaps not if there were no threats of taking further legal action if you did not comply.
Even though the patent owner is the defendant in a DJ action, the defendant/patentee can and almost certainly will counterclaim for patent infringement. So a declaratory judgment lawsuit looks like a patent infringement litigation with the tables turned.
Why sue for declaratory judgment?
If all an accused infringer has done is simply reverse the roles, why file a DJ action in the first place?
First, the accused infringer can pick a venue that is more convenient to them. For example, the accused infringer might be located in California, and litigating a patent lawsuit in another state may be substantially more costly.
Second, the patent owner might not want to escalate the fight. It is one thing to send a cease-and-desist letter or report an Amazon patent violation. Fighting a patent infringement lawsuit takes the battle to a whole new level. Is the patent owner willing to lawyer up and invest in a potentially costly and protracted litigation?
Finally, a patent DJ lawsuit filed in federal court makes everyone do their due diligence before proceeding. How strong are the infringement contentions? Does the patent owner have a solid case of infringement? What about invalidity challenges? Does the accused infringer have solid prior art to invalidate certain claims?
Are you prepared to escalate a patent dispute?
Litigation can become a game of chicken. Who will bow out first? Who has the financial endurance to outlast the opponent? Though not always the case, the party with greater financial resources will typically have a major advantage in litigation.
Before escalating a patent infringement matter to a federal court lawsuit, ask yourself whether you are financially prepared for a long and expensive battle.
Another very practical question is: Who has more to lose? A patent owner may stand to gain from greater market share, but an accused infringer faces the risk of losing significant revenue.
The one with greater pain to alleviate may be the party with greater drive to see through declaratory judgment litigation. And the party with less potential gain may have a greater incentive to settle early.
What are alternatives to a declaratory judgment lawsuit?
A good defensive strategy may require you to play offense, but DJ lawsuits are not the only offensive weapons available to accused infringers.
Another option may be to challenge the validity of the patent by filing a request for reexamination with the USPTO. Invalidating a patent may make sense if you have found relevant prior art, especially if the references were not previously considered by the examiner during the prosecution of the patent application.
Keep in mind that invalidating a patent opens up the market to competitors. It might be great that you can sell your products without liability, but so can your competitors.
Why are many patent lawyers and patent agents unfamiliar with declaratory judgment actions?
Many patent lawyers have never litigated an infringement case. Patent agents are not licensed to practice law. Patent litigation cases require a combination of technical analysis and persuasive communication, both verbal and written.
If your patent practitioner has never mentioned the DJ option, it might be because they do not handle adversarial infringement cases.
