D
eclaratory judgment
actions, commonly
re-ferred to as “DJ
actions,” have histori-
cally provided a mech-
anism for companies threatened
with a patent infringement claim,
e.g., through a cease and desist
letter sent by a patent holder, to
preemptively le a lawsuit seek-
ing a court ruling declaring the
patent invalid or not infringed.
These DJ actions for years had
been a popular tool for accused
infringers, but recent changes in
the patent litigation landscape
have resulted in a shift away
from these DJ actions, and a cor-
responding shift in the way pat-
ent holders approach infringers.
Background
The Declaratory Judgment
Act provides “in a case of actual
controversy within its jurisdic-
tion … any court of the United
States, upon the ling of an appro-
priate pleading may declare the
rights and other legal relations of
any interested party seeking such
declaration.” 28 U.S.C. 2201(a).
To bring a DJ action, a party must
therefore demonstrate the exis-
tence of an actual case or con-
troversy. In the patent context,
that requirement is most often
satised by an explicit or implicit
threat of a patent lawsuit—for
example, a letter from the pat-
ent holder putting the prospec-
tive defendant on notice of the
its claim for infringement, and
offering a license. Faced with
the threat of a patent infringe-
ment suit, the accused party in
these circumstances could then
preemptively bring a DJ action to
challenge the charge of infringe-
ment, or the validity of the sub-
ject patent.
These DJ actions were typically
motivated, at least in part, by
litigation strategy. Rather than
being dragged into a court of the
patent holder’s choosing and on
the patent owner’s terms, the
DJ action allowed the accused
infringer to take charge of the
dispute and bring the ght in a
jurisdiction it chooses.
Previously, patent holders
enjoyed nearly unlimited venue
choices across district courts
in the United States, and would
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Volume 262—No. 104
WedNesday, NoVember 27, 2019
Death of the DJ: The Decline of Declaratory
Judgment Actions in Patent Disputes
PATENT AND TRADEMARK LAW
Expert Analysis
rob maier is an intellectual property partner in
the New York office of Baker Botts, and the head
of its intellectual property group in New York. Joe
akalski, a Baker Botts senior associate, assisted
in the preparation of this article.
www. NYLJ.com
Recent changes in the patent
litigation landscape have re-
sulted in a shift away from these
DJ actions, and a corresponding
shift in the way patent holders
approach infringers.
By
Robert L.
Maier
often le in a district known to
be friendly to patent holders,
either procedurally or in terms
of favorable jury pools and
large damages awards. The DJ
allowed an alleged infringer to
seize the patent holder’s ability
to forum shop, and instead le
in a hometown court or other
court it deemed advantageous.
So signicant was this strategy
point that patent holders histori-
cally considered with great care
what they said in communica-
tions with alleged infringers—
and how they said it—stopping
short of threats that would trig-
ger an “actual case or controver-
sy” that would otherwise allow
an accused infringer to bring a
DJ action.
Decline in Patent
DJ Action Filings
Two factors in recent years
have taken the teeth out of DJ
actions and triggered a steep
decline in DJ action lings. These
filings first declined in 2012,
immediately following passage of
the Leahy-Smith America Invents
Act, which established a Patent
Trial and Appeals Board (PTAB)
at the U.S. Patent and Trademark
Ofce that hears expedited pat-
ent validity challenges. These
proceedings, such as Inter Par-
tes Review (IPR), make it easi-
er, faster, and less expensive to
invalidate patents than in a dis-
trict court, and have therefore
become a tool of choice in patent
defense strategy.
How do these PTAB proceed-
ings impact DJ action lings? By
statute, these proceedings may
not be instituted if “before the
date on which the petition for
such a review is led, the peti-
tioner or real party in interest
led a civil action challenging the
validity of a claim of the patent.”
35 U.S.C. §315(a). In other words,
if an accused infringer were to
le a DJ action in a district court
seeking a declaration of invalid-
ity, it could not thereafter invali-
date the patent at the PTAB. The
steep decline in DJ actions led
in 2012 and continuing thereaf-
ter is a direct result of the rise
of PTAB proceedings as the pre-
ferred mechanism for challenging
the validity of a patent.
The second contributing fac-
tor came some years later. In
May 2017, the Supreme Court
decided TC Heartland v. Kraft
Foods Grp. Brands, 137 S. Ct.
1514 (2017). In TC Heartland, the
Supreme Court interpreted the
patent venue statute, 28 U.S.C.
§1400(b), and held that patent
holders would no longer enjoy
virtually unlimited venue choic-
es nationwide, but rather could
only sue in the state in which the
defendant is incorporated, or
“where the defendant has com-
mitted acts of infringement and
has a regular and established
place of business.” TC Heart-
land, 137 S. Ct. at 1516-17. The
Supreme Court thus stripped
patent holders of their ability
to forum shop. And, accordingly,
parties threatened with a patent
suit no longer have to be as con-
cerned about being dragged into
a faraway district that is highly
plaintiff-friendly—instead, par-
ties know they can only be sued
in a limited number of places,
one often being the District of
Delaware, a sophisticated patent
WedNesday, NoVember 27, 2019
court where most companies are
incorporated, and others being
a party’s home court jurisdic-
tions where they conduct mean-
ingful business operations. As a
result, the strategic advantage
in afrmatively ling a DJ action
to avoid an unfavorable jurisdic-
tion no longer applies.
The ling data supports these
points. In 2017 the number of
patent DJ actions dropped below
200 for the rst time since 2008.
In fact, the number of DJ action
lings have not been this low
since 2002—133 DJ actions were
led in 2002, nearly matching the
134 led in 2018. (See Table 1
below)
Given this shift in the land-
scape, patent holders now can
be more direct in their commu-
nications to would-be licensees.
In the past, parties and their
attorneys would take great care
in drafting letters to potential
licensees, doing so softly and in
a way that would, they hoped, fall
short of creating a case or contro-
versy for DJ purposes, but which,
at the same time, still conveyed
sufcient gravity that the alleged
infringer would be prompted to
consider paying for a license.
Sometimes this dance resulted in
a slow and protracted escalation
before any serious licensing dis-
cussions proceeded. Now, given
the diminishing of this strategy
concern, a patent holder is free
to be more forceful at the outset,
and can thereby accelerate the
discussions.
Are Rumors of DJ’s Death
Greatly Exaggerated?
While DJ action filings are
down, they are not necessarily
out. In some unique circumstanc-
es, the DJ action may still have
strategic value. For example,
accused infringers with regular
and established places of busi-
ness in multiple districts may still
seek to le a DJ action to control
selection of venue from among
the multiple districts in which
they could be sued.
There may even be room for an
alleged infringer to have its cake
and eat it too. While the ling of a
DJ action asserting invalidity of a
patent will preclude a subsequent
PTAB proceeding, a DJ action
asserting only non-infringement
will not, because it does not con-
stitute “a civil action challenging
the validity of a claim of the pat-
ent” for purposes of the statute.
35 U.S.C. §315(a)(1)). And further
still, at least one PTAB panel has
acknowledged in a non-preceden-
tial decision that a party that
les a DJ action seeking only a
declaration of non-infringement,
which is met with an infringe-
ment counterclaim by the pat-
ent holder, can then in response
bring a counterclaim for invalid-
ity and still maintain the ability
to subsequently invalidate the
patent at the PTAB. Canfield Sci.
v. Melanoscan, IPR2017-02125,
2018 WL 1628565, Paper No. 15
(P.T.A.B. Mar. 30, 2018). In Can-
field, the PTAB found that an IPR
petition was not barred because,
as specied in 35 U.S.C. §315(a)
(3)), “[a] counterclaim challeng-
ing the validity of a claim of a
patent does not constitute a civil
action challenging the validity of
a claim of a patent [for purpos-
es of subsection (a)(1)].” Id. at
*2; see also Diagnostics v. Ltd.,
IPR2012-00022, 2013 WL 2181162,
at *6 (P.T.A.B. Feb. 12, 2013).
The bottom line: Use of the DJ
has rapidly declined in recent
years, as a direct result of mean-
ingful changes brought by both
Congress and the Supreme Court.
In the vast majority of cases, a
DJ action will no longer bring the
strategic advantages it once did.
That said, practitioners and pat-
ent litigants should not discount
the value of DJ actions entirely—
instead, they should be consid-
ered in every case, based on the
specic facts and circumstances
and party objectives. In some
cases, the DJ action may still be
a useful tool for responding to
a charge of patent infringement.
WedNesday, NoVember 27, 2019
Reprinted with permission from the November 27, 2019 edition of the NEW YORK
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