Declaratory judgment
Encyclopedia
A declaratory judgment is a judgment of a court
in a civil case which declares the rights, duties, or obligations of one or more parties in a dispute. A declaratory judgment is legally binding, but it does not order any action by a party. In this way, the declaratory judgment is like an action to quiet title, a paternity petition, or any other form of preventive adjudication. The declaratory judgment is generally distinguished from an advisory opinion
because the latter does not resolve an actual case or controversy
. A court may issue a declaratory judgment by itself or along with some other relief (such as an award of damages or an injunction). A declaratory judgment is sometimes called a declaratory ruling, a term which also includes decisions of regulatory agencies
.
A declaratory judgment is typically requested when a party is threatened with a lawsuit
but the lawsuit
has not yet been filed; or when a party or parties believe that their rights under law and/or contract
might conflict; or as part of a counterclaim
to prevent further lawsuits from the same plaintiff (for example, when only a contract claim is filed, but a copyright claim might also be applicable). In some instances, a declaratory judgment is filed because the statute of limitations against a potential defendant may pass before the plaintiff incurs damage (for example, a malpractice statute applicable to a certified public accountant may be shorter than the time period the IRS has to assess a taxpayer for additional tax due to bad advice given by the C.P.A.).
Declaratory judgments are authorized by statute in most common law jurisdictions. In the United States
, the federal government
and most states enacted statutes in the 1920s and 1930s authorizing their courts to issue declaratory judgments. Although the declaratory judgment is generally a statutory remedy, it resembles remedies historically associated with equity. As a result, the declaratory judgment has sometimes been described as a form of equitable relief.
can follow one party sending a cease and desist
letter to another. A party contemplating the sending of such a letter risks that the recipient, or a party related to the recipient, such as a customer or supplier of the recipient, may file for a declaratory judgment in their own jurisdiction
. This may require the sender to appear in a distant court, at their own expense. Thus, the sending of a cease and desist letter presents a dilemma to the sender, as it would be desirable to be able to address the issues at hand in a candid manner without the need for litigation. Upon receiving a cease and desist letter, the recipient may seek a tactical advantage by instituting declaratory judgment litigation in a more favorable jurisdiction.
Sometimes the parties agree in advance of discussions that no declaratory judgment lawsuit will be filed while the negotiations are continuing. Sometimes a lawsuit is filed, but not served, prior to sending such a notice, to preserve a jurisdiction advantage without engaging the judicial process fully. Some parties send cease and desist letters that make "an oblique suggestion of possible infringement" to lower the risk that the recipient files a declaratory judgment lawsuit.
litigation - as well as in other areas of intellectual property
litigation, because declaratory judgments allow an alleged infringer to "clear the air" with regard to a product or service which may be the focal point of a business. Take, for example, a typical claim of patent infringement
. When a patent owner becomes aware of an infringer, the owner can simply wait until he pleases to bring a suit for infringement. Meanwhile, the monetary damages continuously accrue - with no effort expended by the patent owner, apart from marking the patent number on products the patent owner sold or licensed. On the other hand, the alleged infringer could do nothing to rectify the situation if no declaratory judgment existed. The alleged infringer would be forced to continue to operate his business with the cloud of a lawsuit over his head. Fortunately, the declaratory judgment procedure allows the alleged infringer to proactively bring suit to resolve the situation and eliminate the cloud of uncertainty looming overhead.
Common claims for declaratory judgment in patent cases are non-infringement, patent invalidity, and unenforceability. In order to bring a claim for declaratory judgment in a situation where a patent dispute may exist or develop, the claimant must establish that an actual controversy exists. If there is a substantial controversy of sufficient immediacy and reality, the court will generally proceed with the declaratory judgment action. The court may even hear the action if the patentee has not filed a cease and desist letter. The standard for an actual controversy was most recently addressed by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). However, even if an actual controversy exists, the declaratory judgment statute is permissive—a district court
, in its discretion, may decline to hear a declaratory judgment action.
Usually the claimant is actually making, using, selling, offering to sell or importing or is prepared to actually make, use or sell, offer to sell or import an allegedly infringing device or method, and usually the patent owner has claimed that such activities by claimant will result in patent infringement. An express threat of litigation is not needed, nor is it a guarantee that jurisdiction will be granted. Some factors courts have considered in this analysis are whether a patent owner has asserted its rights against an alleged infringer in a royalty dispute, whether the owner has sued a customer of an alleged infringer, or whether an owner has made statements regarding its patents in trade magazines.
owner must be very careful when communicating with possible infringers. If a patent
owner does suggest that there is patent
coverage of what an alleged infringer is doing or planning to do, the alleged infringer may bring suit. The alleged infringer, as the plaintiff in the suit, can choose the venue of the suit subject to constitutional restrictions and the state long-arm statute of the forum in question. The suit can be brought in any forum if the local federal district court can properly obtain personal jurisdiction over the alleged infringer. The patent owner being sued for a declaratory judgment created a situation where he has lost the "home field advantage." Travel costs to a distant courthouse can be substantial, and a party litigating in a distant forum may have to hire a local attorney, if required by the local rules, in addition to the regular patent litigation counsel.
Also, distant juries sometimes prefer the "home town" guy over the foreigner. Defendants in infringement cases should also not forget the utility of a declaratory judgment as a counterclaim. If a defendant brings a declaratory judgment counterclaim
, the plaintiff may not be able to so easily drop the suit if the outcome begins to look dismal because plaintiff now has to defend the counterclaim.
Patent owners should also be aware that a counterclaim of infringement is a compulsory counterclaim to a claim for declaratory judgment of non-infringement. C.f. Vivid Techs., Inc. v. Am. Sci. & Eng'g Inc., 200 F.3d 795, 802 (Fed. Cir. 1999). If a patent owner fails to assert an infringement counterclaim in a declaratory judgment non-infringement suit, the patent infringement claim will be deemed waived.
Court
A court is a form of tribunal, often a governmental institution, with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters in accordance with the rule of law...
in a civil case which declares the rights, duties, or obligations of one or more parties in a dispute. A declaratory judgment is legally binding, but it does not order any action by a party. In this way, the declaratory judgment is like an action to quiet title, a paternity petition, or any other form of preventive adjudication. The declaratory judgment is generally distinguished from an advisory opinion
Advisory opinion
An advisory opinion is an opinion issued by a court that does not have the effect of adjudicating a specific legal case, but merely advises on the constitutionality or interpretation of a law. Some countries have procedures by which the executive or legislative branches may certify important...
because the latter does not resolve an actual case or controversy
Case or controversy
The Case or Controversy Clause of Article III of the United States Constitution has been deemed to impose a requirement that United States federal courts are not permitted to hear cases that do not pose an actual controversy — that is, an actual dispute between adverse parties which is capable of...
. A court may issue a declaratory judgment by itself or along with some other relief (such as an award of damages or an injunction). A declaratory judgment is sometimes called a declaratory ruling, a term which also includes decisions of regulatory agencies
Government agency
A government or state agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency. There is a notable variety of agency types...
.
A declaratory judgment is typically requested when a party is threatened with a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
but the lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
has not yet been filed; or when a party or parties believe that their rights under law and/or contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
might conflict; or as part of a counterclaim
Counterclaim
In civil procedure, a party's claim is a counterclaim if the defending party has previously made a claim against the claiming party.Examples of counterclaims include:...
to prevent further lawsuits from the same plaintiff (for example, when only a contract claim is filed, but a copyright claim might also be applicable). In some instances, a declaratory judgment is filed because the statute of limitations against a potential defendant may pass before the plaintiff incurs damage (for example, a malpractice statute applicable to a certified public accountant may be shorter than the time period the IRS has to assess a taxpayer for additional tax due to bad advice given by the C.P.A.).
Declaratory judgments are authorized by statute in most common law jurisdictions. In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
and most states enacted statutes in the 1920s and 1930s authorizing their courts to issue declaratory judgments. Although the declaratory judgment is generally a statutory remedy, it resembles remedies historically associated with equity. As a result, the declaratory judgment has sometimes been described as a form of equitable relief.
Cease and Desist
The filing of a declaratory judgment lawsuitLawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
can follow one party sending a cease and desist
Cease and desist
A cease and desist is an order or request to halt an activity and not to take it up again later or else face legal action. The recipient of the cease-and-desist may be an individual or an organization....
letter to another. A party contemplating the sending of such a letter risks that the recipient, or a party related to the recipient, such as a customer or supplier of the recipient, may file for a declaratory judgment in their own jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
. This may require the sender to appear in a distant court, at their own expense. Thus, the sending of a cease and desist letter presents a dilemma to the sender, as it would be desirable to be able to address the issues at hand in a candid manner without the need for litigation. Upon receiving a cease and desist letter, the recipient may seek a tactical advantage by instituting declaratory judgment litigation in a more favorable jurisdiction.
Sometimes the parties agree in advance of discussions that no declaratory judgment lawsuit will be filed while the negotiations are continuing. Sometimes a lawsuit is filed, but not served, prior to sending such a notice, to preserve a jurisdiction advantage without engaging the judicial process fully. Some parties send cease and desist letters that make "an oblique suggestion of possible infringement" to lower the risk that the recipient files a declaratory judgment lawsuit.
Declaratory Judgment Actions in Patent Litigation
Declaratory judgments are common in patentPatent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
litigation - as well as in other areas of intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
litigation, because declaratory judgments allow an alleged infringer to "clear the air" with regard to a product or service which may be the focal point of a business. Take, for example, a typical claim of patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
. When a patent owner becomes aware of an infringer, the owner can simply wait until he pleases to bring a suit for infringement. Meanwhile, the monetary damages continuously accrue - with no effort expended by the patent owner, apart from marking the patent number on products the patent owner sold or licensed. On the other hand, the alleged infringer could do nothing to rectify the situation if no declaratory judgment existed. The alleged infringer would be forced to continue to operate his business with the cloud of a lawsuit over his head. Fortunately, the declaratory judgment procedure allows the alleged infringer to proactively bring suit to resolve the situation and eliminate the cloud of uncertainty looming overhead.
Common claims for declaratory judgment in patent cases are non-infringement, patent invalidity, and unenforceability. In order to bring a claim for declaratory judgment in a situation where a patent dispute may exist or develop, the claimant must establish that an actual controversy exists. If there is a substantial controversy of sufficient immediacy and reality, the court will generally proceed with the declaratory judgment action. The court may even hear the action if the patentee has not filed a cease and desist letter. The standard for an actual controversy was most recently addressed by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). However, even if an actual controversy exists, the declaratory judgment statute is permissive—a district court
District court
District courts are a category of courts which exists in several nations. These include:-Australia:District Court is the name given to the intermediate court in most Australian States. They hear indictable criminal offences excluding treason, murder and, in some States, manslaughter...
, in its discretion, may decline to hear a declaratory judgment action.
Usually the claimant is actually making, using, selling, offering to sell or importing or is prepared to actually make, use or sell, offer to sell or import an allegedly infringing device or method, and usually the patent owner has claimed that such activities by claimant will result in patent infringement. An express threat of litigation is not needed, nor is it a guarantee that jurisdiction will be granted. Some factors courts have considered in this analysis are whether a patent owner has asserted its rights against an alleged infringer in a royalty dispute, whether the owner has sued a customer of an alleged infringer, or whether an owner has made statements regarding its patents in trade magazines.
Patent Pitfalls and Strategy
The patentPatent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
owner must be very careful when communicating with possible infringers. If a patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
owner does suggest that there is patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
coverage of what an alleged infringer is doing or planning to do, the alleged infringer may bring suit. The alleged infringer, as the plaintiff in the suit, can choose the venue of the suit subject to constitutional restrictions and the state long-arm statute of the forum in question. The suit can be brought in any forum if the local federal district court can properly obtain personal jurisdiction over the alleged infringer. The patent owner being sued for a declaratory judgment created a situation where he has lost the "home field advantage." Travel costs to a distant courthouse can be substantial, and a party litigating in a distant forum may have to hire a local attorney, if required by the local rules, in addition to the regular patent litigation counsel.
Also, distant juries sometimes prefer the "home town" guy over the foreigner. Defendants in infringement cases should also not forget the utility of a declaratory judgment as a counterclaim. If a defendant brings a declaratory judgment counterclaim
Counterclaim
In civil procedure, a party's claim is a counterclaim if the defending party has previously made a claim against the claiming party.Examples of counterclaims include:...
, the plaintiff may not be able to so easily drop the suit if the outcome begins to look dismal because plaintiff now has to defend the counterclaim.
Patent owners should also be aware that a counterclaim of infringement is a compulsory counterclaim to a claim for declaratory judgment of non-infringement. C.f. Vivid Techs., Inc. v. Am. Sci. & Eng'g Inc., 200 F.3d 795, 802 (Fed. Cir. 1999). If a patent owner fails to assert an infringement counterclaim in a declaratory judgment non-infringement suit, the patent infringement claim will be deemed waived.
External links
- 28 U.S.C. 2201-2 - Declaratory judgment
- Federal Rules of Civil Procedure, Rule 57
- Uniform Declaratory Judgment Act