Declaratory judgment

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A declaratory judgment, also called a declaration, is the legal determination of a court that resolves legal uncertainty for the litigants. It is a form of legally binding preventive adjudication [1] by which a party involved in an actual or possible legal matter can ask a court to conclusively rule on and affirm the rights, duties, or obligations of one or more parties in a civil dispute (subject to any appeal). [2] The declaratory judgment is generally considered a statutory remedy and not an equitable remedy in the United States, [3] and is thus not subject to equitable requirements, though there are analogies that can be found in the remedies granted by courts of equity. [4] [5] A declaratory judgment does not by itself order any action by a party, or imply damages or an injunction, although it may be accompanied by one or more other remedies.

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A declaratory judgment is generally distinguished from an advisory opinion because the latter does not resolve an actual case or controversy. Declaratory judgments can provide legal certainty to each party in a matter when this could resolve or assist in a disagreement. Often an early resolution of legal rights will resolve some or all of the other issues in a matter.

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 CPA).

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. [6]

Cease and desist

The filing of a declaratory judgment lawsuit can follow the sending by one party of a cease-and-desist letter to another party. [7] A party contemplating sending such a letter risks that the recipient, or a party related to the recipient (such as a customer or supplier), may file for a declaratory judgment in their own jurisdiction, or sue for minor damages in the law of unjustified threats. [8] [9] [10] This may require the sender to appear in a distant court, at their own expense. So sending 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. [8] [9]

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, before 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 of the recipient filing a declaratory-judgment lawsuit. [11]

Declaratory judgment actions in patent litigation

Declaratory judgments are common in patent litigation, as well as in other areas of intellectual property litigation, because declaratory judgments allow an alleged infringer to "clear the air" about a product or service that may be a business's focal point. For example, in a typical patent-infringement claim, when a patent owner becomes aware of an infringer, the owner can simply wait until he pleases to bring an infringement suit. [12] 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. [13] 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. 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. 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. [14] If there is a substantial controversy of sufficient immediacy and reality, the court will generally proceed with the declaratory-judgment action. [15] The court may even hear the action if the patentee has not filed a cease and desist letter. [16] 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). But 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. [17]

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. [18] An express threat of litigation is not needed, nor is it a guarantee that jurisdiction will be granted. [19] 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.

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. [8] [9] The alleged infringer, as the plaintiff in the suit, can choose the venue 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.

Defendants in infringement cases can ask for declaratory judgment as a counterclaim.

A counterclaim of infringement is a compulsory counterclaim to a claim for declaratory judgment of non-infringement. [20] 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.

Related Research Articles

Laches (equity)

In common law legal systems, laches is a lack of diligence and activity in making a legal claim, or moving forward with legal enforcement of a right, particularly in regard to equity. This means that it is an unreasonable delay that can be viewed as prejudicing the opposing party. When asserted in litigation, it is an equity defense, that is, a defense to a claim for an equitable remedy.

Injunction a legal order to stop doing something

An injunction is a legal and equitable remedy in the form of a special court order that compels a party to do or refrain from specific acts. "When a court employs the extraordinary remedy of injunction, it directs the conduct of a party, and does so with the backing of its full coercive powers." A party that fails to comply with an injunction faces criminal or civil penalties, including possible monetary sanctions and even imprisonment. They can also be charged with contempt of court. Counterinjunctions are injunctions that stop or reverse the enforcement of another injunction.

A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to 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. If the plaintiff is successful, judgment is in the plaintiff's favor, and a variety of court orders may be issued to enforce a right, award damages, or impose a temporary or permanent injunction to prevent an act or compel an act. A declaratory judgment may be issued to prevent future legal disputes.

A cease and desist letter is a document sent to an individual or business to stop allegedly illegal activity ("cease") and not to restart it ("desist"). The letter may warn that, if the recipient does not discontinue specified conduct, or take certain actions, by deadlines set in the letter, that party, i.e. the letter's recipient, may be sued. When issued by a public authority, a cease and desist letter, being "a warning of impending judicial enforcement", is most appropriately called a "cease and desist order".

Copyright misuse is an equitable defence to copyright infringement in the United States based upon the doctrine of unclean hands. The misuse doctrine provides that the copyright holder engaged in abusive or improper conduct in exploiting or enforcing the copyright will be precluded from enforcing his rights against the infringer. Copyright misuse is often comparable to and draws from the older and more established doctrine of patent misuse, which bars a patentee from obtaining relief for infringement when he extends his patent rights beyond the limited monopoly conferred by the law.

Red Hat v. SCO is a lawsuit filed by Red Hat against The SCO Group on August 4, 2003. Red Hat is asking for a permanent injunction against SCO's Linux campaign and a number of declaratory judgments that Red Hat has not violated SCO's copyrights.

A legal remedy, also referred to as judicial relief or a judicial remedy, is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes another court order to impose its will in order to compensate for the harm of a wrongful act inflicted upon an individual.

An indispensable party is a party in a lawsuit whose participation is required for jurisdiction or the purpose of rendering a judgment. In reality, a party may be "necessary" but not indispensable. For example, if they claim an interest in the litigation, that interest may be impeded if they are not joined. That doesn't transform him them into an indispensable party unless their absence threatens some other party's interest. Often, an indispensable party is any party whose rights are directly affected by disposition of the case. Many jurisdictions have rules which provide for an indispensable party to be joined at the discretion of the judge; this is referred to as a nonjoinder of party. In some cases, the inability to join such a party means that the case must be dismissed. In the United States, this is outlined in the Federal Rules of Civil Procedure, Rule 19.

In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or contribution to the prior art, often through hardball legal tactics. Patent trolls often do not manufacture products or supply services based upon the patents in question. However, some entities which do not practice their asserted patent may not be considered "patent trolls" when they license their patented technologies on reasonable terms in advance.

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<i>Alcatel-Lucent v. Microsoft Corp.</i>

Alcatel-Lucent v. Microsoft Corp., also known as Lucent Technologies Inc. v. Gateway Inc., was a long-running patent infringement case between Alcatel-Lucent and Microsoft litigated in the United States District Court for the Southern District of California and appealed multiple times to the United States Court of Appeals for the Federal Circuit. Alcatel-Lucent was awarded $1.53 billion in a final verdict in August 2007 in the U.S. District Court for the Southern District of California in San Diego. The damages award was reversed on appeal in September 2009, and the case was returned for a separate trial on the amount of damages.

A legal threat is a statement by a party that it intends to take legal action on another party, generally accompanied by a demand that the other party take an action demanded by the first party or refrain from taking or continuing actions objected to by the demanding party.

<i>Jacobsen v. Katzer</i>

Jacobsen v. Katzer was a lawsuit between Robert Jacobsen (plaintiff) and Matthew Katzer (defendant), filed March 13, 2006 in the United States District Court for the Northern District of California. The case addressed claims on copyright, patent invalidity, cybersquatting, and Digital Millennium Copyright Act issues arising from Jacobsen under an open source license developing control software for model trains.

<i>Facebook, Inc. v. StudiVZ Ltd.</i>

Facebook, Inc. v. StudiVZ Ltd. was a federal lawsuit filed on July 18, 2008, by Facebook, Inc. in the United States District Court for the Northern District of California against StudiVZ Ltd., a UK company with its principal place of business in Germany. StudiVZ had launched a website which was alleged to be visually and functionally similar to Facebook's site. Facebook filed a similar lawsuit the same day in the German regional court of Stuttgart and an additional related lawsuit on November 19, 2008, in the German regional court of Cologne. In May 2009 the District Court in California issued an order indicating its view that Germany was the more appropriate forum for the dispute, but withheld issuing a final order on the question until further review of the issues of personal jurisdiction could be addressed. The parties subsequently settled the California case, but continued the litigation in Germany in which the regional court of Cologne held that StudiVZ did not violate any intellectual property rights held by Facebook.

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Medtronic, Inc. v. Mirowski Family Ventures, LLC, 571 U.S. ___ (2014), is a case of the Supreme Court of the United States that deals with civil procedure, and specifically with the question of the burden of proof required in pursuing declaratory judgments.

Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014), is a United States Supreme Court copyright decision in which the Court held 6-3 that the equitable defense of laches is not available to copyright defendants in claims for damages.

References

  1. Bray, Samuel (2010). "Preventive Adjudication". University of Chicago Law Review. 77: 1275. SSRN   1483859 .
  2. 28 U.S.C.S. § 2201 (“Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.”)
  3. Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 284 (1988) (“Actions for declaratory judgments are neither legal nor equitable . . . .”).
  4. Samuels v. Mackell, 401 U.S. 66, 70 (1971) (“Although the declaratory judgment sought by the plaintiffs was a statutory remedy rather than a traditional form of equitable relief, the Court made clear that a suit for declaratory judgment was nevertheless ‘essentially an equitable cause of action,’ and was ‘analogous to the equity jurisdiction in suits quia timet or for a decree quieting title.’”) (citations omitted)
  5. Green v. Mansour, 474 U.S. 64, 72 (1985) (“The propriety of issuing a declaratory judgment may depend upon equitable considerations”).
  6. See Declaratory Judgment Act, 28 U.S.C.S. § 2201
  7. 1 2 3 "Archived copy". Archived from the original on August 20, 2011. Retrieved October 21, 2011.CS1 maint: archived copy as title (link)
  8. 1 2 3 "Cease and Desist letter". Patent Attorney | Orange County | OC Patent Lawyer. January 6, 2010.
  9. "Legaltech News". Legaltech News.
  10. "Patent Law: "Reasonable Apprehension" After Receipt of Cease-and-Desist Letter Grounds for Declaratory Judgment Action". Library.findlaw.com. Retrieved June 13, 2012.
  11. But see 35 U.S.C. 286 (imposing a six-year time limitation on damages).
  12. "Patent Marking Requirements: Patented Articles Must be Marked as Patented in Order For Patentee to Recover Damages Due to Patent Infringement". Findlaw.
  13. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126–27 (2007).
  14. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).
  15. "Cease and Desist Letter". Houstoninternetlaw.com. September 23, 2008. Archived from the original on August 20, 2011. Retrieved June 13, 2012.
  16. Grand T. W. R. Co. v. Consolidated Rail Corp., 746 F.2d 323, 325 (6th Cir. 1984) (“Title 28 of the United States Code § 2201 provides that in ‘a case of actual controversy within its jurisdiction’ a federal court ‘may’ give a declaratory judgment, a power permissive, not mandatory. Although it is well settled that the granting of a declaratory judgment rests in the "sound discretion" of the court”).
  17. 35 U.S.C. 271.
  18. Grand T. W. R. Co. v. Consolidated Rail Corp. Archived August 20, 2011, at the Wayback Machine , 746 F.2d 323, 325 (6th Cir. 1984).
  19. Vivid Techs., Inc. v. Am. Sci. & Eng'g Inc., 200 F.3d 795, 802 (Fed. Cir. 1999)