Declaratory judgment actions, covenants not to sue, and bad patents: a call to allow the judiciary to weed out bad patents while adhering to the "case or controversy" requirement.

AuthorTiedeman, Jason Scott
PositionIII. Proposed Solution through Conclusion, with footnotes, p. 81-87

It seems incongruous that a potentially invalid patent may be allowed to remain merely because the patent owner issues a CNS. It seems equally incongruous to force a party to continue with litigation when no longer wishes enforce its patent against a DJ plaintiff. In its current guise, our system allows for a patentee to remove the case and controversy requirement and thus end litigation. It may do this even when--or perhaps because of--a potentially invalidating piece of prior art has been uncovered.

To resolve these seemingly conflicting ideals, the authors propose two options that would resolve this issue. Initially, the authors propound the extension subject matter jurisdiction to all claims of invalidity brought under the Declaratory Judgment Act such that a CNS may not be used to obviate a potentially invalidating piece of prior art. The authors also assert that the use of ex parte reexamination, instigated by the courts and administered by the USPTO, is an equally compelling means to resolve this issue.

  1. The Extension of Currently-Accepted Judicial Means

    As noted in the preceding sections, a court may extend jurisdiction over claims of violation of the Sherman Act or claims based on Section 285. (410) Each of these derives its jurisdiction-retaining power because they constitute their own cause of action and are independent of the underlying infringement suit. (411) Claims brought pursuant to the Declaratory Judgment Act must always carry their own jurisdiction. (412)

    However, neither of these causes of action were initially held to confer jurisdiction. (413) In both cases either the Supreme Court or the CAFC sided with the party claiming that jurisdiction existed, thus allowing the court to determine whether the inequitable assertion of a patent had occurred. (414) Prior to their assertion by the aggrieved party, neither of these causes of action was originally seen to satisfy the case or controversy requirement on their own accord. (415) It was only after the court recognized the inequitable burden placed on the patent system that these jurisdiction-retaining means were recognized. (416)

    Further, the court has not hesitated in extending jurisdiction to claims of invalidity or unenforceability levied against patents that are interrelated or derived from the same general invention. (417) This shows that if the court considers a wrong egregious enough, it will project its equitable powers to right the wrong. (418) It is unclear whether a court may extend subject matter jurisdiction to patents subject to a CNS or whether such power resides in the equitable powers of the court itself. (419) Yet courts may, and do, extend this power. (420)

    The combination of the Declaratory Judgment Act and the court's equitable function lays the groundwork for the extension of jurisdiction. Functionally, the proposed extension of jurisdiction would only occur in the limited circumstance where, during litigation, the parties became aware of a potentially invalidating piece of prior art and a CNS was issued to avoid this piece of art. Thereafter, the court would exercise its equitable powers and would retain jurisdiction to consider the art in question. If the art was not invalidating, there would be limited harm in this exercise. If the art was found to be invalidating, the court would have utilized the opportunity to fulfill the important function of removing an improvidently granted patent.

    Extending jurisdiction in this way would better accomplish the Declaratory Judgment Act's intended purpose and would forestall the assertion of a patent that does not disserve the limited monopoly granted to it. (421)

  2. Utilizing Administrative Remedies

    Administrative remedies before the USPTO provide a further means by which the judiciary may address the validity of patent claims even in the face of a CNS. Of the available administrative remedies, it is ex parte reexamination which presents the most viable solution. (422) The USPTO, through reexamination proceedings, has perpetual jurisdiction over patents throughout their enforceable life. (423) Additionally, where the validity of a patent is in question, the USPTO is uniquely qualified to interpret validity issues because of the heavy technical burdens required to reach a correct conclusion. (424)

    In the proposed scenario, it is the judge who would exercise her discretion and equitable powers to initially determine whether an ex parte reexamination should be sought based on a reference uncovered during litigation. If this initial determination is met, the judge would then request that the Director institute an ex parte reexamination based on reference that the Judge forwards to the Director. (425) This would be done without deference to the wishes of the parties involved in the litigation.

    As it currently stands, a party seeking an ex parte reexamination is required to provide a written request and pay the required fee. (426) A request "must set forth the pertinency and manner of applying cited prior art to every claim for which reexamination is requested." (427) This pertinency requirement would likely be overly burdensome on a judge and therefore it is proposed that the Director waive this requirement when the request is initiated by a judge. This would be akin to the situation where the Director instigates a reexamination on her own volition. (428) Along with this, it is noted that the fee requirement may be waived by the Director at her discretion. (429)

    Waiving both the pertinency and fee requirements would allow cited information to be evaluated by the Director. Thus it would be the Director that would exercise jurisdiction over the patent at issue rather than the judge. The filing of petition would merely inform the USPTO of a potential issue with a valid patent and the USPTO would make the determination as to whether it is applicable.

    Allowing the USPTO, through the Judiciary, to evaluate potentially invalidating references would resolve the scenario presented in this discussion. It would also skirt the issue of a lack of subject-matter jurisdiction when a CNS is issued. It would, however, no longer allow the DJ plaintiff to participate in the invalidation process. In sum, this is a viable solution that should be implemented when the fact scenario presents itself.

  3. Public Policy Rational

    It is against public policy to allow an invalid patent to be asserted by a patentee. (430) The U.S. patent system is grounded on the give and take between patent owners and the government. (431) This fact, however, assumes that the patent in question was granted under proper pretenses (432) and that the patent is indeed new, novel, and non-obvious. (433)

    A patent that is invalid because of a prior art reference that was not considered during prosecution and which may be invalidating, must be ferreted out when the opportunity presents itself. (434) Allowing patent owners to avoid such a determination through the issuance of a CNS circumvents the patent system's checks and balances. (435) As such, public policy considerations call for the judiciary to utilize its equitable powers and to evaluate the validity of a patent when the opportunity arises. This may take the form of either extended jurisdiction, even in the face of a CNS, or utilization of the USPTO's ex parte reexamination process.


    The Declaratory Judgment Act was passed as a means to allow accused parties to strike first and bring their case to court. (436) The spirit of the Act, however, may be circumvented in the circumstance where a patent owner has the ability to avoid a determination of invalidity by issuing a CNS. It is proposed that courts should hold that subject matter jurisdiction sufficient to satisfy Article Ill's case or controversy requirement exists in such situations. It is also proposed that the judiciary utilize the administrative remedies open to it by employing ex parte reexamination where appropriate. Doing so would provide for a mechanism to guard against improperly obtained patents and supports the important public policy of ensuring that only valid patents remain enforceable.

    (1) 28 U.S.C. [section] 2201 (1988) (stating "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.").

    (2) Lorelei Ritchie de Larena, Re-evaluating Declaratory Judgment Jurisdiction in Intellectual Property Disputes, 83 IND. L.J. 957, 959 (2008) (noting that "[i]ntellectual property disputes are prime candidates for declaratory relief); Jonathan S. Pope, Declaratory Judgment Jurisdiction in Patent Disputes: A Rock and a Hard Place, 9 J. MARSHALL REV. INTEL. PROP. L. 583, 584-85 (2009) (reiterating that the Declaratory Judgment Act is utilized often in patent litigation).

    (3) SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed.Cir. 2007) (noting a party's opportunity to establish its legal rights without risking an infringement suit). The court stated:

    [W]here a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where the party contends that it has the right to engage in the accused activity without a license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights. Id.

    (4) Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059 (Fed. Cir. 1995) (describing an instance in which a threat of suit brought about an action for declaratory judgment).

    (5) See Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 735 (Fed. Cir. 1988) (contrasting the state of patent law prior to the Declaratory Judgment Act in which the "scare-the-customer-and-run tactics" were used by certain patent holders to...

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