Wednesday, 2 May 2012

Declaratory Judgment - A preemptive action!

In a typical patent infringement lawsuit, the patentee enjoys the convenience of bringing the lawsuit at his/her own will. In other words, when the patentee is made aware of an infringer, the patentee has the liberty of waiting for the “right time” to file a lawsuit against the infringer in order to claim maximum damages.  What happens when the so called “alleged infringer” has made an honest mistake and was unaware of patents mentioned in the lawsuit? Are there any provisions or preemptive actions present in the patent laws that can be exploited by people who have invested a substantial amount of capital, efforts and time in manufacturing and launching their products and subsequently feel that they may become targets of potential patent infringement lawsuits?
Declaratory judgment is one such provision that can be used by the “alleged infringer” as a preemptive action to clear any uncertainty about their products. As the name implies, Declaratory Judgment is merely declarative where the court provides its opinion on an issue. Thus, when a patentee sends a Cease and Desist letter to the alleged infringer stating that certain products or services of the alleged infringer are infringing or potentially infringing patents owned by the patentee, the “alleged infringer” can file for a Declaratory Judgment in their own jurisdiction or a “favorable jurisdiction”.  Although the patentee has the option to file a motion for transfer of the jurisdiction, the selection of a favorable jurisdiction by the alleged infringer acts as a great tool to control the venue and time of future trials.
The alleged infringer can file for a Declaratory Judgment on the following grounds, namely, non-infringement, invalidity, and unenforceability. Further, while filing for Declaratory Judgment, the alleged infringer has to prove that controversy exists over the patents and the products in order to persuade the court to grant the Declaratory Judgment.  
Some advantages of Declaratory Judgment:
  • A strong pre-emptive action that can be used by alleged infringers
  • Increases expenses of the patentee by forcing the patentee to continue proceedings in the jurisdiction where the Declaratory Judgment is filed by the alleged infringer
  • Less expensive as it does not involve a trial and the court provides opinion on the controversy
  • Get an idea on the likely outcome of a future trial and accordingly take appropriate corrective actions (such as out of court settlements).


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