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A Declaratory Judgment Shift in Patent Cases

12-11-2009 [Ben Hanrahan] [Permalink]

Last week, the Federal Circuit’s decision in Hewlett-Packard, Co. v. Acceleron, LLC, (Fed. Cir. 2009) lowered the bar for declaratory judgment jurisdiction in patent cases where the patent owner is a holding company.

In this case, Acceleron, the owner of U.S. Patent No. 6,948,021 (“the ‘021 patent”), sent a letter to Hewlett-Packard (“HP”) informing HP of the ‘021 patent and attempting to initiate discussions with HP regarding the same. Acceleron further asked HP to agree that the information exchanged between the parties would not be used for litigation purposes and would not create an actual case or controversy.

HP responded stating that HP would agree not to file a declaratory judgment action for 120 days, if Acceleron would similarly agree not to file an infringement action in the same 120 day period. Acceleron rejected the 120 day standstill offer, and simply stated that Acceleron does not believe HP had any basis to file a declaratory judgment action anyway.

Soon thereafter, HP filed a declaratory judgment action in the U.S. District Court for the District of Delaware, quickly followed by Acceleron’s motion to dismiss.

While finding in favor of HP and broadening the standard for declaratory judgment jurisdiction in patent cases, the Federal Circuit emphasized the fact that Acceleron is a holding company and that “without enforcement, it receives no benefits from its patents.” This added to the significance that Acceleron refused to accept HP’s 120 day standstill offer, and that Acceleron imposed a short, two-week deadline for HP to respond to its letters.

Recognizing that there is “no bright-line rule for distinguishing those cases that satisfy the actual case-or-controversy requirement from those that do not,” the Federal Circuit stated that its decision in this case “undoubtedly marks a shift from past declaratory judgment cases.”

The entire Federal Circuit Opinion can be found here.