Intellectual Property Law

Are patent holding companies subject to different DJ jurisdiction standards than others?

By McKee, Voorhees & Sease, P.L.C.

According to the Federal Circuit, the answer to this question appears to be "yes."  The court reversed a district court's dismissal of a declaratory judgment action against a patent holding company (or non-practicing entity (NPE), sometimes pejoratively referred to as a patent troll).  The DJ action was predicated on three letters, the first from the NPE to the DJ plaintiff, the second in reply, and the third from the NPE in reply to the second.  The court held there was a sufficient "implied assertion of its rights" under the patent to support DJ jurisdiction.

Of particular note are some statements the court made regarding different rules when NPEs contact potential licensees for their patents.  These include:

[T]he receipt of such correspondence from a non-competitor patent holding company . . . may invoke a different reaction than would a meet-and-discuss inquiry by a competitor, presumably with intellectual property of its own to place on the bargaining table. Under the totality of the circumstances, therefore, it was not unreasonable for [the DJ plaintiff] to interpret [the NPE's] letters as implicitly asserting its rights under the patent.

. . .

[The NPE] is solely a licensing entity, and without enforcement it receives no benefits from its patents. This adds significance to the fact that [the NPE] refused [the DJ plaintiff's] request for a mutual standstill . . . .

Even the court observed it was changing the rules, noting "our decision in this case undoubtedly marks a shift from past declaratory judgment cases."  Based on this decision, it appears very difficult for a NPE to even contact a potential licensee without exposing itself to the potential for a declaratory judgment action.

More detail of Hewlett-Packard Co. v. Acceleron LLC after the jump.

[More]

Full post as published by FileWrapper on December 14, 2009 (boomark / email).