Intellectual Property Law

Sending a form letter and engaging in follow up licensing discussions do not satisfy the "reasonable apprehension of litigation" test as required to support jurisdiction under the Declaratory Judgment Act, 28 U.S.C. Section 2201(a).  So held Judge Martin Jenkins of the Northern District of California in a May 31, 2006 Order in Shoom, Inc. v. Electronic Imaging Systems, 2006 WL 1529983 (N.D.Cal.).

Plaintiff Shoom is in the business of producing electronic invoices containing electronic tearsheets for newspapers that publish print advertisements.  The patent at issue in the litigation was defendant eISA's patent entitled "Method for electronically merging digitized data system of generating billing statements for published advertising." 

Today's Blogger:  Jeff Fisher

In June 2005, eISA sent a form letter to approximately 250 newspapers and newspaper organizations, including 30 of Shoom's customers.  The letter did not threaten or even refer to the possibility of litigation or infringement, only informing its recipients of the patent and offering to initiate licensing discussions.  It did, however, spark concern on the part of Shoom's customers.

Shoom filed an action seeking a declaration of noninfringement and/or invalidity in response to its customer's concerns.  In granting defendant's motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), the court held that the form letter consisted of a mere offer to license, noting the letter's non-threatening tone, that eISA's president - not legal counsel - signed the letter, and that the letter avoids any language that requires urgent action on the recipient's part.  The court reached this holding despite Shoom's allegations that the letter "created a major turmoil in the newspaper industry" and "start[ed] a freeze on the market place," stating that the reasonable apprehension standard "requires more than the nervous state of mind of the possible infringer."  See Phillips Plastics Corp. v. Kato Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1053-54 (Fed. Cir. 1995).

Although the court in this case found that the patent holder's conduct was not sufficient to create a "reasonable apprehension of litigation" as required to establish jurisdiction under the Declaratory Judgment Act, determining what type of conduct is sufficient to satisfy this standard remains a fact-intensive inquiry that varies from case to case.  What do you think?  Does this decision provide a helpful framework for determining when that line has been crossed?