1 Declaratory Judgment Actions

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3 Subject Matter Jurisdiction - The Statute
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5 A court has subject matter jurisdiction under the Declaratory Judgment Act, 28 U.S.C. S 2201, and Article
6 III, §2 of the United States Constitution only if a case or controversy exists between the parties at the time
7 the complaint was filed.
8
9 Actual Controversy Required
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11 In a declaratory judgment action seeking a declaration of invalidity and non-infringement of a patent, as
12 with any other declaratory judgment action, the first question is whether there exists an "actual controversy."
13 DuPont Merck Pharm. Co. v. Bristol-Myers Squibb Co., 62 F.3d 1397, 1401 (Fed.Cir.1995) (citing Aetna
14 Life Ins. Co. v. Haworth, 300 U.S. 227, 239-41, 57 S.Ct. 461, 463-64, 81 L.Ed. 617 (1937).
15 A party may not "obtain a declaratory judgment merely because it would like an advisory opinion on
16 whether it would be liable for patent infringement if it were to initiate some merely contemplated activity."
17 Arrowhead Industrial Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed.Cir.1988). Rather, "the
18 conflict must be real and immediate." Id. at 735.
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20 "In general, the presence of an 'actual controversy' within the meaning of the statute depends on 'whether
21 the facts alleged, under all the circumstances, show that there is a substantial controversy between the
22 parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
23 declaratory judgment.' " EMC Corp. v. Norand Corp., 89 F.3d 807, 810 (Fed.Cir.1996) (quoting Maryland
24 Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941)), cert. denied,
25 --- U.S. ----, 117 S.Ct. 789, 136 L.Ed.2d 730 (1997). The purpose of a declaratory judgment action is to
26 permit a threatened party to resolve its potential liability, but only when the relationship has progressed to
27 an actual controversy, as required by Article III of the U.S. Constitution. Phillips Plastics Corp. v. Kato
28 Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1053 (Fed.Cir.1995); Super Sack Mfg. Corp. v. Chase Packaging
29 Corp., 57 F.3d 1054, 1058 (Fed.Cir.1995) (also citing 28 U.S.C. S 2201(a), of the Declaratory Judgment Act,
30 for this "actual controversy" requirement), cert. denied, --- U.S. ----, 116 S.Ct. 815, 133 L.Ed.2d 760 (1996).
31
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33 Burden to Establish Jurisdiction
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35 The burden is on the declaratory plaintiff to establish that jurisdiction over its declaratory judgment action
36 existed at the time of filing and has continued to exist to the time the court considers the claim. Super
37 Sack, 57 F.3d at 1058.
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40 To Part Test for Justiciable Cases
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42 A two-part test has been developed to distinguish cases impermissibly seeking advisory opinions from those
43 presenting justiciable cases and controversies. A party seeking a declaration of patent invalidity or non-
44 infringement must prove:
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46 First, that the patentee's conduct has created a reasonable apprehension on the plaintiff's part that it will face

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 1 a suit for patent infringement.1 This prong is an objective one, focusing on whether the patentee's conduct
2 "rose to a level sufficient to indicate an intent to enforce its patent."2 To assess the patentee's conduct, the
3 court looks initially for a specific and express charge of infringement and, if none is found, then to the
4 "totality of the circumstances."3 In other words, even when no single action or statement by the patentee
5 would suffice to put a declaratory judgment plaintiff in reasonable apprehension, the cumulative effect of
6 the patentee's actions and statements might rise to a level sufficient to indicate an intent to enforce the
7 patent. Shell Oil Co., 970 F.2d at 888.
8
9 Second, plaintiff must prove that it has engaged in allegedly infringing acts or possess the capability and
10 definite intention to engage immediately in such acts. Put another way, "plaintiff must be engaged in an
11 actual making, selling, or using activity subject to an infringement charge or must have made meaningful
12 preparation for such activity."4 This second prong, in essence, prohibits declaratory judgment plaintiffs from
13 seeking advisory opinions on their potential liability for initiating some future activities.
14
15 The "purpose of the two-part test is to determine whether the need for judicial attention is real and
16 immediate or is prospective and uncertain of occurrence." BP Chemicals Ltd. v. Union Carbide Corp., 4
17 F.3d 975, 978 (Fed.Cir.1993) (citations omitted).
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20 Discretion to decline to hear declaratory judgment actions
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22 Even if a case satisfies the Federal Circuit's two-prong test of an actual controversy, "there is no absolute right
23 to a declaratory judgment, for the statute specifically entrusts courts with discretion to hear declaratory suits
24 or not depending on the circumstances." Serco Servs Co., L.P., 51 F.3d at 1039 (citing Minnesota Mining
25 & Mfg. Co. v. Norton Co., 929 F.2d 670, 672 (Fed.Cir.1991)). Thus, the court must make a reasoned
26 judgment whether the investment of time and resources will be worthwhile. Of course, the court's
27 discretion is not unfettered: "An abuse of discretion may occur when the trial court's decision was based
28 on an incorrect conclusion of law or clearly erroneous finding of fact, was devoid of any evidence in the
29 record upon which the court rationally could have based its decision, or was clearly unreasonable or
30 arbitrary." Genentech Inc. v. Eli Lilly & Co., 998 F.2d 931, 936, 27 U.S.P.Q.2d 1241, 1243 (Fed.Cir.1993),

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BP Chemicals, Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed.Cir.1993); Spectronics Corp., 940 F.2d at
634; Goodyear Tire & Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 955 (Fed.Cir.1987); Indium Corp. Of Am. v.
Semi-Alloys, Inc., 781 F.2d 879, 882-83 (Fed.Cir.1985), cert. denied, 479 U.S. 820, 107 S.Ct. 84, 93 L.Ed.2d 37 (1986);
Jervis B. Webb Co. v. Southern Sys., Inc., 742 F.2d 1388, 1398- 99 (Fed.Cir.1984); Davox Corp. v. Digital Sys. Int'l, Inc.,
846 F.Supp. 144, 26 U.S.P.Q.2d 1231, 1233 (D.Mass.1993).

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Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888 (Fed.Cir.1992); see also Phillips Plastics Corp. v. Kato
Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1053-54 (Fed.Cir.1995); Arrowhead Indus. Water, Inc. v. Ecolochem, Inc.,
846 F.2d 731, 736 (Fed.Cir.1988).

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Shell Oil Co., 970 F.2d at 888 ("We must look for any express charges of infringement, and if none, then to
the 'totality of the circumstances'."); Arrowhead Indus. Water, Inc., 846 F.2d at 736 ("When the defendant's conduct,
including its statements, falls short of an express charge, one must consider the 'totality of the circumstances.' ").

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Arrowhead Indus. Water, Inc., 846 F.2d at 736; GAF Building Materials Corp. v. Elk Corp., 90 F.3d 479, 481
(Fed.Cir.1996); see also, Indium Corp. Of Am., 781 F.2d at 883; Jervis B. Webb Co., 742 F.2d at 1399.

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 1 cert. denied sub nom. Regents of Univ. of Cal. v. Genentech, Inc., 510 U.S. 1140, 114 S.Ct. 1126, 127
2 L.Ed.2d 434 (1994).
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5 When Patentee Seeks a Declaratory Judgment
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7 A patentee may seek a declaration that a person will infringe a patent in the future. See Lang v. Pacific
8 Marine & Supply Co., 895 F.2d 761, 763, 13 USPQ2d 1820, 1821 (Fed.Cir.1990). As is the case when an
9 accused infringer brings a declaratory judgment action, the exercise of jurisdiction over such an action is
10 within the discretion of the district court. See Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 982 F.2d
11 1520, 1526-27, 25 USPQ2d 1196, 1201 (Fed.Cir.1992); Spectronics Corp. v. H.B. Fuller Co., 940 F.2d
12 631, 634, 19 USPQ2d 1545, 1547 (Fed.Cir.1991).
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14 When a patentee seeks a declaratory judgment against an alleged future infringer, the patentee must
15 demonstrate that two elements are present:
16
17 (1) the defendant must be engaged in an activity directed toward ... an infringement charge ... or
18 be making meaningful preparation for such activity; and
19
20 (2) acts of the defendant must indicate a refusal to change the course of its actions in the face of
21 acts by the patentee sufficient to create a reasonable apprehension that a suit will be
22 forthcoming.
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24 Lang, 895 F.2d at 764, 13 USPQ2d at 1822.
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26
27 Standard of Review
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29 The Federal Circuit will reverse a decision to grant or to deny declaratory relief if "(1) the court's decision
30 was clearly erroneous, arbitrary, or fanciful; (2) the decision was based on an erroneous conclusion of law;
31 (3) the court's findings were clearly erroneous; or (4) the record contains no evidence upon which the court
32 rationally could have based its decision." Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562 (Fed. Cir.
33 1997)(quoting Minnesota Mining & Mfg. Co. v. Norton Co., 929 F.2d 670, 673, 18 USPQ2d 1302, 1305
34 (Fed.Cir.1991)).
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36 Notwithstanding this deferential standard of review, if there is no actual controversy the district court is
37 without jurisdiction to hear a claim for declaratory relief. Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562
38 (Fed. Cir. 1997); See also Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72, 70 S.Ct. 876, 879,
39 94 L.Ed. 1194 (1950) (stating that the Declaratory Judgment Act "enlarge[s] the range of remedies available
40 in the federal courts but does not extend their jurisdiction"); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227,
41 240, 57 S.Ct. 461, 463, 81 L.Ed. 617 (1937) (stating that the Declaratory Judgment Act "is operative *1571
42 only in respect to controversies which are such in the constitutional sense"). Accordingly, we must first
43 determine if an actual controversy exists. See Loveladies Harbor, Inc. v. United States, 27 F.3d 1545, 1555
44 n. 26 (Fed.Cir.1994) ("[C]ourts must attend to their jurisdiction even if the parties do not.") (citing Louisville
45 & Nat'l R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908)).

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