Blitz Defense by Declaratory Judgment
According to our read of the Federal Circuit’s March 2012 decision (3M v Avery Dennison), business owners concerned about infringing a competitor’s patent have more guidance about when they can have the court declare the patent to be invalid or not infringed. That’s right, you can sue a patent owner as a defensive strategy. Just like an aggressive blitz can be a great call at the right moment in a football game, suing a patent owner for declaratory judgment (DJ) can help your business get the ball back so you can regain the initiative and score. The 3M case informs us about when to safely file a DJ.
Why Would I Want to File a DJ?
When a patent owner threatens your business with the possibility of suing you for infringement, you might want to seize the initiative from the patent owner by filing a DJ.
A DJ action permits you to “clear the air” and take control of the situation. This can be a great relief when a major product is being delayed or revenue depressed due to a lingering threat of being sued. Rather than waiting helplessly while the patent owner retains all the power to control this situation, the party who is threatened can sue to have the courts declare whether or not the patent is or is not a problem. This allows the parties to move on with their business. Thus, the DJ helps level the playing field for those concerned about being sued for patent infringement.
When Can I DJ to “Clear the Air?”
Courts only accept DJs in limited factual circumstances.
The facts of the 3M case shed light on when a DJ is an option and when it is not, which reduces the risk that the DJ action may be unexpectedly rejected by a court.
For you to bring a DJ action, you must be able to show a controversy that is “definite and concrete, touching the legal relations of parties having adverse interests.” The controversy must also have “sufficient immediacy and reality.”
The appeals court ruled that 3M online casino could successfully DJ Avery if it established the following facts: (i) Avery’s Chief IP Counsel told 3M Chief IP counsel, in a telephone call, that specific ones of 3M’s sheeting products “may infringe” Avery’s patents and that “licenses are available;” (ii) when 3M rejected the license offer, Avery said they would send 3M claim charts that detail how 3M’s products infringe.
According to the appeals court, these communications are sufficient to constitute a controversy that meets the requirements for a DJ action.
It seems that the Court did not view a verbal accusation of “infringement” over the phone as merely informal “passing remarks.” Their effect was to open up Avery to a law suit by 3M.
Sales puffery vs. “Infringement”
Business owners should be mindful of the effect of verbal conversations about patents, particularly where the party on the other end of the line may be on the other side in a patent infringement suit. Owners familiar with boasting about their product as legitimate “sales puffery” may be caught unaware of the risks of bravado if the conversation turns to patent infringement.
Had Avery’s IP Attorney not uttered the words “infringement” and “claim charts” in those two telephone calls, 3M would not have been able to sue Avery in a DJ action. As it happened, Avery handed 3M a club, and 3M seized the initiative by using the club on Avery. Blitz called.