"Practical Implications of SanDisk Corp. v. STMicroelectronics"

Traditionally, patent owners have been able to choose whether, where, and when to commence litigation against a third party for infringement of its patent rights and to choose which patent rights to assert.  The lone exception has been if the interaction between a potential patent infringement defendant and the patentee has risen to the level of an “actual case and controversy,” in which case the potential infringement defendant has had the right to bring a declaratory judgment action against the patent owner to determine whether the potential defendant’s actions constitute infringement or whether the patent is invalid or unenforceable.

To establish that an actual case and controversy exists, the potential infringement defendant (and declaratory judgment plaintiff) must prove “both (1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity.”  If an actual case or controversy exists, the declaratory judgment plaintiff has the choice of venue under 28 U.S.C. §1391(b) and (c).

Prior to SanDisk, a patent owner was able to avoid creating an actual case or controversy by carefully wording its communications to potential infringement defendants, couching the discussion as an offer of a license, as opposed to the threat of litigation.  Under those circumstances, the potential infringement defendant could not bring a declaratory judgment action, even if it believed its activities were permissible or the patent was invalid or unenforceable.  Rather, it faced the choice of ceasing its activities to avoid litigation, continuing its activities with the risk of liability for infringement, or entering into a license and paying a royalty for activities that it believed permissible.

In short, absent creating an actual case or controversy themselves, patentees have enjoyed the tactical advantage of controlling the timing, venue and the scope of infringement litigation.  The recent case of SanDisk Corp. v. STMicroelectronics, 480 F.3d 1372 (Fed. Cir. 2007), has rewritten the rules of engagement.


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