Cease And Desist (Please)

The Rulings In MedImmune And SanDisk May Also Force Trade Mark Owners To Re-think Their Enforcement Strategies

The Supreme Court and the Federal Circuit have recently issued two decisions in patent-licensing cases that may ultimately affect how trade mark practitioners conduct future enforcement efforts. In its recent decision in MedImmune v Genentech, the Supreme Court redefined the case-and-controversy requirement for declaratory judgment actions in the context of patent licensing disputes to make it easier for patent licensees to bring suit rather than negotiating a license at a disadvantaged position (MedImmune, Inc v Genentech, Inc, 127 S Ct 764 (2007)). Just two months later, the Federal Circuit followed the Supreme Court's guidance and, in Sandisk v STMicroelectronics, applied the more permissive MedImmune declaratory-judgment standard and reversed a lower court's dismissal of a declaratory-judgment action (SanDisk Corp v STMicroelectronics, Inc, 480 F 3d 1372 (Fed Cir 2007)). Although the facts of each case relate to patent-licensing disputes, they may signal a liberalizing trend in allowing declaratory-judgment plaintiffs to gain access to federal courts to resolve disputes over IP rights.

The Declaratory Judgment Act provides that:

[i]n a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate proceeding, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought (28 USC 2201(a)).

The "actual controversy" requirement of the Act is rooted in Article III of the Constitution, which provides for federal jurisdiction over "cases and controversies". The issue, of course, is what set of facts is needed for an Article III "actual controversy" to arise in the IP context.

The purpose of federal declaratory judgment in trade mark cases is almost identical to that in patent cases, where declaratory-judgment litigation is common. The Act offers a remedy to a potential defendant who is uncertain of his rights and wants to obtain an early adjudication without waiting for a potential adversary to bring suit, and being left to act at his peril in the interim.

The Windsurfing Test

Since the Federal Circuit's decision in Windsurfing in 1987, the standard for determining whether a case or controversy exists in a trade mark declaratory-judgment suit has been twofold: "(1) the declaratory plaintiff must have a 'real and reasonable apprehension' of litigation; and (2) the declaratory plaintiff must have engaged in a course of conduct that brought it into 'adversarial conflict' with the declaratory defendant" (Windsurfing Int'l, Inc v AMF, Inc, 828 F 2d 755 (Fed Cir 1987)). While the second prong is typically satisfied because most trade mark enforcement efforts are initiated as a result of some kind of adversarial conflict, satisfaction of the first prong has been debated and...