Recent U.S. Decisions And Developments Affecting Licensing - March 2009

by Brian Brunsvold and John C. Paul

Brian Brunsvold

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Attorney, Washington, D.C., USA

John C. Paul

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Attorney, Washington, D.C., USA


Under the Declaratory Judgment Act, potential infringers can file lawsuits against patent owners to determine whether their present actions constitute infringement. Potential infringers thus have an opportunity to have a court rule on a matter when a patent owner threatens, but does not file, an infringement lawsuit. However, since federal courts may only issue declaratory judgments in cases involving “actual controversies,” potential infringers may not bring a declaratory judgment action regarding some speculative future activity. As noted by the Supreme Court in MedImmune Inc. v. Genetech, Inc., the proper question for jurisdiction in declaratory judgment actions is whether the facts, as stated in the plaintiff’s complaint, show there is a “substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”

In Prasco v. Medicis Pharmaceutical Corp. et al., Medicis marketed a benzoyl peroxide cleansing product marked as being covered by four U.S. patents, and Prasco made a competing benzoyl peroxide product. In May 2006, Prasco requested a declaratory judgment that its product did not infringe Medicis’ four patents. At the time that Prasco filed its declaratory judgment action, it had devoted “substantial efforts” to developing its product, but not yet begun marketing the product. Indeed, Medicis only became aware of Prasco’s product when it was served with the complaint for the lawsuit. As a result, Medicis asked the district court to dismiss the case, citing the lack of “case or controversy” between the parties that deprived the district court of jurisdiction. After Medicis filed its motion to dismiss, Prasco sent a sample of its product to Medicis, and filed an amended complaint stating that it had begun to market its product. The district court found that under all the circumstances, there was no “case or controversy” between Medicis and Prasco, and even in light of MedImmune, there was “no definite and concrete dispute that touches the legal relations of these parties.” Thus, finding that it did not have jurisdiction, the district court dismissed the case.

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