Addressing whether a district court erred in dismissing a declaratory judgment action, the U.S. Court of Appeals for the Federal Circuit overturned the district court’s dismissal based on lack of an "actual controversy." The Court instructed that the Supreme Court’s ruling in MedImmune v. Genentech "made clear that a declaratory judgment plaintiff does not need to establish a reasonable apprehension of a lawsuit" to establish that an actual controversy exists. Sony Electronics, Inc. v. Guardian Media Technologies, Ltd., Case No. 06-1363 (Fed. Cir., Aug. 3, 2007) (Prost, J.).
Guardian holds several patents covering "V-Chip" adult content censoring technology. Guardian sent notices of infringement to television manufacturers such as Sony, Matsushita Electric Industrial and Mitsubishi, and later sent detailed claim charts. Four years later, Guardian contacted the manufacturers again, claiming that each owed millions in back royalties but offered to settle the claims through license agreements.
Shortly thereafter, the manufacturers filed declaratory judgment actions. On motion, the district court dismissed the suit for lack of declaratory judgment jurisdiction because Guardian had not explicitly threatened to sue and the circumstances did not imply a threat of immediate suit. Further, even if declaratory jurisdiction existed, the court said it would not hear the case because the question of jurisdiction was "close," and it felt that the manufacturers were using the case as a negotiation tool and not a means to settle the dispute. Sony appealed.
The Federal Circuit reversed, finding the district court applied the wrong legal standard in light of the Supreme Court’s recent ruling in MedImmune v. Genentech. Judge Prost said that "jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do."
Under the new standard, the Court determined that the dispute was "manifestly susceptible of judicial determination." An actual controversy existed because Guardian asserted that it was owed royalties based on the manufacturers’ past and present activities, while the manufacturers contended that they could engage in those activities without a license. Thus, the Court found that the district court had abused its discretion in refusing to hear the action because its decision was based on an erroneous conclusion of law.
Further, the Court was "troubled" by the district court’s inference of a nefarious motive on the part of the manufacturers, noting that it was inappropriate to infer that suit was filed as an intimidation tactic in the absence of affirmative evidence of that fact.
The Court remanded the case to the district court for reconsideration of whether, in the appropriate exercise of its discretion, the case should be dismissed.
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