Patent Litigation, Personal Jurisdiction, and the Public Good

Abstract

There is consensus among scholars, policymakers, and industry leaders that our patent system currently faces a crisis of confidence as a result of the proliferation of bad patents. For now, validity challenges asserted in litigation – usually as a defense to a claim of patent infringement – serve as the primary gatekeeper of patent quality. When an alleged infringer’s validity challenge is successful, the court invalidates the patent and the intellectual property enters the public domain where anyone may use it. This creates a “public good” which inures to the benefit of society at large. In recent years, scholars have proposed alternative reform measures to address the problem of bad patents, but little has been written about how our litigation system might be retooled to better serve the important public function of eradicating bad patents. This Article seeks to fill that void by examining, in particular, the underutilization of declaratory judgment actions to challenge suspect patents.

Validity challenges asserted in declaratory judgment actions have a significantly higher success rate than those raised in defense to infringement claims. Actions for declaratory relief can be particularly effective at invalidating bad patents because the alleged infringer rather than the patent holder chooses the forum and controls the timing of the suit. Yet declaratory relief actions make up a surprisingly small percentage of the total number of patent cases.

This Article argues that one reason so few declaratory judgment actions are filed is because of a longstanding but incorrect jurisdictional doctrine that precludes many alleged infringers from seeking declaratory relief in a convenient forum – the Federal Circuit’s categorical rule that patent holders will not be subject to personal jurisdiction in declaratory judgment actions based on cease-and-desist letters sent into the forum state. The Article then critically examines and rejects various possible justifications for that doctrine, ultimately demonstrating that the doctrine is both legally unsound and contrary to public policy. Finally, the Article concludes with a proposal that would empower alleged infringers with more robust declaratory judgment rights, facilitate validity challenges, and ultimately provide more of the public good of invalidating bad patents.

Keywords: Patent, Declaratory Judgment, Personal Jurisdiction