What Not to Say to Competitors, Post-Medimmune

Prior to the Supreme Court’s decision in MedImmune v. Genentech, courts used a “reasonable apprehension of suit” test developed by the Federal Circuit to determine whether there was an actual controversy sufficient to allow for declaratory relief in matters of potential patent infringement. To find declaratory judgment jurisdiction, courts looked for an express or implied threat of an impending patent infringement lawsuit.

This was a high standard for a plaintiff, and it also meant that a patentee could safely communicate regarding its patent rights and negotiate licensing terms with a defined and limited risk of creating actual controversy.

But in MedImmune, three cases were cited in which there was declaratory judgment jurisdiction despite lack of threats of an impending lawsuit. The Court reasoned that the wiser approach to declaratory relief was the “totality-of-the-circumstances” standard articulated in Maryland Casualty. The new standard adopted in MedImmune forced the Federal Circuit to reconsider how and when party communications give rise to actual controversy.

MedImmune lowered the bar for determining declaratory judgment jurisdiction in all patent cases. Since MedImmune, the Federal Circuit has found jurisdiction in nearly every case involving communications between parties. This makes it difficult for lawyers to advise clients on what they can say to competitors without triggering an actual controversy, and a potential lawsuit.

The authors cite recent Federal Circuit decisions to illustrate what not to do when communicating with a competitor.