Who needs yoga when there's patent litigation? The Federal Circuit's decision in Revolution Eyewear Inc. v. Aspex Eyewear Inc. shows how holding on too tight can endanger the very thing to which one is attached. In Revolution Eyewear, the patent holder wouldn't release the right to claim patent infringement in the future even though it tried to conclude the litigation by offering a covenant not to sue. Using the wisdom of the ancients (and the decisions in MedImmune and Sandisk) the Federal Circuit found that the defendant still had standing to bring a declaratory judgment for patent invalidity and non-infringement in large part because of the time-limited nature of the proffered covenant. By refusing to let go, the patent holder ended up imperiling the very patent rights it sought to protect.
The Revolution Eyewear patent holder claimed infringement of a magnetized system used to connect a removable sunglass overlay to a pair of eyeglass frames. The years-long litigation history included an early summary judgment and previous trip to the Federal Circuit. Shortly before trial on all claims was scheduled to begin, the patent holder tried to end the lawsuit (including defendant's declaratory judgment action for invalidity and non-infringement) through the offer of the date-limited covenant not sue. Reversing the district court's dismissal of defendant's declaratory judgment action, the Federal Circuit found that defendant had shown the continuing existence of a justiciable controversy.
The court's decision rested in large part upon the fact that the proffered covenant only released infringing conduct through the date of dismissal of the suit. Though the defendant had pulled its allegedly infringing product from the market "out of an abundance of caution," it still had a large quantity on hand. Defendant showed that it could quickly return its product to the marketplace and would do so upon a determination of the patent's invalidity. During oral argument, the patent holder admitted that it would return to court if defendants re-introduced the product after the suit's dismissal and "refused to repudiate suit for future infringement."
The court said that, while the patent holder certainly had such a right, its retention preserved the controversy at a level-under MedImmune and Sandisk-of "sufficient immediacy and reality" to allow the defendant to pursue its declaratory judgment action. The court emphasized no actual infringement or active preparation to infringe was necessary for the justiciable controversy to exist.
Revolution Eyewear demonstrates the new powers held by accused infringer to control the pacing and the initiative in a dispute. By thoroughly considering both the timing of counterclaims and decisions as to how and when to bring products and designs on (and off) the market, accused infringers can gain a distinct strategic advantage.
Remember too that under the "totality of circumstances" test, the history and tenor of the litigation, and the clarity and definiteness of the record with regard to future business plans and litigation intentions takes on great importance. In the end, this record will be the dividing line between prohibited "advisory opinions" and actual controversies.
Patent holders seeking to temper this power are reminded that covenants not to sue are not necessarily fail-proof. Courts will look at the precise coverage intended by covenant and hold the patent holder to it-even if it means finding that the parties still have on ongoing controversy to resolve. One thing is certain: lack of clarity here will almost always lead to an unintended result.
More than ever, patent holders should meditate upon the consequences of rattling the litigation saber. A well-executed declaratory judgment may end up transforming unmindful patent litigation into the very thing that causes a next incarnation of patent invalidity-a rebirth no patent holder is interested in.
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