Wednesday, January 05, 2005

EFI v. Coyle on declaratory judgment actions (DJs)

The case of EFI v. Coyle gives information on what can happen to an overly aggressive patent holder in a case wherein the alleged infringer files a declaratory judgment (DJ) action. On these facts, an initial dismissal of the DJ action was reversed by the CAFC.

The dismissal of a declaratory judgment action is reviewed for abuse of discretion (eg, Minn Mining v Norton, 929 F2d 670)

EFI argued that the relevant uncertainty was created by Coyle's persistent and forceful threats of patent litigation. The CAFC agreed with EFI that the uncertainty and delay regarding legal rights caused by the actions of Coyle were cognizable under the DJ Act, citing Goodyear, 824 F2d 953. The CAFC cited text in Arrowhead, 846 F2d 731, about "scare the customer and run tactics." The fact that EFI was "certain" it would prevail was not the relevant consideration.

EFI also criticized the district court's characterization of EFIs DJ action as a race to the court house, and the CAFC agreed, citing Genentech 998 F2d at 938.

The district court's dismissal of EFI's DJ action was reversed and remanded.


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