An extremely useful strategy for companies seeking to avoid patent infringement, is to precipitate patent litigation by commencing court proceedings requesting a declaration from the court that the patent is either not infringed, or invalid, or both.

As a result of the US Supreme Court decision in MedImmune, this requires a ‘a substantial controversy, of sufficient immediacy and reality’, otherwise the infringement avoider will lack standing.

Dennis Crouch at Patently-O reports today on the decision in Benitec Australia v. Nucleonics (Fed. Cir. 2007) in which Nucleonics was denied standing to sue for declaratory relief in relation to its invalidity and unenforceability case. Why?

Well, as it happened, the infringement suit had been withdrawn, and Benitec had given an undertaking not to sue.

Problem for Nucleonics, or so they argued, is that they are now left with uncertainty about whether the patent will be asserted against them in the future. The CAFC affirmed – too bad, you no longer have a sufficient controversy to warrant a declaratory judgment.

Strategic response?

1 – make sure the settlement agreement clearly deals with future potential suits from Benitec.

2 – maybe its better for Nucleonics to leave the patents alone and share the future risk of litigation with its competitors. (Actually it will clearly be in a better position than them, given the result of this litigation.)

3 – keep the invalidity position in the top drawer, and bring it out if by Benitec’s actions, a ‘sufficient controversy’ crystallises in the future.

PS – for reasons that will appear in a future article, Australia’s position on declarations of non-infringement does not work.