In a holding that the Court admitted “undoubtedly marks a shift from past declaratory judgment cases,” the U.S. Court of Appeals for the Federal Circuit found that declaratory judgment jurisdiction was established by letters from a non-practicing patent owner that did not specifically threaten litigation, but which stated that the patent was “related” to the manufacturer’s products, refused a 120-day non-suit agreement and imposed a deadline for a response. Hewlett-Packard Company v. Acceleron LLC, Case No. 09-1283, (Fed. Cir., Dec. 4, 2009) (Michel, J.).

Acceleron is a patent holding company. Acceleron’s president wrote to Hewlett-Packard’s general counsel, “call[ing] attention” to one of its patents, stating that the patent “relates” to a specific HP product and proposing a discussion between the parties about the patent. Acceleron asked HP to respond within two weeks. HP responded two weeks later, expressing interest in learning more about the patent and proposing an agreement that neither party file a declaratory judgment action for 120 days. Acceleron replied four days later, refusing to enter into HP’s proposed agreement and again asking for a substantive response from HP within two weeks.

Shortly thereafter, HP filed a declaratory judgment suit seeking a declaratory judgment of non-infringement and invalidity. The district court granted Acceleron’s motion to dismiss for lack of subject matter jurisdiction, finding that, under the totality of the circumstances, litigation was “too speculative a prospect to support a declaratory judgment action,” in part because Acceleron’s letters did not contain statements of infringement, identification of specific claims, claim charts, or the identification of other licensees. HP appealed.

The Federal Circuit reversed and remanded, finding that, objectively and under the totality of the circumstances, “it was not unreasonable for HP to interpret Acceleron’s letters as implicitly asserting its rights under the [patent].” First, the Court noted that per MedImmune and SanDisk, declaratory judgment jurisdiction exists in patent cases when a patentee asserts rights under a patent based on specific activities of another party and that other party contends that its activities are lawful. The Court stated that “a communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more, cannot establish” declaratory judgment jurisdiction.

The Court examined various factors, noting that there is no bright-line rule for determining when a case or controversy exists in patent matters. For one, “Acceleron took the affirmative step of twice contacting HP directly, making an implied assertion of its rights under the [patent] against [specific HP] products, and HP disagreed.” In addition, Acceleron refused to enter into the 120-day non-suit agreement and imposed very short response deadlines in its letters. Finally, the Court observed that “Acceleron is solely a licensing entity, and without enforcement it receives no benefits from its patents.” Therefore, the Court held that “there is declaratory judgment jurisdiction arising from a ‘definite and concrete’ dispute between HP and Acceleron.”