In 2007, the United States Supreme Court invalidated the Federal Circuit’s test for declaratory judgment jurisdiction explaining that the law requires an “all circumstances” approach and that the “reasonable apprehension of suit” test is not sufficient. The Federal Circuit’s subsequent applications of the “all circumstances” test show that a potential infringer is likely to sustain jurisdiction where the potential infringer and the patentee have merely communicated their adverse positions to one another. On the other hand, the Federal Circuit is not likely to find jurisdiction where the patent-holder has not communicated, or has vaguely communicated, its position to the potential infringer. The focus on clarity of communication renders a patentee unable to effectively negotiate licensing agreements without putting itself at risk of litigation. This risk increases the cost of enforcing a patent and may discourage participation in the patent system. A system of post-grant review through a third party, nonprofit organization would provide a cost-effective means to solve validity disputes which alleviates some of the financial burden of enforcing a patent. This savings would encourage the filing of patent applications and promote innovation.
Jonathan S. Pope, Declaratory Judgment Jurisdiction in Patent Disputes: A Rock and a Hard Place, 9 J. Marshall Rev. Intell. Prop. L. 583 (2009)