Patent Law: "Reasonable Apprehension" After Receipt of Cease-and-Desist Letter Grounds for Declaratory Judgment Action

The drafter of a cease-and-desist letter must carefully craft the language in the letter to put the recipient on actual notice of patent infringement without giving the recipient a "reasonable apprehension" of litigation. When a court considers a declaratory relief action, it verifies that an actual controversy exists between the two parties. Declaratory Judgment Act, 28 U.S.C. § § 2201-2202.

In the patent context, an actual controversy exists if: (1) there is an objectively reasonable apprehension of litigation, and (2) present activity which could constitute infringement or concrete steps taken with intent to do so. B.P. Chems., Ltd. v. Union Carbide Corp., 4 F.3d 975 (Fed. Cir. 1993). Because a cease-and-desist letter may prompt the recipient to file a declaratory relief action, the sender must avoid creating the "reasonable apprehension" of litigation with her letter. The Seventh Circuit and Federal Circuit have continued to follow the standard set forth in Phillips Plastic Corporation v. Kato Hatsujou Kabushiki Kaisha, 57 F.3d 1051 (Fed. Cir. 1995) (and Shell Oil Co. v. Amoco Corp., 970 F.2d 885 (Fed. Cir. 1992), cited in Phillips), which looks at the totality of the circumstances, and a number of specific factors therein, to determine whether an actual controversy is at hand.


When the patentee sends a cease-and-desist letter, accusing a specific product of infringement and threatening litigation, "reasonable apprehension" is easy for the alleged infringer to establish. EMC, 89 F. 3d 807. However, a direct threat of litigation is not required for the court to find this "reasonable apprehension." Instead, courts will consider whether the sender's "conduct rose to a level sufficient to indicate an intent to enforce its patent." Shell Oil Co. v. Amoco Corp., 970 F. 2d 885 (Fed. Cir. 1992). The court will examine the language of the letter and the circumstances of the parties' relationship to determine whether an actual controversy exists. The court must "police the sometimes subtle line between cases in which the parties have adverse interests and cases in which those adverse interests have ripened into a dispute that may properly be deemed a controversy." EMC, 89 F. 3d at 811.

Where the cease-and-desist letter makes an express charge of infringement, the court will almost certainly find a "reasonable apprehension" of litigation. Blistex Inc. v. Circle Laboratories, Inc., 2000 U.S. Dist. LEXIS 11749 (N.D. Ill. 2000); Arrowhead Indus. Waters, Inc. v. Ecolochem, Inc., 846 F.2d 731 (Fed. Cir. 1988); see also Infinitech v. Vitrophage, Inc., 842 F. Supp. 332 (N.D. Ill. 1994) (repeated references to infringement create reasonable apprehension). If there is no express charge of infringement, the court will then look at the "totality of the circumstances" to determine whether a reasonable apprehension exists.

A cease-and-desist letter may make "an oblique suggestion of possible infringement" without expressly accusing infringement and triggering the threat of litigation. Russell Corp. v. Sara Lee Corp., 129 F. Supp. 2d 1165, 1168 (N.D. Ill. 2001). However, an "implied charge of infringement" may sometimes be sufficient to create the reasonable apprehension that a suit is imminent. Millenium Products Inc. v. Gravity Boarding Co., 127 F. Supp.2d 974 (N.D. Ill. 2000). The line between "oblique suggestion of infringement" and "implied charge of infringement" is defined by the substance of the cease-and-desist letter and the circumstances surrounding the parties' negotiations. [1] In Russell, preliminary statements made by the attorney regarding "a product that appeared to be covered by Sara Lee's patent" did not trigger the reasonable apprehension standard, nor did the mere proposal of a licensing arrangement. Russell, 129 F. Supp.2d at 1168 [italics mine]. Indeed, other courts have found that the offer of a licensing agreement does not signal imminent litigation: in Dataline Inc. v. MCI WorldCom Network Service, 2001 U.S. Dist. Lexis 950 (S.D.N.Y. 2001), the court determined that a letter offering favorable terms for a license was merely "an invitation by MCI to Dataline to engage in business transactions." Dataline, 2001 U.S. Dist. LEXIS at *12.

Potentially Mitigating Factor: Ongoing License Negotiations

Not only is the offer of a license insufficient to create "reasonable apprehension," but in some cases, license negotiations may in fact help establish that no actual controversy exists. Phillips, 57 F.3d at 1053. In both Shell Oil and Phillips, the Federal Circuit considered the presence of "ongoing license negotiations" between a patentee and a potential infringer, unaccompanied by threats of legal action, to negate the reasonable apprehension of litigation. Shell Oil, 970 F.2d 885; Phillips, 57 F.3d at 1051. However, license negotiations cannot completely insulate the sender from the court finding an actual controversy. For example, in Russell Corp. v. Sara Lee Corp., the parties were involved in licensing negotiations but the court still found a reasonable apprehension of litigation. Sara Lee's attorney used language that "threw down the gauntlet" and "essentially told [Russell's attorney] that he was ready to file suit...that he was certain the case would end up being tried to a jury and that substantial damages would be awarded." Russell, 129 F. Supp.2d at 1168. Given the tone of the offending language–the attorney reportedly said "he had tried 'lots of these suits' and that trying such cases is how he makes his living"–the court was unsympathetic to the presence of ongoing license negotiations as a mitigating factor. Id. at 1167.

Even if the court finds that a "reasonable apprehension" has been created, the presence of ongoing license negotiations may still play a role in whether it chooses to exercise its jurisdiction. In Russell, the Seventh Circuit acknowledged the Federal Circuit's holding from EMC that: "it was appropriate for a court to take into account the pendency of serious negotiations to sell or license a patent in determining whether to exercise jurisdiction." Russell, 129 F. Supp.2d at 1169. Because license negotiations signal that the controversy between the parties may have a "real prospect of a non-judicial resolution," the court may use its discretion to choose not to exercise jurisdiction. EMC, 89 F.3d at 814.

Potentially Aggravating Factor: Additional Indicia of Litigation

If a cease-and-desist letter is coupled with "additional indicia of the potential for litigation," the court may find that a reasonable apprehension of litigation was created. In a recent Federal Circuit case, the court reaffirmed a 1987 decision (Goodyear Tire & Rubber Co. v. Releasomers Inc., 824 F.2d 953 (Fed. Cir. 1987)) and found that when a patentee files suit against the alleged infringer in another distinct yet related matter, he creates a reasonable apprehension of litigation in the matter at hand. Vanguard Research, Inc. v. PEAT, 304 F.3d 1249 (Fed. Cir. 2002). "By filing the earlier lawsuitÂ…PEAT has shown a 'willingness to protect that technology'" with litigation and "filing a lawsuit for patent infringement would be just another logical step in its quest to protect its technology." Id. at 1255. See also Fina Oil and Chemical Co. v. Ewen, 123 F.3d 1466 (Fed. Cir. 1997) (parties involvement in another related dispute provides reasonable apprehension of likelihood of additional patent claim).

Other more tangential activities can also indicate the probability of litigation: the patentee's threat of litigation against the accused infringer's customers and demand for payment of royalties may create a reasonable apprehension in the alleged infringer. C.R. Bard, Inc. v. Schwartz, 716 F.2d 874 (Fed. Cir. 1983). The patentee could also create a reasonable apprehension of suit by making statements to the accused infringer's customers about the alleged infringement. Publications International, Ltd. v. Futech Educational Products, 1997 U.S. Dist. LEXIS 15713 (N.D. Ill. 1997). However, merely offering to engage in negotiations, filing unrelated suits against others, or sending simple cease-and-desist letters generally do not create an actual controversy. Michael J. McCue, Feature: The Letters of the Law: Sending Cease and Desist Letters, 10 Nevada Lawyer 23 (2002). [2]


The court in EMC Corp. v. Norand Corp. warns that the inquiry into whether there is a reasonable apprehension "does not turn on whether the parties have used particular 'magic words' in communicating with one another." EMC, 89 F.3d at 812. While there may not be "magic words" to demarcate the reasonable apprehension standard, there are patterns of language that appear to play a role in whether or not the court will find an actual controversy.

In Blistex Inc. v. Circle Laboratories, Inc., 2000 U.S. Dist. LEXIS 11749 (N.D. Ill. 2000), Circle argued that their letter did not create a "reasonable apprehension" on the basis that they made no express threat to sue. The court examined the language of the letter, however, and found otherwise: the letter accused Blistex of manufacturing an "unlicensed copycat product" and "unlicensed infringing product;" it called Blistex' product an "intentional rip off" and said "our attorneys strongly believe a jury would agree;" it warned that Blistex "could be liable for monetary damages" and cited statutory provisions; and it asserted that Blistex' retailers could be liable for damages. Relying upon the rule from Arrowhead Indus. Waters, Inc. v. Ecolochem, Inc., 846 F.2d 731 (Fed. Cir. 1988), the court found that the express charge of infringement, alone, would show actual controversy. Yet, the court also noted the importance of the 'litigation language' used in Circle's letter–their references to a jury, damages, and statutory citations further supported a finding of "reasonable apprehension" of litigation. Blistex, 2000 U.S. Dist. LEXIS 11749 at *7.

In EMC Corp. v. Norand Corp., the letter in question referred to Norand's inclination to give the matter to its litigation counsel "for action" and suggested a meeting, "perhaps avoiding this matter escalating into a contentious legal activity." EMC, 89 F.3d at 812. Despite the expressed desire to avoid litigation, the court found this language would create a reasonable apprehension to "an objective reader" that Norand intended to pursue litigation if it did not obtain satisfaction. Id. at 812. Likewise in Millenium Products Inc. v. Gravity Boarding Co., 127 F. Supp.2d 974 (N.D. Ill. 2000), the court found an implicit threat of litigation–Gravity's president stated that "there could come a time soon that Gravity would need to commence an action to protect its mark, [but that he] still hoped to resolve the parties' dispute 'like gentleman and without litigation.'" Millenium, 127 F. Supp.2d at 976.

Language that does not trigger this reasonable apprehension steers clear of terms of litigation (jury, statutory provisions, damages, liable for remedies, past legal successes) and seems to express concern of possible infringement without directly accusing the other party. In Phillips, the language used by the patentee did not rise to the level of creating a reasonable apprehension–Kato merely stated that "certain fasteners made by Phillips Plastics were 'covered by'" Kato's patent and offered a license, "assuming that an appropriate agreement can be reached concerning the terms of the license." Phillips, 57 F.3d at 1052. In Shell Oil v. Amoco, none of the following language was found to create a reasonable apprehension: Amoco stated that Shell's activities "fall within," are "covered by," and have "operations under" the patent held by Amoco. Shell, 970 F.2d at 889.

Cautious language that avoids outright accusations has been successful in avoiding the creation of reasonable apprehension. In Publications International, Ltd. v. Futech Educational Products, the cease-and-desist letter accomplished its purpose of giving notice of possible infringement while avoiding accusation. The letter began by stating, "we do not know which specific technologies you plan to use." It then acknowledged the patents owned by patentee: "please be advised that we hold rights under U.S. Patent Nos. 5,167,508, 5,417,575 and 5,484,292, which cover this technology." Finally, it offered conditional notice of possible infringement without accusing the recipient of wrongdoing: "if, indeed, your organizationÂ…is actually producing a product that falls within the claims of either of these patents, you are hereby directed to cease and desist in such efforts immediatelyÂ…If your organization does proceed to infringe either of these patents, we would seek treble damages." Futech, 1997 U.S. Dist. LEXIS 15713 at *6 [italics mine]. The court found that this language did not establish a reasonable apprehension of litigation on the part of the recipient and ultimately dismissed his claim.

Even stronger language can avoid creating a reasonable apprehension, depending upon the audience to whom it is directed. In Cygnus Therapeutic Systems v. ALZA Corp., 92 F. 3d 1153, 1160 (Fed. Cir. 1996) , the court found that the patentee did "nothing more than exercise its lawful commercial prerogatives" when it made a statement to an audience of investors about how it took a "very strong proprietary position" towards its patents. The court found this language to be "precisely what one would expect" in a business context, and held that finding this to trigger reasonable apprehension in the mind of the alleged infringer would set the threshold for declaratory judgment jurisdiction far too low. Id. at 1161.

Finally, careful language may be able to accomplish two distinct goals: (1) meeting the standard for giving an infringing party actual notice of infringement, while (2) avoiding the reasonable apprehension threshold. In SRI International, Inc. v. Advanced Technology Laboratories, 127 F. 3d 1462 (Fed. Cir. 1997), the letter in question asserted that ATL's products "may infringe one or more" of SRI's patents, included a copy of the patent, offered a license, and then stated, "If you are of the opinion that you do not need a license from SRI, it would be helpful if you could give us some insight into your reasons." SRI, 127 F. 3d at 1470. By adopting this cautious language, SRI managed to successfully give adequate notice of possible infringement, for purposes of accrual of damages, while still not creating an actual controversy under the rule. 35 U.S.C.A. § 287(a); Declaratory Judgment Act, 28 U.S.C. § § 2201-2202.

In the Federal and Seventh Circuits, the standard for finding a "reasonable apprehension" of litigation follows the rule in Phillips Plastics–that there must be "objective circumstances [to] support such an apprehension" Phillips, 57 F.3d. at 1054. The totality of the circumstances considered will include the substantive content of the cease-and-desist letter, the nature of the relationship between the parties, the presence of ongoing license negotiations, the presence of other indicia of litigation, and the language chosen by the patentee (although courts may not explicitly acknowledge the role that language plays in their findings).



[1] See discussion in part B regarding specific language that may push the letter from one category to the other.

[2] Conversely, if the patentee wishes to threaten legal action, and start down the road to litigation, he should offer a clear deadline after which litigation will commence in the cease-and-desist letter. This protects the sender from "preemptive strike" suits, until the deadline or other reasonable time for settlement negotiations have passed. David L. Hoffman and Robert J. Lauson, Cease and Desist Letters in Intellectual Property Disputes, 16 NO. 12 Computer Law. 17 (1999), citing Charles Schwab & Co. v. Duffy, 49 U.S.P.Q. 2d 1862 (N.D. Cal 1998)).


Mr. Tomaselli acknowledges the large contribution of Sara S. Lochen in researching and drafting this paper.