Court Says Cisco Has No Right To Sue To Invalidate A Patent That Is Being Used Against Its Customers

Yet another unfortunate patent decision has come out of the appeals court for the federal circuit. This involves a case where certain customers of Cisco products were being sued for patent infringement by TR Labs, and part of its argument was that certain Cisco equipment resulted in the infringement by those customers. In response, Cisco filed a lawsuit in federal court, asking for a declaratory judgment that TR Labs' patents were invalid. TR Labs hit back that it had not sued Cisco, had no intention of suing Cisco, and thus Cisco could not sue for declaratory judgment. Unfortunately, the lower courts and now the appeals court have agreed that Cisco has no basis to bring a lawsuit, because there is no direct threat against it.

There are reasons why it makes sense to require an actual potential dispute before allowing someone to bring a declaratory judgment action, but it seems silly to argue that Cisco can't file this lawsuit. After all, its business can clearly be impacted by TR Labs' lawsuits. First, it automatically makes Cisco's offerings more expensive, in that buyers may either face increased liability or direct licensing costs just to use those products. Thus, Cisco has a direct financial stake in the outcome of those lawsuits and has a very good reason to see the patents invalidated.