April 2010 Issue
Civil Cases
Express Scripts, Inc. v. Intel Corp.,
2010 U.S. Dist. LEXIS 18933 (E.D. Mo. Mar. 3, 2010)
ABSTRACT
After plaintiff filed an intent-to-use trademark application for the mark INTELLACT, defendant Intel sent a cease-and-desist letter demanding that plaintiff abandon its application. The letter also stated that use of the INTELLACT mark would infringe and dilute Intel’s rights in its INTEL mark. When the letter was sent, plaintiff had already begun using the INTELLACT mark, apparently unbeknownst to Intel. After plaintiff brought a lawsuit seeking a declaratory judgment of noninfringement, Intel moved to dismiss for lack of subject matter jurisdiction. The district court denied the motion, finding (1) a controversy existed under the Supreme Court’s MedImmune decision because, by alleging possible infringement, the letter put plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which it claims a right to do, and (2) discretionary dismissal of the declaratory judgment suit was not warranted because Intel’s letter specifically alleged infringement, making a declaratory ruling on infringement necessary to clarify plaintiff’s right to use the INTELLACT mark going forward.
CASE SUMMARY
FACTS
Express Scripts, Inc. (“ESI”) provides pharmacy benefit management and related healthcare consulting services. ESI filed an intent-to-use trademark application for the mark INTELLACT for these services and began use of the INTELLACT mark in connection with some of these services as early as February 2009.
In May 2009, ESI received a letter from Intel Corporation (“Intel”) concerning the INTELLACT trademark application, stating in relevant part:
Given Intel’s strong presence in the computer industry and the fact that Intel actively provides a wide range of medical and healthcare products and services, Intel believes that your client’s use of INTELLACT is likely to deceive or confuse consumers . . . . Furthermore, any use of INTELLACT is likely to dilute the famous INTEL mark . . . . Use of the INTELLACT trademark thus constitutes infringement of Intel’s established trademark rights and violates Intel’s rights . . . . Accordingly, Intel must insist that your client abandon its INTELLACT trademark application.
Please note that our intention is not to disrupt your client’s business but to protect Intel’s trade name and trademark rights. We are therefore interested in settling this manner [sic] in an efficient and amicable manner.
In response to Intel’s letter, ESI filed suit, seeking a declaratory judgment that ESI’s use of INTELLACT in connection with its pharmacy benefit management services does not violate Intel’s rights in the INTEL mark. Intel moved to dismiss the declaratory judgment action for lack of subject matter jurisdiction on the ground that no case or controversy exists.
ANALYSIS
The court noted that prior to the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118 (2007), the Federal Circuit had employed the two-part “reasonable apprehension of imminent suit” test for declaratory judgment actions in intellectual property cases. In MedImmune, however, the Supreme Court rejected the reasonable-apprehension-of-suit test in favor of a broader facts-and-circumstances inquiry. In this case, the court found that although MedImmune was a patent case, courts have concluded it is equally applicable to other types of intellectual property disputes and “there does not appear to be a colorable argument to the contrary.”
As articulated in MedImmune, the jurisdictional test is “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” The court noted that subsequent decisions of the Federal Circuit applying the MedImmune standard have recognized that it makes declaratory judgment jurisdiction “much more readily available in disputes concerning intellectual property rights.”
Courts following MedImmune have concluded that jurisdiction to enter a declaratory judgment exists where the defendant has taken “a position that puts the declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do.” Although it is no longer necessary to show a reasonable apprehension of imminent suit in order to present a justiciable case, doing so remains one possible avenue for demonstrating that a case or controversy exists. Likewise, the second prong of the prior test—requiring the plaintiff to demonstrate that it has taken significant steps toward engaging in arguably infringing activity—remains a significant consideration in determining whether the court has jurisdiction to enter a declaratory judgment.
Intel argued that there was no actual controversy here because its letter only requested that ESI abandon its intent-to-use application for the INTELLACT mark, and that it therefore, at most, threatened an opposition before the PTO. However, ESI presented evidence that it was in fact already using the mark in connection with providing certain pharmacy benefit management services. Although Intel apparently did not know that ESI was using the INTELLACT mark when it sent its letter, Intel did expressly state that using INTELLACT would infringe on its trademark rights. The court concluded that because ESI knew that it was using INTELLACT when it received Intel’s letter, the letter put ESI in the position of either pursuing arguably illegal behavior or abandoning that which it claims a right to do. The court thus concluded that there was subject matter jurisdiction to entertain ESI’s claim for a declaratory judgment.
Intel next argued that the court should exercise its discretion to dismiss ESI’s claim because (1) ESI’s action attempted to usurp Intel’s choice of forum as the true plaintiff; (2) ESI could not show any adverse effects on its use of the INTELLACT mark; and (3) allowing the action to go forward would discourage settlement efforts.
In rejecting these arguments, the court first found that ESI’s actual, ongoing use of the INTELLACT mark was the principal factor in creating a concrete dispute that warranted resolution by declaratory judgment. The court stated it might have agreed with Intel that declaratory relief would not serve any purpose if ESI were not using the mark. But because of ESI’s use and the specific allegation of infringement, a declaratory ruling on infringement was necessary to clarify ESI’s right to use INTELLACT going forward.
Furthermore, the court found Intel’s arguments in favor of discretionary dismissal unpersuasive. To support its usurpation-of-forum argument, Intel cited cases involving situations in which a declaratory judgment action and an infringement action were pending in different federal courts. Here, in contrast, Intel had not filed an infringement action in another forum, and its argument was therefore that this action should not proceed at all, not that the proper forum is elsewhere. Likewise, the court reasoned that any adverse effect on ESI’s ability to use its mark was not an especially pertinent consideration when the other option is outright dismissal. As for promotion of settlement, the court stated that though there is of course a general policy in favor of settlements, ESI was under no obligation to negotiate with Intel and the court saw no reason to dismiss the lawsuit on this basis.
CONCLUSION
This decision shows the increased risk of a preemptory declaratory judgment lawsuit when sending cease-and-desist letters in trademark disputes. In this court’s words, the MedImmune standard makes declaratory judgment jurisdiction “much more readily available in disputes concerning intellectual property rights.” The decision also highlights the impact that the use of the allegedly infringing mark, or lack thereof, by the target of a cease-and-desist letter can have on the declaratory judgment analysis. The court stated that, had the plaintiff not begun using its mark, it might have dismissed the suit.
