Opinion ID: 692072
Heading Depth: 3
Heading Rank: 2

Heading: Lockwood's Right to a Jury

Text: 16
17 The Seventh Amendment to the United States Constitution declares that [i]n suits at common law ... the right of trial by jury shall be preserved.... The thrust of the Amendment was to preserve the right to jury trial as it existed in 1791; indeed, for a time the appropriate rules of the common law as they existed in 1791 were the sole measure of the scope and meaning of the Seventh Amendment. Dimick, 293 U.S. at 476, 55 S.Ct. at 297; cf. Thompson v. Utah, 170 U.S. 343, 350, 18 S.Ct. 620, 622-23, 42 L.Ed. 1061 (1898) (using same test for scope of Sixth Amendment jury rights). It is now well settled, however, that the constitutional right to a jury trial extends beyond the bounds set by the common law forms of action existing at the time of the Amendment's adoption. Curtis v. Loether, 415 U.S. 189, 193-94, 94 S.Ct. 1005, 1007-08, 39 L.Ed.2d 260 (1974). The Court, through Mr. Justice Story, established the basic principle in 1830: 18 The phrase common law, found in [the Seventh Amendment], is used in contradistinction to equity, and admiralty and maritime jurisprudence.... By common law, [the Seventh Amendment's framers] meant what the constitution denominated in the third article law; not merely suits, which the common law recognized among its old and settled proceedings, but suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered; or where, as in admiralty, a mixture of public law, and of maritime law and equity, was often found in the same suit.... In a just sense, the amendment then may well be construed to embrace all suits, which are not of equity and admiralty jurisdiction, whatever may be the peculiar form which they may assume to settle legal rights. 19 Parsons, 28 U.S. (3 Pet.) at 445-46. Accord Chauffeurs Local No. 391 v. Terry, 494 U.S. 558, 564, 110 S.Ct. 1339, 1344, 108 L.Ed.2d 519 (1990) (quoting Parsons ). In short, any adjudication of a legal, as opposed to an equitable, right falls within the scope of the Amendment. Tull v. United States, 481 U.S. 412, 417, 107 S.Ct. 1831, 1835, 95 L.Ed.2d 365 (1987) (Seventh Amendment require[s] a jury trial on the merits in those actions that are analogous to 'Suits at common law.' ). For example, the Seventh Amendment embraces the adjudication of a legal right created by statute, even where that right has no precursor among the suits and actions known to the common law. Id. It is, of course, a simpler matter to state the Amendment's scope in the abstract than to mark out its boundaries with precision in a given case. 20 To determine whether a particular action resolves legal or equitable rights, we examine both the nature of the issues involved and the nature of the remedy sought. Specifically, the test for statutory actions involves two steps: 21 First, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature. 22 Chauffeurs, 494 U.S. at 565, 110 S.Ct. at 1345 (quoting Tull, 481 U.S. at 417-18, 107 S.Ct. at 1835-36); see Ross v. Bernhard, 396 U.S. 531, 538 n. 10, 90 S.Ct. 733, 738 n. 10, 24 L.Ed.2d 729 (1970). 5 Thus, if a particular action entails either the adjudication of legal rights, Tull, 481 U.S. at 425, 107 S.Ct. at 1839, or, alternatively, the implementation of legal remedies, Curtis, 415 U.S. at 195, 94 S.Ct. at 1008-09, the district court must honor a jury demand to the extent that disputed issues of fact concerning those rights and remedies require a trial. 6 23 We proceed to analyze Lockwood's Seventh Amendment claim within this framework, concluding that he is entitled to a jury trial as a matter of right in this case. Our decision preserves, as it must, the patentee's ability to compel a jury trial on the factual questions relating to patent validity. 24
25 The Declaratory Judgment Act, passed in 1934, ch. 512, 48 Stat. 955 (codified as amended at 28 U.S.C. Secs. 2201-02 (1988)), created an action unknown at common law. 7 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure Sec. 2752 (2d Ed.1983). Designed particularly to assist potential litigants unable to settle their rights and liabilities through then-existing procedures, an action for declaratory relief is sui generis and is as much legal as equitable. Borchard, supra note 7, at 26-28, 239. Indeed, from the Act's passage in 1934 until the merger of law and equity in the federal system in 1938, declaratory judgment actions were heard on both the law and the equity sides of the federal courts. See, e.g., United States ex rel. Guest v. Perkins, 17 F.Supp. 177 (D.D.C.1936) (law side); Texas Co. v. Wilkinson, 21 F.Supp. 771 (E.D.La.1937) (equity side). This has led a number of courts to remark that declaratory judgments are neither legal nor equitable, rather than both. See, e.g., Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 284, 108 S.Ct. 1133, 1140-41, 99 L.Ed.2d 296 (1988); Hartford Fin. Sys., Inc. v. Florida Software Servs., 712 F.2d 724, 727 (1st Cir.1983); American Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 824 (2d Cir.1968). The variety of formulations should not, however, distract one from the basic point: declaratory judgment actions are, for Seventh Amendment purposes, only as legal or equitable in nature as the controversies on which they are founded. See Fed.R.Civ.P. 57 (Declaratory Judgments); Simler v. Conner, 372 U.S. 221, 223, 83 S.Ct. 609, 611, 9 L.Ed.2d 691 (1963) (The fact that the action is in form a declaratory judgment case should not obscure the essentially legal nature of the action.). 26 Importantly, the Supreme Court has followed this principle even where, as here, the prayer for a declaration is joined with a request for injunctive relief. Beacon Theatres, 359 U.S. at 511, 79 S.Ct. at 957. In Beacon Theatres, the declaratory judgment plaintiff prayed for both a declaration that its contracts with movie distributors did not violate the antitrust laws, and an injunction preventing the defendant from bringing an antitrust suit based on those contracts. Id. at 502-03, 79 S.Ct. at 952-53. The Court required a jury trial on the antitrust issues on Seventh Amendment grounds, reasoning as follows: 27 [I]f Beacon would have been entitled to a jury trial in a treble damages suit against Fox it cannot be deprived of that right merely because Fox took advantage of the availability of declaratory relief to sue Beacon first. Since the right to trial by jury applies to treble damages suits under the antitrust laws ... the Sherman and Clayton Act issues on which Fox sought a declaration were essentially jury questions. 28 Id. at 504, 79 S.Ct. at 953. See also American Safety Equip., 391 F.2d at 824 (to assess Seventh Amendment claim, courts have looked to the basic nature of the suit in which the issues involved would have arisen if Congress had not created the Declaratory Judgment Act.). Because the declaratory judgment action is itself neither legal nor equitable, the historical inquiry required by the Seventh Amendment takes as its object the nature of the underlying controversy. To assess Lockwood's right to a jury trial in the context of American's prayer for a declaration that Lockwood's patents are invalid, we must therefore determine how patent validity was adjudicated prior to merger and absent the declaratory judgment procedure.
29 Before the passage of the Declaratory Judgment Act in 1934, a party concerned that its present or future activities might give rise to patent infringement liability had no legal or equitable procedure to test the validity of the patent at issue. Zenie Bros. v. Miskend, 10 F.Supp. 779, 781, 25 USPQ 153, 155 (S.D.N.Y.1935) (It is said that a suit by a private party who has no patent himself to declare a competitor's patent void is without precedent. The charge is true.); Borchard at 802-06; Note, Federal Jurisdiction Over Declaratory Judgment Proceedings in Patent Cases, 45 Yale L.J. 1287, 1289 (1936). The worried party could only wait for the patentee to bring an infringement suit and raise the patent's invalidity as an affirmative defense. 8 Patent validity simply was not litigated in isolation from an infringement claim. 30 As we noted in Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., patent owners could threaten infringement suits without ever bringing them, engaging in a danse macabre, brandishing a Damoclean threat with a sheathed sword. 846 F.2d 731, 735, 6 USPQ2d 1685, 1688 (Fed.Cir.1988). Where the patentee had initiated a suit for infringement and subsequently decided to withdraw the claim prior to trial, the alleged infringer had no way to force the patentee to revive the infringement claim so as to allow for a determination of validity. Leach v. Ross Heater & Mfg., 104 F.2d 88, 91, 41 USPQ 558, 560-61 (2d Cir.1939). The only suit an accused infringer faced with the threat of an infringement action could bring was an action in state court for unfair competitive practices--namely, the patentee's bad faith attempts to destroy the party's business with groundless threats of infringement suits. See, e.g., Racine Paper Goods Co. v. Dittgen, 171 F. 631 (7th Cir.1909); A.B. Farquhar Co. v. National Harrow Co., 102 F. 714 (3d Cir.1900). But this action, even if successful, produced no ultimate decision on the question of validity, and thus fell short of what a declaratory judgment action for invalidity would eventually offer. Zenie Bros., 10 F.Supp. at 782, 25 USPQ at 156; Emack v. Kane, 34 F. 46 (C.C.N.D.Ill.1888). 31 American maintains its declaratory judgment action against Lockwood in order to test the validity of Lockwood's patents. Insofar as the validity of the patents is adjudicated, American's action resembles nothing so much as a suit for patent infringement in which the affirmative defense of invalidity has been pled, and Lockwood's right to a jury trial must be determined accordingly. 9 The primary difference between American's action and the infringement suit that would formerly have been required for an adjudication of validity is that the parties' positions here have been inverted, 10 and such an inversion cannot operate to frustrate Lockwood's Seventh Amendment rights. Beacon Theatres, 359 U.S. at 504, 79 S.Ct. at 953; Owens-Illinois, Inc. v. Lake Shore Land Co., 610 F.2d 1185, 1189 (3d Cir.1979) (If the declaratory judgment action does not fit into one of the existing equitable patterns but is essentially an inverted law suit--an action brought by one who would have been a defendant at common law--then the parties have a right to a jury.); James v. Pennsylvania General Ins. Co., 349 F.2d 228, 230 (D.C.Cir.1965) (The right to jury trial in a declaratory judgment action depends ... on whether the action is simply the counterpart of a suit in equity--that is, whether an action in equity could be maintained if declaratory judgment were unavailable--or whether the action is merely an inverted lawsuit.); Johnson v. Fidelity & Casualty Co., 238 F.2d 322, 324-25 (8th Cir.1956); Hargrove v. American Cent. Ins. Co., 125 F.2d 225, 228 (10th Cir.1942); Pacific Indemnity Co. v. McDonald, 107 F.2d 446, 448 (9th Cir.1939). 11 4. The Patentee's Right to a Jury Trial at Common Law 32 As we have demonstrated, the Seventh Amendment preserves to Lockwood the same right to a jury trial on the factual questions relating to validity in a declaratory judgment action that he would have enjoyed had the validity of his patents been adjudicated in a suit for patent infringement according to eighteenth-century English practice. 33 In eighteenth-century England, allegations of patent infringement could be raised in both actions at law and suits in equity. 2 Joseph Story, Commentaries on Equity Jurisprudence Secs. 930-34, at 236-39 (photo. reprint 1988) (13th ed. 1886); 5 Moore p 38.11-. Because an action at law for damages could not obviate the need for perpetual litigation over future acts of infringement nor ascertain the full extent of the injury done to one's interests by past acts of infringement, courts of equity gave a patentee the option of pursuing injunctions and accountings against alleged infringers. 2 Story at Secs. 932, 933. The choice of forum and remedy, and thus of the method of trial, was left with the patentee. Nineteenth-century American practice followed the same basic pattern. Marsh v. Seymour, 97 U.S. 348, 349, 24 L.Ed. 963 (1877) (Owners of a patent ... may seek redress for the unlawful use of the improvement which it secures, in the Circuit Court, by a suit at law or in equity, at their option....); Wise v. Grand Ave. Ry. Co., 33 F. 277, 278 (C.C.W.D.Mo.1888) (It is now settled that a patentee may sue either at law or in equity, according as the relief demanded is of a legal or equitable nature.). If the patentee sought only damages, the patentee brought an action at law; in such a case, the defense of invalidity was tried to the jury, assuming that a jury had been demanded. Battin v. Taggart, 58 U.S. (17 How.) 74, 85, 15 L.Ed. 37 (1854); Wood v. Underhill, 46 U.S. (5 How.) 1, 5-6, 12 L.Ed. 23 (1847). However, if the patentee facing past acts of infringement nevertheless sought only to enjoin future acts of infringement, the patentee could only bring a suit in equity, and the defense of invalidity ordinarily would be tried to the bench. Root v. Railway Co., 105 U.S. 189, 205-06, 26 L.Ed. 975 (1881). 12 Under both English and American practice, then, it was the patentee who decided in the first instance whether a jury trial on the factual questions relating to validity would be compelled. 34 We cannot, consistent with the Seventh Amendment, deny Lockwood that same choice merely because the validity of his patents comes before the court in a declaratory judgment action for invalidity rather than as a defense in an infringement suit. Lockwood is entitled to have the factual questions relating to validity in this case tried to a jury as a matter of right.