A recent Delaware Court of Chancery opinion provides a reminder of the limited jurisdiction of Delaware’s court of equity and why not all suits for declaratory judgment satisfy the narrow subject matter jurisdiction of the Court of Chancery. See Takeda Pharmaceuticals U.S.A., Inc. v. Genentech, Inc., C.A. No. 2018-0384-MTZ (Del. Ch. Mar. 26, 2019).
This case involved an effort to obtain a declaratory judgment that would validate a defense in patent litigation pending in another forum based on a patent license. The court held that because there was an adequate remedy at law, the court did not have equitable subject matter jurisdiction for a declaratory judgment in this case, and no anti-suit injunction was available either.
- The court explained that in order for it to entertain a declaratory judgment action, there must be an “actual controversy.” See footnotes 46 to 47 and accompanying text. Although the four elements that the court reviews in order to determine whether there is an “actual controversy” were satisfied in this case, the court dismissed the suit without prejudice because it determined that the necessary equitable jurisdiction for making a ruling on a declaratory judgment claim was lacking.
- The court provided its reasoning about why an adequate remedy at law deprived it of equitable jurisdiction. See footnotes 52 to 68 and accompanying text. The adequate remedy at law in this case was that the license defense was capable of being presented in pending litigation in another forum, and therefore an anti-suit injunction was not available based on the absence of the irreparable harm requirement.
- Importantly, the Court of Chancery in the instant opinion distinguished a 2013 Delaware Supreme Court decision in National Industries Group v. Carlyle Investment Management, highlighted on these pages, as inapplicable in this matter. The Court of Chancery distinguished the facts in that case which involved the grant of specific performance to enforce a forum selection clause and to enjoin suits pending in another jurisdiction contrary to the forum selection clause. The difference between that decision and similar decisions highlighted on these pages involving the enforcement of a forum selection clause, distinguished in this decision, was that it has been well-established in Delaware that forcing someone to litigate in another forum contrary to a forum selection clause satisfies the irreparable harm prerequisite for injunctive relief–a prerequisite not satisfied in this case.
- In this case, there was no contractual forum selection clause involved, and the request that the Court of Chancery validate a defense to be used in court in another jurisdiction failed to acknowledge that courts often apply the law of jurisdictions other than where the court is sitting.
See generally, the three traditional “buckets” that a case must “fit into” in order to trigger equitable jurisdiction, described at footnotes 42 through 45 and accompanying text.