Professor Samuel Bray has a paper on ssrn titled The Myth of the Mild Declaratory Judgment. Here is the link and here is the abstract:
When plaintiffs in an American court seek prospective relief, they usually request an injunction, a declaratory judgment, or both. The fact that plaintiffs often choose between these remedies, or decide to seek both together, raises an obvious question. What is the difference between them? The standard answer is that the declaratory judgment is milder and the injunction is stronger. This “mildness thesis” has been endorsed by the Supreme Court, the Restatement (Second) of Judgments, and many legal scholars. Three rationales have been given for why the declaratory judgment is milder, each focused on something the declaratory judgment is said to lack: a command to the parties, a sanction for disobedience, and full issue-preclusive effect. This Article critiques the mildness thesis, showing how these rationales cannot be squared with the way the declaratory judgment and the injunction are actually used.
This Article also offers an alternative account of the relationship between the declaratory judgment and the injunction. In many contexts these remedies are substitutes, but they are not always perfect substitutes. This Article therefore explores the conditions under which each remedy has a comparative advantage when used prospectively. Central to this account is management: the injunction has, and the declaratory judgment lacks, a number of features that allow a court to conveniently and efficiently manage the parties. There is also a difference in timing: the declaratory judgment is sometimes available at an earlier stage of a dispute. The argument developed here has implications not only for remedies but also for other areas of law, including justiciability and fee-shifting.
This is a very interesting article, and makes some persuasive points about the relationship between declaratory judgments and injunctions. A few of the things the author says about patents, however, strike me as questionable. In particular, the author refers three times to an example under which an inventor wants to launch a product but is concerned that it might infringe someone else's patent, and therefore seeks a declaratory judgment first. At pp. 29-30, Professor Bray writes:
If the inventor makes the wrong choice—in either direction—there will be costs, both private costs and public costs. If she manufactures an infringing product, the costs include her risk of treble damages for patent infringement as well as the public and private costs of a patent-infringement trial. If she decides not to manufacture a product that a court would have found to be non-infringing, then she will lose the profits that would have covered the cost of this invention and subsidized other inventions—with the potentially tragic outcome for the public of reduced innovation. She has no viable intermediate options and must choose one of the roads: she will or will not make the product. A declaratory judgment is able to liquidate this uncertainty—it lets you litigate before you leap.
Similarly, at pp. 48-49:
Yet it is hard to define this stage in the lifecycle of a dispute where only the declaratory judgment is available. In many disputes this stage will never even exist. When it does exist, it is tenuous and transitory. For instance, in the patent scenario either party can choose to end it: the inventor, by manufacturing and distributing the product, thus allowing a suit for damages by the patent-holder; or the patent-holder, by explicitly threatening to immediately sue for infringement, thus allowing a suit for injunction by the inventor.
And at p.52:
Recall the example of a dispute over whether a patent is valid. The inventor must choose: either begin production (which means risking treble damages for patent infringement), or forgo bringing the invention to market (which means risking lost profits). Assume that at this point the inventor is seeking venture capital funding and is not yet ready to begin production, much less distribution to retailers. Both sides would of course be happy to have an injunction—the patent-holder would like one prohibiting the inventor from producing the product, and the inventor would like one prohibiting the patent-holder from suing for patent infringement. But both injunctions would be premature, given the imminence requirement, because the inventor is not yet ready to make the product. Even so, private and public costs may already be accruing from the legal uncertainty, the sort of costs that the theory of the declaratory judgment suggests it was meant to avoid.
As I said, I find much of the article persuasive, but I'm puzzled by the above examples involving patents. First of all, the assumption that the patent owner would necessarily exclude the prospective infringer/inventor from the market if the patent in suit is valid and infringed is not necessarily true; the patent owner may find it in his or her interest to license instead. Second, I'm not sure there really are very many cases in which the prospective inventor/infringer (1) is not yet using the purportedly patented technology, so that the patentee could not yet sue (see article p.17 n.76, "The question considered here is the remedy before there has been infringement. A much larger literature exists on remedies after infringement, where the choice is usually between an injunction and damages"), and (2) would be allowed to file a declaratory judgment action. (Even in the Hatch-Waxman context, the patentee has a special exception that permits a suit for "technical infringement.") Third, I don't know what to make of the author's reference to the inventor (here, the potential infringer) having a claim for an injunction against the patent holder if the patent is invalid or not infringed. There is no cause of action that I can see, unless the prospective patent infringement suit would be a sham. Fourth, it might have been useful to acknowledge that in patent law one function of declaratory judgments is forum selection: the prospective infringer would like to go first so as to select the forum for an inevitable patent infringement suit. That said, the author is clear that he's talking about declaratory judgments that might be available before the patent owner would be able to sue for infringement (but see my second point above). Fifth, as further support for his thesis that a declaratory judgment is not necessarily a "milder" remedy than an injunction, he might have noted that, following a final nonappealable judgment of invalidity the USPTO will cancel the patent in suit. See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1429 (Fed. Cir. 1988). To my knowledge, that rule applies even if the judgment is only a declaratory judgment.