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For example, a policyholder believes that their denied claim is unjust. As a result, they inform the insurer that they are considering a lawsuit to recover losses. The insurer seeks a declaratory judgment to clarify its rights and obligations with hopes of preventing the lawsuit.
To begin with, a ?declaratory judgment action is the preferred manner of deciding a dispute between an insured and insurer over the construction and effect of the terms of the insurance contract.? Franklin v. Professional Risk Managment Services, Inc., 987 F. Supp.
The Declaratory Judgments Act, N.J.S.A. 2A:16-51 et seq., authorizes courts to declare rights, status and other legal relations so as to afford litigants relief from uncertainty and insecurity.
Declaratory relief refers to a court's declaratory judgment stating the rights of parties without ordering any specific action or listing awards for damages.
A counterclaim of infringement is a compulsory counterclaim to a claim for declaratory judgment of non-infringement. If a patent owner fails to assert an infringement counterclaim in a declaratory-judgment non-infringement suit, the patent infringement claim will be deemed waived.
For example, a declaratory judgment action could be brought to determine party rights and obligations under a contract or to establish the validity of a patent. Under Article III of the U.S. Constitution, a federal court may only issue a declaratory judgment when there is an actual controversy.
To establish federal jurisdiction in a declaratory judgment action, two conditions must be satisfied. First, is the constitutional inquiry - the case must be a 'case or controversy' pursuant to Article III of the US Constitution. Second is the prudential inquiry ? declaratory relief must be appropriate.
So what is a "declaratory judgment" lawsuit? This answer is this: It's a lawsuit that a plaintiff files in which the plaintiff asks the court to "declare" through issuance of a "declaratory judgment" what the respective rights of the parties are.