On May 20, 2013, the United States Supreme Court granted cert. in Medtronic v. Boston Scientific, a case that will answer whether the licensee in a declaratory judgment challenge bears the burden of proving that the alleged non-infringing product does not infringe, or whether the responding patentee must prove infringement. To read the Federal Circuit decision in the case, click here.
The Supreme Court explained the question presented as follows:
In Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007), this Court ruled that a patent licensee that believes that its products do not infringe the patent and accordingly are not subject to royalty payments is “not required … to break or terminate its … license agreement before seeking a declaratory judgment in federal court that the underlying patent is … not infringed.”
The question presented is whether, in such a declaratory judgment action brought by a licensee under MedImmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.
The dispute arose when Medtronic filed a complaint against Mirowski Family Ventures, LLC’s (“MFV”) and Boston Scientific Corp. in the United States District Court for the District of Delaware. The complaint sought a declaratory judgment of noninfringement and invalidity of U.S. Reissue Patents No. RE38,119 (“RE’119 Patent”) and No. RE39,897 (“RE’897 Patent”). The district court entered judgment of noninfringement in favor of Medtronic and judgment of validity and enforceability in favor of MFV. MFV appealed the district court’s judgment of noninfringement and Medtronic cross appealed the district court’s claim construction on which its judgment of validity was based. The Federal Circuit, with Judge Linn writing and joined by Judges Lourie and Prost, reversed because the district court relied on a legally incorrect allocation of the burden of proof to find noninfringement and incorrectly construed the claims.
MFV argued that because Medtronic is the declaratory judgment plaintiff — the party seeking court action — Medtronic bore the burden of proving noninfringement, a burden it failed to carry. Medtronic countered that, as the district court held, the burden of proving patent infringement always lies with the patentee; that burden never shifts to the accused infringer.
Judge Linn explained that “generally, the party seeking relief bears the burden of proving the allegations in his complaint.” However, he recognized that it is “well settled that a patentee who files a complaint or counterclaim alleging patent infringement bears the burden of proving that infringement.” Judge Linn also recognized that “”[t]he substantive burden of proof normally does not shift simply because the party seeking relief is a counter-claiming defendant in a declaratory judgment action.”
At its core, however, this is a contract dispute and Medtronic could not be sued for patent infringement because they were a licensee. The dispute arose because the parties disagreed about whether a particular product would infringe and therefore need to be covered by the terms of the license. Essentially, Medtronic did not want to pay royalties, believing it to be unnecessary.
Judge Linn explained:
The contract at issue here required MFV to identify products it believed were covered by the contract. After MFV identified those products, Medtronic was required to either pay royalties on them, or sue for declaratory judg- ment that the products were not covered. Medtronic is unquestionably the party now requesting relief from the court: it already has a license; it cannot be sued for infringement; it is paying money into escrow; and it wants to stop. In contrast, regarding the patents at issue here, MFV seeks nothing more than to be discharged from the suit and be permitted to continue the quiet enjoyment of its contract. In other words, it is Medtronic and not MFV that is asking the court to disturb the status quo ante and to relieve it from a royalty obligation it believes it does not bear. Consistent with the above, for the court to disturb the status quo ante, Medtronic must present evidence showing that it is entitled to such relief.
The decision of the Federal Circuit seems to make a lot of sense, so the fact that the Supreme Court wanted to take this issue suggests that at least 4 of the 9 Justices are leaning toward overruling or modifying the decision in some way.