Medtronic, Inc. v. Mirowski Fam. Ventures: Burden of Persuasion in DJ Action Remains with Patentee

Category: Civil Procedure 
By: Jesus Hernandez, Blog Editor/Contributor 
TitleMedtronic, Inc. v. Mirowski Fam. Ventures, LLC, No. 12-1128 (Jan. 22, 2014).
IssueThis case asks us to decide whether the burden of proof shifts when the patentee is a defendant in a declaratory judgment action, and the plaintiff (the potential infringer) seeks a judgment that he does not infringe the patent.
Medtronic, Inc. at *1.
HoldingWe hold that, when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee. We reverse the Federal Circuit’s determination to the contrary.
Id. at *1.

Procedural HistoryIn 2007 Medtronic brought this declaratory judgment action in Federal District Court in Delaware. It sought a declaration that its products did not infringe Mirowski’s patents and that the patents were invalid. But, as its agreement with Mirowski provided, Medtronic paid all the relevant royalties into an escrow account. The District Court recognized that Mirowski was the defendant in the action. But it nonetheless believed that Mirowski, “[a]s the part[y] asserting infringement,” bore the burden of proving infringement. [...] The Court of Appeals for the Federal Circuit considered the burden of proof question, and it came to the opposite conclusion. It held that Medtronic, the declaratory judgment plaintiff, bore the burden.
Medtronic, Inc. at *3 (internal citations omitted).
Legal Reasoning (Breyer)
Dicta on Subject Matter Jurisdiction
CAFC Subject Matter Jurisdiction for Breach of Patent Contract
An amicus claims that we must vacate the Federal Circuit’s decision because that court lacked subject-matter jurisdiction. [...], [A]micus says, in determining whether this case is a “civil action arising under” an “Act of Congress relating to patents,” we must look to the nature of the action that the declaratory judgment defendant, namely the patentee, Mirowski, could have brought in the absence of a declaratory judgment. And that action, amicus adds (in its most significant argument against jurisdiction), would not be a patent infringement action but, rather, an action for damages for breach of contract, namely an action for breach of the Mirowski-Medtronic licensing contract, in which patent infringement is the central issue. [...]
Medtronic, Inc. at *4 (internal citations omitted).
The patent licensing agreement specifies that, if Medtronic stops paying royalties, Mirowski can terminate the contract and bring an ordinary patent infringement action. Such an action would arise under federal patent law because “federal patent law creates the cause of action.” Christianson v. Colt Industries Operating Corp., 486 U. S. 800, 809 (1988).
Id. at *5.
Burden of Persuasion in a DJ Action Remains with Patentee, Same as an Infringement Action
Precedence and Legal Logic maintain the Burden of Proof on PatenteeIt is well established that the burden of proving infringement generally rests upon the patentee. See, e.g., Imhaeuser v. Buerk, 101 U. S. 647, 662 (1880) (“[T]he burden to prove infringement never shifts [to the alleged infringer] if the charge is denied in the plea or answer”) […] We have long considered “the operation of the Declaratory Judgment Act” to be only “procedural,” […] leaving “substantive rights unchanged,” […] And we have held that “the burden of proof” is a “‘substantive’ aspect of a claim.” Raleigh v. Illinois Dept. of Revenue, 530 U. S. 15, 20–21 (2000)[…] Taken together these three legal propositions indicate that, in a licensee’s declaratory judgment action, the burden of proving infringement should remain with the patentee.
Medtronic, Inc. at *6-7 (some internal citations omitted).
Postlitigation Uncertainty if Burden ShiftedTo shift the burden depending upon the form of the action could create postlitigation uncertainty about the scope of the patent. Suppose the evidence is inconclusive, and an alleged infringer loses his declaratory judgment action because he failed to prove noninfringement. The alleged infringer, or others, might continue to engage in the same allegedly infringing behavior, leaving it to the patentee to bring an infringement action. If the burden shifts, the patentee might lose that action because, the evidence being inconclusive, he failed to prove infringement. […] The example is not fanciful. The Restatement (Second) of Judgments says that relitigation of an issue (say, infringement) decided in one suit “is not precluded” in a subsequent suit where the burden of persuasion “has shifted” from the “party against whom preclusion is sought . . . to his adversary.”
Id. at *10-11 (some internal citations omitted).
Schaffer v. Weast does not support shifting burden[T]he Federal Circuit thought it had found support in a recent case of this Court, Schaffer v. Weast, 546 U. S. 49 (2005). […] Schaffer, however, was not a declaratory judgment case. And Schaffer described exceptions to its basic burden of proof rule. E.g., id., at 57 (when an element of a claim “can fairly be characterized as [an] affirmative defens[e],” the burden of proof “may be shifted to [the] defendants”); id., at 60 (“‘[T]he ordinary rule, based on considerations of fairness, does not place the burden upon a litigant of establishing facts peculiarly within the knowledge of his adversary’” […] [D]eclaratory judgment suits like the one at issue here constitute a further exception to the basic rule Schaffer described.
Id. at *10 (some citations omitted).
For these reasons the judgment of the Federal Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
Medtronic, Inc. at *11.
Editor Note
For further insight, check out the Audio Brief of Medtronic, Inc. oral arguments before the SCOTUS here (Medtronic, Inc. v. Boston Scientific Corp. et al.).
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