High Court Grants Cert on Burden of Proof In Patent Licensee Declaratory Judgment Suit

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By Tony Dutra  

 

The U.S. Supreme Court will hear next term a case on the burden of proof in a declaratory judgment action brought by a licensee of technology covered by the license (Medtronic Inc. v. Boston Scientific Corp. ( U.S., No. 12-1128, review granted 5/20/13).

The case appeals a Sept. 18 decision by the U.S. Court of Appeals for the Federal Circuit that interpreted the Supreme Court's ruling in MedImmune Inc. v. Genentech Inc., 549 U.S. 118, 81 USPQ2d 1225 (2007) (06 PTD, 1/10/07).

The court held that “in the post-MedImmune world,” the licensee seeking a declaratory judgment bears the burden of persuasion. 695 F.3d 1266, 104 U.S.P.Q.2d 1323 (Fed. Cir. 2012) (181 PTD, 9/19/12).

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.  

 

 

Two petitions were filed in the same case and were discussed by the court in its May 16 conference. However, the court made no announcement as to the second petition, which asked questions on claim construction deference and standards that would affect a broader section of the patent community. Mirowski Family Ventures L.L.C. v. Medtronic Inc., No. 12-1116 (U.S., review sought March 14, 2013).

Licensee Files Declaratory Judgment Action

Morton Mower and Mieczyslaw Mirowski developed the first implantable cardioverter defibrillators during the period between 1969 and 1980. Two reissue patents (RE38,119 and RE39,897) are assigned to Mirowski Family Ventures L.L.C. (MFV), which in turn exclusively licensed the patents to Guidant Corp., which is owned by Boston Scientific Corp. The patents--the '897 patent is a continuation of the '119 patent--cover what has become known as a cardiac resynchronization therapy device.

Medtronic is a sublicensee of the '119 patent. In 2003, it began paying royalties into an escrow account and initiated a validity challenge against the patent. The license called for MFV to identify infringing Medtronic products and then for Medtronic to file a declaratory judgment action, which it did in 2007 in the U.S. District Court for the District of Delaware. Because Medtronic was a licensee authorized to use the patented technology, MFV was prohibited from counterclaiming for infringement.

The district court ruled in favor of Medtronic, concluding that the burden always falls on the patentee to show infringement.

Post-MedImmune World Necessitates Change

Reversing that decision, the Federal Circuit identified the limited question at issue in the case as follows:  

MedImmune provided licensees with a shield from the economic consequences of challenging their licensors' patents while enabling those licensees to file declaratory judgment suits to clarify the rights and obligations of the parties under their license agreements. This case requires us to determine the proper allocation of the burden of persuasion in the post-MedImmune world, under circumstances in which a declaratory judgment plaintiff licensee seeks a judicial decree absolving it of its responsibilities under its license while at the same time the declaratory judgment defendant is foreclosed from counterclaiming for infringement by the continued existence of that license.  

 

 

The court concluded that the burden of persuasion must fall on the party seeking relief. In this case, that party was clearly Medtronic, “asking the court to disturb the status quo ante and to relieve it from a royalty obligation it believes it does not bear,” the court said. “A contrary result would allow licensees to use MedImmune's shield as a sword--haling licensors into court and forcing them to assert and prove what had already been resolved by license.”

“Therefore, this court holds that in the limited circumstance when an infringement counterclaim by a patentee is foreclosed by the continued existence of a license, a licensee seeking a declaratory judgment of noninfringement and of no consequent liability under the license bears the burden of persuasion.”

Martin R. Lueck of Robins Kaplan Miller & Ciresi, Minneapolis, represents Medtronic. Arthur I. Neustadt of Oblon, Spivak, McClelland, Maier & Neustadt, Alexandria, Va., represents MFV.

By Tony Dutra  


Federal Circuit's opinion is available at http://pub.bna.com/ptcj/11131312Sep18.pdf.

Cert petition is available at http://pub.bna.com/ptcj/121128pet.pdf.

MFV response is at http://pub.bna.com/ptcj/121128resp.pdf.

Medtronic reply is at http://pub.bna.com/ptcj/121128reply.pdf.