Supreme Court Unanimously Holds Burden Of Proving Infringement Does Not Shift To Licensees In Declaratory Judgment Actions

The Supreme Court's decision last week in Medtronic v. Mirowski Family Ventures, LLC clarifies once again that patent holders bear the burden of proving patent infringement—even in declaratory judgment actions brought by licensees. 571 U.S. __ (2014). The Federal Circuit had held that licensees must prove non-infringement in declaratory judgment actions in which they are challenging a patent while continuing to pay royalties under a license. The Supreme Court reversed, explaining that "[s]imple legal logic, resting upon settled case law" requires that burden to remain, as usual, with the patentee. This decision reaffirms and reinforces the Supreme Court's earlier decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), which found that there is jurisdiction where licensees challenge patents through declaratory judgment actions.

BACKGROUND

In MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Supreme Court held that a patent licensee can file a declaratory judgment action challenging a patent without first having to terminate the license. The Court found that the case-or-controversy requirement of Article III, reflected in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a), does not require that licensees expose themselves to liability by breaching or terminating their license agreements before they can take advantage of the declaratory judgment procedure. Id. at 120, 137. MedImmune did not address the question of which party bears the burden of proving infringement in these kinds of actions, however.

The Federal Circuit faced that issue for the first time in Medtronic. The case arises from a licensing agreement entered into in 1991 between Medtronic, Inc. and Mirowski Family Ventures for patents relating to implantable heart stimulators. In 2007, Mirowski sent notice to Medtronic asserting that several of Medtronic's new products practiced patents covered by the licensing agreement. In response, Medtronic brought a declaratory judgment action in the Federal District Court of Delaware, seeking a declaration that Medtronic's devices did not infringe any valid and enforceable claim of the asserted patents. Medtronic continued to make royalty payments, pursuant to a provision in the parties' agreement that, if Medtronic chose to pursue a declaratory judgment action, royalties paid in the meantime would be held in an escrow account. (Slip op. at 1-3.)

The parties disagreed in District...