Supreme Court Decision Alert - January 22, 2014

Today the Supreme Court issued one decision, described below, of interest to the business community.

Patents—Actions Seeking Declaration Of Noninfringement—Burden Of Proof

Medtronic, Inc. v. Mirowski Family Ventures, LLC, No. 12-1128 (previously discussed in the May 20, 2013, Docket Report)

The Supreme Court long ago established that a patent holder making a claim of infringement bears the burden of proof. See Agawam Co. v. Jordan, 7 Wall. 583, 609 (1869). Today, in Medtronic, Inc. v. Mirowski Family Ventures, LLC, No. 12-1128 (January 22, 2104), the Supreme Court held that the burden remains with the patentee even if the patentee is the defendant in a declaratory-judgment action by a patent licensee seeking a judgment of non-infringement. The decision reverses the Federal Circuit's holding two years ago in Medtronic Inc. v. Boston Scientific Corp., 695 F.3d 1266 (Fed. Cir. 2012).

In 1991, Medtronic entered into an agreement (through sublicensors, not relevant here) to license patents held by Mirowski. Under that agreement, as revised in 2006, if Mirowski believed that a new Medtronic product infringed a Mirowski patent, Medtronic could either pay royalties and cure the infringement, or make payments into an escrow account and bring a declaratory-judgment action to challenge the assertion of infringement. Id. An infringement dispute arose in 2007, and Medtronic brought an action for declaratory relief in the District of Delaware, seeking a judgment that its products did not infringe any Mirowski patent and that the patents at issue were not valid.

Medtronic prevailed in the trial court, which held that Mirowski bore the burden of proving that Medtronic had infringed its patent, and that Mirowski had failed to meet that burden. Id. On appeal, the Federal Circuit reversed. While acknowledging the general rule allocating the burden of persuasion to the patentee, and affirming that the burden does not shift merely because the patentee is a defendant in a declaratory-judgment action, the Federal Circuit held that the burden does shift to the party asserting noninfringement in "the limited circumstance when an infringement counterclaim by a patentee is foreclosed by the continued existence of a license." 695 F.3d at 1274.

The Supreme Court disagreed. Citing three underlying legal principles(1) the default rule that the patentee bears the burden of proving infringement, (2) the fact that the burden of proof is a substantive aspect of a claim, and...