Supreme Court Action: Who Has The Burden of Proof in a Declaratory Judgment Action Over a Disputed Patent

The Supreme Court issued one opinion this morning.  The case is Medtronic, Inc. v. Mirowski Family Ventures, LLC (12-1128).  The case determines which party has the burden of proof to show patent infringement or lack of it in a declaratory judgment proceeding when the patent holder is the defendant.  Medtronic licensed patents from Mirowski for use in medical devices.  The license outlined procedures to identify and resolve disputes between the parties.

Mirowski claimed certain devices manufactured by Medtronic infringed the licensed patents.  Medtronic filed a declaratory judgment action challenging the assertion of infringement and placed royalties in an escrow account.  The District Court stated that Mirowski had the burden of proof on infringement and found that Mirowski had not met the burdern.  The Court of Appeals for the Federal Circuit reversed, saying that as a defendant in a declaratory judgment proceeding, Mirowski is foreclosed from asserting a counterclaim for infringement.  The burden of proof, therefore, belonged to Medtronic.

The Supreme Court reversed.  The Court first disposed of a jurisdictional issue relating to whether the Court of Appeals could hear the appeal of the declaratory judgment action.  The Court said it could as the underlying issue related to a threatened patent infringement action.  It then stated that the burden of proof of a patent infringement rests with the patent holder.  Patentees normally have that burden in an infringement case.  Declaratory judgment actions are procedural and as such do not change the assignment of the burden of proof.  Additionally, the burden of proof is a substantive aspect of the claim and not procedural.

The Court stated that giving the burden to the licensee in these circumstances would create a situation where the licensee would not necessarily know the nature of the claim it is trying to disprove.  That would add unnecessary complexity to the case.  The Court further rejected arguments that case law supported the COA decision, saying that cited precedent was not applicable to the circumstances.  Amici argued that a ruling in favor of the licensee would place patent holders at risk of litigation.  The Court responded that a case has to be based on a real dispute.  In fact, the present case was triggered by Mirowski’s assertion of infringement.

Justice Breyer delivered the opinion for a unanimous Court. – Mark

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