Medtronic, Inc. v. Mirowski Family Ventures, LLC.
Medtronic, Inc. v. Mirowski Family Ventures, LLC.
Opinion
A patentee ordinarily bears the burden of proving infringement.
Agawam Co. v. Jordan,
I
A
We set forth a simplified version of the facts. The parties are Medtronic, Inc., a firm that (among other things) designs, makes, and sells medical devices, and Mirowski Family Ventures, LLC, a firm that owns patents relating to implantable heart stimulators. In 1991 Medtronic and Mirowski entered into an agreement permitting Medtronic to practice certain Mirowski patents in exchange for royalty payments.
In less simplified form: Mirowski entered into a license agreement with Eli Lilly & Co., which then sublicensed the Mirowski patents to Medtronic. Guidant Corp. is Eli Lilly's successor in interest. For present purposes we shall ignore Eli Lilly, Guidant, and other parties on Mirowski's side, using "Mirowski" to refer to any and all of them.
The 1991 agreement also provided that, if Mirowski gave notice to Medtronic that a new Medtronic product "infringe[d]" a
*847
Mirowski patent, Medtronic had a choice. App. 13. Medtronic could simply "cure the nonpayment of royalties."
In 2006 the parties entered into a further agreement that slightly modified the procedure for resolving disputes. If Medtronic, having received "timely written notice of infringement," chose to pursue a declaratory judgment action "challenging infringement *195 ," it could "accumulate disputed royalties" in an escrow account. Id., at 24, 27. The prevailing party in the declaratory judgment action would receive the royalties. Id., at 28.
In 2007 the parties found themselves in the midst of an "infringement" dispute. Mirowski gave Medtronic notice that it believed seven new Medtronic products violated various claims contained in two of its patents (related to devices that cause the heart's ventricles to contract simultaneously as the heart beats). Medtronic thought that its products did not infringe Mirowski's patents, either because the products fell outside the scope of the patent claims or because the patents were invalid.
B
In 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.
Medtronic, Inc. v. Boston Scientific Corp.,
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
*196
plaintiff, bore the burden. It acknowledged that normally the patentee, not the accused infringer, bears the burden of proving infringement, and that the burden normally will not "shift" even when the patentee is "a counterclaiming defendant in a declaratory judgment action."
Medtronic sought certiorari, asking us to review the Federal Circuit's burden of proof rule. In light of the importance of burdens of proof in patent litigation, we granted the petition.
*848 II
We begin with a jurisdictional matter. An
amicus
claims that we must vacate the Federal Circuit's decision because that court lacked subject-matter jurisdiction.
Amicus
agrees with the parties that
We agree with
amicus
that the Declaratory Judgment Act does not "extend" the "jurisdiction" of the federal courts.
Skelly Oil Co. v. Phillips Petroleum Co.,
But we do not agree with
amicus
' characterization of the "threatened" or "coercive" action that Mirowski might have brought. 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.,
Amicus
says that an infringement suit would be unlikely. But that is not the relevant question. The relevant question concerns the nature of the threatened action in the absence of the declaratory judgment suit. Medtronic believes-and seeks to establish in this declaratory judgment suit-that it does not owe royalties because its products are noninfringing. If Medtronic were to act on that belief (by not paying royalties and not bringing a declaratory judgment action), Mirowski could terminate the license and bring an ordinary federal patent law action for infringement. See Brief for
*198
Respondent 48 (acknowledging that if Medtronic had "chosen not to pay the royalties ... it would have subjected itself to a suit for infringement"). Consequently this declaratory judgment action, which avoids that threatened action, also "arises under" federal patent law. See
Franchise Tax Bd., supra,
at 19,
For this reason we believe that the hypothetical threatened action is properly characterized as an action "arising under an Act of Congress relating to patents."
III
We now turn to the question presented. A patent licensee paying royalties into an escrow account under a patent licensing agreement seeks a declaratory judgment that some of its products are not covered by or do not infringe the patent, and that it therefore does not owe royalties for those products. In that suit, who bears the burden of proof, or, to be more precise, the burden of persuasion? Must the patentee prove infringement or must the licensee prove noninfringement? In our view, the burden of persuasion is with the patentee, just as it would be had the patentee brought an infringement suit.
A
Simple legal logic, resting upon settled case law, strongly supports our conclusion. It is well established that the burden of proving infringement generally rests upon the patentee. See,
e.g.,
Imhaeuser v. Buerk,
We have long considered "the operation of the Declaratory Judgment Act" to be only "procedural,"
Aetna Life Ins. Co. v. Haworth,
And we have held that "the burden of proof" is a " 'substantive' aspect of a claim."
Raleigh v. Illinois Dept. of Revenue,
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.
Several practical considerations lead to the same conclusion. To 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 *850 infringer loses his declaratory judgment action because he failed to prove noninfringement. The alleged infringer, *200 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. So, both sides might lose as to infringement, leaving the infringement question undecided, creating uncertainty among the parties and others who seek to know just what products and processes they are free to use.
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." Restatement (Second) of Judgments § 28(4) (1980). Rather, the
"[f]ailure of one party to carry the burden of persuasion on an issue should not establish the issue in favor of an adversary who otherwise would have the burden of persuasion on that issue in later litigation." 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4422, p. 592 (2d ed. 2002).
Thus the declaratory judgment suit in the example above would have failed to achieve its object: to provide "an immediate and definitive determination of the legal rights of the parties."
Aetna, supra, at 241,
Moreover, to shift the burden can, at least on occasion, create unnecessary complexity by making it difficult for the licensee to understand upon just what theory the patentee's infringement claim rests. A complex patent can contain many pages of claims and limitations. A patent holder is in a better position than an alleged infringer to know, and to be able to point out, just where, how, and why a product (or process) infringes a claim of that patent. Until he does so, however, the alleged infringer may have to work in the dark, *201 seeking, in his declaratory judgment complaint, to negate every conceivable infringement theory.
Finally burden shifting here is difficult to reconcile with a basic purpose of the Declaratory Judgment Act. In
MedImmune, Inc. v. Genentech, Inc.,
a case that similarly concerned a patent licensee that brought a declaratory judgment action after the patentee accused it of infringement, we wrote that the " 'very purpose' " of that Act is to " 'ameliorate' " the "dilemma" posed by "putting" one who challenges a patent's scope "to the choice between abandoning his rights or risking" suit.
The Federal Circuit's burden shifting rule does not deprive Medtronic of the right to seek a declaratory judgment. But it does create a significant obstacle to use of that action. It makes the declaratory judgment procedure-compared to, say, *851 just refusing to pay royalties-disadvantageous. To that extent it recreates the dilemma that the Declaratory Judgment Act sought to avoid. As we have made clear (and as we explain below), we are unaware of any strong reason for creating that obstacle.
B
We are not convinced by the arguments raised to the contrary. First, the Federal Circuit thought it had found support in a recent case of this Court,
*202
Schaffer v. Weast,
Schaffer,
however, was not a declaratory judgment case. And
Schaffer
described exceptions to its basic burden of proof rule.
E.g.,
Second, the Federal Circuit emphasized that its holding applied only in "the limited circumstance when an infringement counterclaim by a patentee is foreclosed by the continued existence of a license."
Third, an
amicus
supporting Mirowski fears that our holding, unlike the Federal Circuit's rule, will "burden ... patent owners" by permitting "a licensee ...-at its sole discretion-[to] force the patentee into full-blown patent-infringement litigation." Brief for Intellectual Property
*203
Owners Association as
Amicus Curiae
9. The short answer to this argument, however, is that litigation can occur only in the presence of a genuine dispute, " 'of sufficient immediacy and reality,' " about the patent's validity or its application.
MedImmune,supra,
at 127,
The public interest, of course, favors the maintenance of a well-functioning patent system. But the "public" also has a "paramount interest in seeing that patent monopolies ... are kept within their legitimate scope."
Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co.,
For these reasons the judgment of the Federal Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
Reference
- Full Case Name
- MEDTRONIC, INC., Petitioner v. MIROWSKI FAMILY VENTURES, LLC.
- Cited By
- 195 cases
- Status
- Published