Wednesday, January 22, 2014

Supreme Court Tackles Procedural Issues in Patent Declaratory Judgment Action

In Medtronic, Inc. v. Mirowski Family Ventures, LLC, Mirowski licensed its patents relating to implantable heart stimulators to Medtronic, which makes medical devices.  Later, Mirowski notified Medtronic that it believed some of Medtronic's new products infringed Mirowski's patents.

Medtronic brought a declaratory judgment action in federal court in Delaware, claiming that its products did not infringe Mirowski's patents and that the patents were invalid.  The district court held that Mirowski, as patentee, bore the burden of proving infringement, even though it was the defendant, and Mirowski lost after a bench trial.

The Federal Circuit reversed, holding that Medtronic, the declaratory judgment plaintiff, bore the burden of proving infringement.

The Supreme Court, in a unanimous opinion by Justice Breyer, reversed.  First the Court addressed federal jurisdiction.  An amicus argued that in a DJA, in order to determine whether the action arose under patent law under Section 1338(a), the court must look to the action that the DJ defendant (the patentee, Mirowski) could have brought in the absence of a DJA.  That action, argued the amicus, would be a state-law claim for breach of the license agreement.

The Court agreed that when determining declaratory judgment jurisdiction, courts look to the "character of the threatened action" to see whether it would necessarily present a federal question.  However, the Court held that the threatened action would arise under federal patent law, because if Medtronic stopped paying royalties, Mirowski could terminate the license agreement and sue for patent infringement.

Turning to the burden of proof issue, the Court reversed the Federal Circuit:

It is well established that the burden of proving infringement generally rests upon the patentee. . . . We have long considered "the operation of the Declaratory Judgment Act" to be only "procedural." . . . And we have held that "the burden of proof" is a "'substantive' aspect of a claim." . . .

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.

Thanks to Professor Ira Nathenson for bringing this case (which perhaps only a Civil Procedure professor could love) to my attention. 

 

 

http://lawprofessors.typepad.com/civpro/2014/01/supreme-court-tackles-procedural-issues-in-patent-declaratory-judgment-action.html

Federal Courts, Recent Decisions, Subject Matter Jurisdiction | Permalink

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