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Sup. Ct. Rules Burden of Proof Remains with Patent Owner
The Supreme Court began 2014 by reversing the Court of Appeals for the Federal Circuit's decision in Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843 (Jan. 22, 2014). The Supreme Court held that the burden of proof on infringement remains with the patent owner even when a licensee files a declaratory judgment suit seeking a judgment of no infringement. Id. at 846. The Supreme Court reached this conclusion based on three legal propositions:
- The burden of proving infringement generally rests with the patent owner;
- The operation of the Declaratory Judgment Act is only procedural; and
- The burden of proof is substantive.
On the practical side, the Supreme Court found that:
- Shifting the burden depending on the form of the proceeding would result in uncertainty as to the scope of the patent;
- The patent owner is in a better position to identify infringement; and
- Shifting the burden would make bringing a declaratory judgment proceeding “disadvantageous” as compared with just refusing to pay royalties.
Thus, the Supreme Court concluded that the burden of proof on infringement remains with the patent owner in a declaratory judgment proceeding for non-infringement.
The Underlying Facts
In 1991, Mirowski Family Ventures, LLC (MFV) entered into a patent license agreement with Eli Lilly & Co., which then sublicensed the subject patents to Medtronic, Inc. (Medtronic). Under the agreement, if MFV notified Medtronic that a new Medtronic product infringed, Medtronic could: 1) cure the non-payment of royalties; or 2) cure the non-payment of royalties and challenge the assertion of infringement by bringing a declaratory judgment action. Medtronic also could choose not to challenge the asserted infringement but, contrary to the terms of the agreement, not pay royalties. In that case, MFV could terminate the license and bring an infringement action.
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