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SCOTUS Shifts Burden of Proof Back, Reverses Fed. Circuit

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By William Peacock, Esq. on January 24, 2014 3:35 PM

The facts of this case are unremarkable. Medtronic licenses patents from Mirowski for some products. Mirowski noticed that Medtronic was about to release new products, which they claimed infringed upon their patents. They wanted more royalties. Medtronic decided not to wait to be sued and filed a declaratory judgment action, seeking to have a judge rule that the new products didn't implicate the patents at issue.

The trial court ruled in Medtronic's favor, holding that even though they brought the declaratory judgment suit, the burden of proof still fell upon the party alleging infringement. The Federal Circuit disgreed, and reversed, holding that the burden fell on the party that brought the lawsuit.

The Supreme Court, however, disagreed, and shifted the burden of proof back to the patent holder.

Declaratory Judgment is Procedural

The Federal Circuit's opinion wasn't completely out of left field. After all, if Medtronic is seeking a judicial ruling, shouldn't they be required to provide the requisite proof?

Not so much.

In ordinary patent infringement cases, the patent holders bear the burden of proving infringement, for obvious reasons (it's their patent, their theory of infringement, etc.). That's been clear since, oh, 1869 or so.

The Declaratory Judgment Act's mechanism of providing a preemptive suit is, per controlling case law, purely procedural, and "leaves substantive rights unchanged." The burden of proof is a substantive aspect of a claim.

Not Proving a Negative

The Court also emphasized the practical considerations, and refused to force a party to prove a negative (that they didn't infringe).

"[S]hift[ing] the burden can create unnecessary complexity by making it difficult for the licensee to understand upon just what theory the patentee's infringement claim rests," Justice Stephen Breyer wrote for a unanimous court.

"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, seeking, in his declaratory judgment complaint, to negate every conceivable infringement theory."

Takeaway

"We hold that when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee."

Why is this important? It should lead to more challenges to patents. Under the Federal Circuit's burden-shifting rule, a patent licensee would face the choice of proving a negative or continuing to pay licensing fees for a questionable patent. The Supreme Court's rule, as the Court notes, encourages challenges to patents via the declaratory judgment procedure.

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