En Banc Question: Who Proves (Non)Infringement When Licensee Challenges Patent

by Dennis Crouch

Medtronic v. Boston Scientific & Mirowski Family Ventures (Fed. Cir. 2012) on request for rehearing [Download Medtronic_Petition_Rehearing_EnBanc]

Medtronic has filed an interesting request for rehearing en banc following its recent loss to Boston Scientific. In my post on that panel decision I wrote "Good-Standing Licensee Must Prove Non-Infringement in DJ Action."

During patent litigation, it is normally the patentee that has the burden of proving infringement. In this case, however, the Federal Circuit flipped the burden and instead began with a presumption of infringement. The court recognized that its decision went against the weight of precedent, but based its conclusion upon the special circumstances in this case and the Supreme Court's holding in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).

Now, this case is different from typical patent litigation because the plaintiff who filed the case (Medtronic) is not the patentee seeking to enforce a patent. Rather, Medtronic has asked the court to issue a declaratory judgment that its operation does not infringe the Mirowski patent. U.S. Patent No. 4,928,688. Further, unlike the ordinary declaratory judgment case, Medtronic has signed the contract and given its word to pay ongoing royalties. The key holding in MedImmune is that a current patent licensee has standing to seek a declaratory judgment "that the underlying patent is invalid, unenforceable, or not infringed." Thus, under MedImmune, a licensee is not required to breach its contract before seeking declaratory relief. Prior to that case, the Federal Circuit had repeatedly ruled that a licensee in good standing could not challenge a patent because it had no apprehension of suit.

The present case falls squarely within the MedImmune expansion of declaratory judgment jurisdiction. The situation is interesting because the patentee would likely have no standing to sue for infringement even though the licensee now has standing. This situation, although unique, falls within the Supreme Court's general policy of encouraging licensees to challenge patent rights that it announced in Lear v. Adkins, 395 U.S. 653 (1969).

Because of this special factual background of the case, the patentee could not file an infringement counterclaim and therefore asked the court to place the burden of proving non-infringement onto the DJ plaintiff. Considering this issue, the Federal Circuit agreed – holding that the licensee had the burden of proving non-infringement in this situation. Writing for a unanimous panel, Judge Linn wrote:

This case requires us to determine the proper allocation of the burden of persuasion in the post-MedImmune world, under circumstances in which a declaratory judgment plaintiff licensee seeks a judicial decree absolving it of its responsibilities under its license while at the same time the declaratory judgment defendant is foreclosed from counterclaiming for infringement by the continued existence of that license. . . . [I]n the limited circumstance when an infringement counterclaim by a patentee is foreclosed by the continued existence of a license, a licensee seeking a declaratory judgment of noninfringement and of no consequent liability under the license bears the burden of persuasion. . . .

In its petition for rehearing, Medtronic directly challenges this holding. The question presented is:

Whether a legal presumption of patent infringement should exist such that in a declaratory judgment action brought by a licensee seeking a declaration of noninfringement the burden of proof is shifted to the declaratory judgment plaintiff to prove non-infringement.

In my view, it is a bit of an overstatement to say that the court applied a presumption of patent infringement. While we usually think of a simple dichotomy between infringement and non-infringement, it is fair to say that this case presents a potential third option. Because the patentee has not alleged infringement. If the patentee wins the ultimate lawsuit, the final holding should not be that of infringement but rather should merely be a denial of the request for declaratory relief.

For its part, the challenger makes a strong case that the holding here (if overstated) still goes against the weight of Federal Circuit precedent and more than 100 years of Supreme Court precedent.

Judges Linn, Lourie, and Prost were on the original panel. It will be interesting to see how the other eight judges respond.

One thought on “En Banc Question: Who Proves (Non)Infringement When Licensee Challenges Patent

  1. In my view, it is a bit of an overstatement to say that the court applied a presumption of patent infringement.

    I’m glad to hear it, Dennis, since you said something very similar to that in your earlier article: “Now, on remand, the district court will need to begin with a presumption of infringement and then consider whether the licensee can prove otherwise.”

    From my posting on your earlier article:

    I thought your use of “presumption of infringement” to sum up the case was interesting. I’m not sure you are wrong, but I’m also not sure that it’s the best way to sum this up, as it seems to suggest that the licensee has some enhanced burden of proof. That’s not quite the case. In fact, the primary effect of this case is to relieve the patentee of a burden of production. The patentee doesn’t have to make a showing on every element in a claim, because it is not trying to prove infringement. Instead, the patentee can limit its case to rebutting the DJ plaintiff’s showing as to non-infringement. Because you can prove non-infringement by showing the absence of only a single element, the prima facie case for this type of lawsuit is quite different than for a “normal” DJ case.

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