Federal Government Supports Licensees in the Battle over Burdens of Proof

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The federal government recently filed its amicus brief with the United States Supreme Court in Medtronic, Inc. v. Boston Sci. Corp.  At issue is who should bear the burden of proof when a licensee says it does not infringe a licensed patent and, therefore, no royalties are due to the licensor.  The Federal Circuit (Judges Lourie, Linn, and Prost) held that a licensee bears the burden of proof on infringement in situations where the licensee files a declaratory judgment suit for noninfringement against the licensor (patent holder).  Medtronic, the licensee, filed a writ of certiorari, which the Supreme Court granted in May.

While courts have traditionally held that the patentee bears the burden of proof on patent infringement, in Medtronic Inc. v. Boston Sci. Corp., 695 F.3d 1266 (Fed. Cir. 2012), a Federal Circuit panel carved out an exception where a licensee seeks declaratory judgment relief from the patent owner, who is unable to countersue for infringement due to the license.  The Federal Circuit panel reasoned that because it is the licensee seeking relief, the licensee must bear the burden of proof.  A contrary result would, in the panel’s view, allow licensees to hale a licensor into court and force them to assert and prove what the parties already resolved by license.

The federal government’s amicus brief encourages the Supreme Court to reverse.  Rather than shifting the burden of proof in the very specific circumstance where a licensee seeks declaratory judgment of noninfringement from the licensor, the federal government argues that the burden of proof on infringement should always fall on the patent owner.

The federal government points out three major problems with this newfound burden shifting.  First, it is inconsistent with the procedural character and purpose of the Declaratory Judgment Act.  Second, there is no practical justification for this burden shift.  In either a declaratory judgment action or an infringement suit, the court must conduct the same factual inquiries, and apply the same body of law.  Finally, the federal government argues that shifting the burden of proof to the licensee in these cases would effectively prevent licensees’ use of the declaratory-judgment mechanism and upset sound patent policy.

It is now just a matter of time before the Supreme Court weighs in on whether to set the bright-line rule that the burden of proof on infringement always falls with the patentee, or whether to let stand the Federal Circuit’s new carve-out for declaratory judgment cases based on license disputes.