Medtronic, Inc. v. Mirowski Family Ventures, LLC
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NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
MEDTRONIC, INC. v. MIROWSKI FAMILY VENTURES, LLC
certiorari to the united states court of appeals for the federal circuit
No. 12–1128. Argued November 5, 2013—Decided January 22, 2014
Petitioner Medtronic, Inc., designs, makes, and sells medical devices. Respondent Mirowski Family Ventures, LLC, owns patents relating to implantable heart stimulators. They have a licensing agreement that permits Medtronic to practice certain Mirowski patents in exchange for royalty payments, and that specifies procedures to identify products covered by the license and to resolve disputes between the parties. Pursuant to those procedures, Mirowski notified Medtronic of its belief that several of Medtronic’s products infringed the licensed patents, and Medtronic then challenged that assertion of infringement in a declaratory judgment action, while accumulating disputed royalties in an escrow account for distribution to the prevailing party. The District Court concluded that Mirowski, as the party asserting infringement, had the burden of proving infringement and that Mirowski had not met that burden. The Federal Circuit disagreed. It acknowledged that a patentee normally bears the burden of proof, but concluded that where the patentee is a declaratory judgment defendant and, like Mirowski, is foreclosed from asserting an infringement counterclaim by the continued existence of a licensing agreement, the party seeking the declaratory judgment, namely Medtronic, bears the burden of persuasion.
1. The Federal Circuit did not lack subject-matter jurisdiction in this case. Title 28 U. S. C. §1338(a) gives federal district courts exclusive jurisdiction over “any civil action arising under any Act of Congress relating to patents,” and §1295(a)(1) gives the Federal Circuit appellate jurisdiction over any case where jurisdiction in the district court “was based, in whole or in part, on section 1338.” The Declaratory Judgment Act does not “extend” the federal courts’ “jurisdiction,” Skelly Oil Co. v. Phillips Petroleum Co., 339 U. S. 667 ; and federal courts determining declaratory judgment jurisdiction often look to the “character” of the declaratory judgment defendant’s “threatened action,” Public Serv. Comm’n of Utah v. Wycoff Co., 344 U. S. 237 , i.e., whether the defendant’s hypothetical “coercive action” “would necessarily present a federal question,” Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U. S. 1 . Here, if Medtronic had acted consistent with the understanding of its rights that it seeks to establish through the declaratory judgment suit (by ceasing to pay royalties), Mirowski could terminate the license and bring a suit for infringement. That suit would arise under federal patent law because “patent law creates the cause of action.” Christianson v. Colt Industries Operating Corp., 486 U. S. 800 . Thus, this declaratory judgment action, which avoids that hypothetical threatened action, also “arises under” federal patent law. See, e.g., Security-First Nat. Bank of Los Angeles v. Franchise Tax Bd. of Cal., 368 U. S. 3 . Pp. 4–6.
2. When a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion on the issue of infringement. Pp. 6–11.
(a) This conclusion is strongly supported by three settled legal propositions: First, a patentee ordinarily bears the burden of proving infringement, see, e.g., Agawam Co. v. Jordan, 7 Wall. 583, 609; second, the “operation of the Declaratory Judgment Act” is only “procedural,” Aetna Life Ins. Co. v. Haworth, 300 U. S. 227 , leaving “substantive rights unchanged,” Beacon Theatres, Inc. v. Westover, 359 U. S. 500 ; and third, “the burden of proof” is a “ ‘substantive’ aspect of a claim,” Raleigh v. Illinois Dept. of Revenue, 530 U. S. 15 –21. Practical considerations lead to the same conclusion. Shifting the burden based on the form of the action could create postlitigation uncertainty about a patent’s scope. It may also create unnecessary complexity by compelling a licensee to prove a negative. Finally, burden shifting is difficult to reconcile with the Declaratory Judgment Act’s purpose of ameliorating the “dilemma” posed by “putting” one challenging a patent’s scope “to the choice between abandoning his rights or risking” suit, MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118 . To the extent that the Federal Circuit’s burden shifting rule makes the declaratory judgment procedure disadvantageous, that rule recreates the dilemma that the Declaratory Judgment Act sought to avoid. Pp. 6–9.
(b) Several arguments to the contrary are unconvincing. First, Schaffer v. Weast, 546 U. S. 49 , which noted the “ordinary default rule” that “plaintiffs” have the “risk of failing to prove their claims,” does not support the Federal Circuit’s conclusion. Schaffer was not a declaratory judgment case, and it described exceptions to its basic burden of proof rule. For reasons explained in this case, declaratory judgment suits like this one are an exception to Schaffer’s default rule. Second, the fact that the Federal Circuit limited its holding to the circumstance where a license forecloses an infringement counterclaim by a patentee cannot, by itself, show that the holding is legally justified. Third, contrary to one amicus’ concern that this Court’s holding will permit licensees to force patent holders into full-blown infringement litigation, such litigation can occur only when there is a genuine and sufficiently “immedia[te]” dispute about a patent’s validity or application, MedImmune, supra, at 127. Here, Mirowski set this dispute in motion by accusing Medtronic of infringement, and there is no convincing reason why burden of proof law should favor the patentee. General considerations relating to the public interest in maintaining a well-functioning patent system are, at most, in balance, and do not favor changing the ordinary burden of proof rule. Pp. 9–11.
695 F. 3d 1266, reversed and remanded.
Breyer, J., delivered the opinion for a unanimous Court.