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SUPREME COURT OF THE UNITED STATES
_________________
No. 12–1128
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MEDTRONIC, INC., PETITIONER v. MIROWSKI FAMILY
VENTURES, LLC
on writ of certiorari to the united states
court of appeals for the federal circuit
[January 22, 2014]
Justice Breyer
delivered the opinion of the Court.
A patentee ordinarily
bears the burden of proving infringement. Agawam Co. v. Jordan, 7
Wall. 583, 609 (1869). This case asks us to decide whether the
burden of proof shifts when the patentee is a defendant in a
declaratory judgment action, and the plaintiff (the potential
infringer) seeks a judgment that he does not infringe the patent.
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. We reverse the
Federal Circuit’s determination to the contrary.
I
A
We set forth a
simplified version of the facts. The parties are Medtronic, Inc., a
firm that (among other things) designs, makes, and sells medical
devices, and Mirowski Family Ventures, LLC, a firm that owns
patents relating to implantable heart stimulators. In 1991
Medtronic and Mirowski entered into an agreement permitting
Medtronic to practice certain Mirowski patents in exchange for
royalty payments.
In less simplified
form: Mirowski entered into a license agreement with Eli Lilly
& Co., which then sublicensed the Mirowski patents to
Medtronic. Guidant Corp. is Eli Lilly’s successor in
interest. For present purposes we shall ignore Eli Lilly, Guidant,
and other parties on Mirowski’s side, using
“Mirowski” to refer to any and all of them.
The 1991 agreement also
provided that, if Mirowski gave notice to Medtronic that a new
Medtronic product “infringe[d]” a Mirowski patent,
Medtronic had a choice. App. 13. Medtronic could simply “cure
the nonpayment of royalties.” Ibid. Or it could pay royalties
and, at the same time, “challenge” the “assertion
of infringement of any of the Mirowski patents through a
Declaratory Judgment action.” Ibid. Medtronic, of course,
might just ignore the agreement and decide not to pay royalties at
all, in which case Mirowski would have “the right to
terminate the [l]icense,” ibid., and, if it wished, bring an
infringement action.
In 2006 the parties
entered into a further agreement that slightly modified the
procedure for resolving disputes. If Medtronic, having received
“timely written notice of infringement,” chose to
pursue a declaratory judgment action “challenging
infringement,” it could “accumulate disputed
royalties” in an escrow account. Id., at 24, 27. The
prevailing party in the declaratory judgment action would receive
the royalties. Id., at 28.
In 2007 the parties
found themselves in the midst of an “infringement”
dispute. Mirowski gave Medtronic notice that it believed seven new
Medtronic products violated various claims contained in two of its
patents (related to devices that cause the heart’s ventricles
to contract simultaneously as the heart beats). Medtronic thought
that its products did not infringe Mirowski’s patents, either
because the products fell outside the scope of the patent claims or
because the patents were invalid.
B
In 2007 Medtronic
brought this declaratory judgment action in Federal District Court
in Delaware. It sought a declaration that its products did not
infringe Mirowski’s patents and that the patents were
invalid. But, as its agreement with Mirowski provided, Medtronic
paid all the relevant royalties into an escrow account.
The District Court
recognized that Mirowski was the defendant in the action. But it
nonetheless believed that Mirowski, “[a]s the part[y]
asserting infringement,” bore the burden of proving
infringement. Medtronic, Inc. v. Boston Scientific Corp., 777
F. Supp. 2d 750, 766 (Del. 2011); see Under Sea
Industries, Inc. v. Dacor Corp., 833 F. 2d 1551, 1557 (CA Fed.
1987) (“The burden always is on the patentee to show
infringement”). After a bench trial, the court found that
Mirowski had not proved infringement, either directly or under the
doctrine of equivalents. And since Mirowski, the patentee, bore the
burden of proof, it lost. 777 F. Supp. 2d, at
767–770.
The Court of Appeals
for the Federal Circuit considered the burden of proof question,
and it came to the opposite conclusion. It held that Medtronic, the
declaratory judgment plaintiff, bore the burden. It acknowledged
that normally the patentee, not the accused infringer, bears the
burden of proving infringement, and that the burden normally will
not “shift” even when the patentee is “a
counterclaiming defendant in a declaratory judgment action.”
695 F. 3d 1266, 1272 (2012). Nonetheless, the Court of Appeals
believed that a different rule applies where that patentee is a
declaratory judgment defendant and, like Mirowski, that
patentee/defendant is “foreclosed” from asserting an
“infringement counterclaim” by the “continued
existence of a license.” Id., at 1274. In that case, the
Court of Appeals held, the party “seeking a declaratory
judgment of noninfringement,” namely Medtronic, “bears
the burden of persuasion.” Ibid.
Medtronic sought
certiorari, asking us to review the Federal Circuit’s burden
of proof rule. In light of the importance of burdens of proof in
patent litigation, we granted the petition.
II
We begin with a
jurisdictional matter. An amicus claims that we must vacate the
Federal Circuit’s decision because that court lacked
subject-matter jurisdiction. Amicus agrees with the parties that 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” (emphasis added).
Moreover, the version of §1295(a)(1) governing this appeal
gives the Federal Circuit exclusive appellate jurisdiction over any
case where jurisdiction in the district court “was based, in
whole or in part, on section 1338.” But, amicus says, in
determining whether this case is a “civil action arising
under” an “Act of Congress relating to patents,”
we must look to the nature of the action that the declaratory
judgment defendant, namely the patentee, Mirowski, could have
brought in the absence of a declaratory judgment. And that action,
amicus adds (in its most significant argument against
jurisdiction), would not be a patent infringement action but,
rather, an action for damages for breach of contract, namely an
action for breach of the Mirowski-Medtronic licensing contract, in
which patent infringement is the central issue. See Brief for
Tessera Technologies, Inc., as Amicus Curiae 2–3.
We agree with amicus
that the Declaratory Judgment Act does not “extend” the
“jurisdiction” of the federal courts. Skelly Oil Co. v.
Phillips Petroleum Co., 339 U. S. 667, 671 (1950) . We also
agree that federal courts, when determining declaratory judgment
jurisdiction, often look to the “character of the threatened
action.” Public Serv. Comm’n of Utah v. Wycoff Co., 344
U. S. 237, 248 (1952) . That is to say, they ask whether
“a coercive action” brought by “the declaratory
judgment defendant” (here Mirowski) “would necessarily
present a federal question.” Franchise Tax Bd. of Cal. v.
Construction Laborers Vacation Trust for Southern Cal., 463
U. S. 1, 19 (1983) .
But we do not agree
with amicus’ characterization of the “threatened”
or “coercive” action that Mirowski might have brought.
The patent licensing agreement specifies that, if Medtronic stops
paying royalties, Mirowski can terminate the contract and bring an
ordinary patent infringement action. Such an action would arise
under federal patent law because “federal patent law creates
the cause of action.” Christianson v. Colt Industries
Operating Corp., 486 U. S. 800, 809 (1988) .
Amicus says that an
infringement suit would be un-likely. But that is not the relevant
question. The relevant question concerns the nature of the
threatened action in the absence of the declaratory judgment suit.
Medtronic believes—and seeks to establish in this declaratory
judgment suit—that it does not owe royalties because its
products are noninfringing. If Medtronic were to act on that belief
(by not paying royalties and not bringing a declaratory judgment
action), Mirowski could terminate the license and bring an ordinary
federal patent law action for infringement. See Brief for
Respondent 48 (acknowledging that if Medtronic had “chosen
not to pay the royalties . . . it would have subjected
itself to a suit for infringement”). Consequently this
declaratory judgment action, which avoids that threatened action,
also “arises under” federal patent law. See Franchise
Tax Bd., supra, at 19; Wycoff Co., supra, at 248. See also
MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118, 128 (2007)
(concluding that Article III’s case-or-controversy
requirement was satis-fied where a patent licensee faced the threat
of suit if it ceased making payments under a license agreement,
notwithstanding that the licensee’s continued royalty
payments rendered the prospect of such a suit “remote, if not
nonexistent”).
For this reason we
believe that the hypothetical threatened action is properly
characterized as an action “arising under an Act of Congress
relating to patents.” 28 U. S. C.
§1338(a).
III
We now turn to the
question presented. A patent li-censee paying royalties into an
escrow account under a pat-ent licensing agreement seeks a
declaratory judgment that some of its products are not covered by
or do not infringe the patent, and that it therefore does not owe
royalties for those products. In that suit, who bears the burden of
proof, or, to be more precise, the burden of persuasion? Must the
patentee prove infringement or must the licensee prove
noninfringement? In our view, the burden of persuasion is with the
patentee, just as it would be had the patentee brought an
infringement suit.
A
Simple legal logic,
resting upon settled case law, strongly supports our conclusion. It
is well established that the burden of proving infringement
generally rests upon the patentee. See, e.g., Imhaeuser v. Buerk,
101 U. S. 647, 662 (1880) (“[T]he burden to prove
infringement never shifts [to the alleged infringer] if the charge
is denied in the plea or answer”); Agawam Co., 7 Wall., at
609 (“Infringement is an affirmative allegation made by the
complainant, and the burden of proving it is upon him
. . .”). See also Under Sea Industries, 833
F. 2d, at 1557 (“The burden always is on the patentee to
show infringement”); 5B Chisum §18.06[1][a], at
18–1180 (2007) (“[T]he burden of proof on factual
issues relating to infringement rests upon the patent
owner”).
We have long considered
“the operation of the Declaratory Judgment Act” to be
only “procedural,” Aetna Life Ins. Co. v. Haworth, 300
U. S. 227, 240 (1937) , leaving “substantive rights
unchanged,” Beacon Theatres, Inc. v. Westover, 359 U. S.
500, 509 (1959) . See also Vaden v. Discover Bank, 556 U. S.
49 , n. 19 (2009); Skelly Oil Co., 339 U. S., at 674
(noting the “limited procedural purpose of the Declaratory
Judgment Act”).
And we have held that
“the burden of proof ” is a
“ ‘substantive’ aspect of a claim.”
Raleigh v. Illinois Dept. of Revenue, 530 U. S. 15 –21
(2000); Director, Office of Workers’ Compensation Programs v.
Greenwich Collieries, 512 U. S. 267, 271 (1994) (“[T]he
assignment of the burden of proof is a rule of substantive law
. . .”); Garrett v. Moore-McCormack Co., 317
U. S. 239, 249 (1942) (“[T]he burden of proof
. . . [is] part of the very substance of [the
plaintiff ’s] claim and cannot be considered a mere
incident of a form of procedure”).
Taken together these
three legal propositions indicate that, in a licensee’s
declaratory judgment action, the burden of proving infringement
should remain with the patentee.
Several practical
considerations lead to the same conclusion. To shift the burden
depending upon the form of the action could create postlitigation
uncertainty about the scope of the patent. Suppose the evidence is
inconclusive, and an alleged infringer loses his declaratory
judgment action because he failed to prove noninfringement. The
alleged infringer, or others, might continue to engage in the same
allegedly infringing behavior, leaving it to the patentee to bring
an infringement action. If the burden shifts, the patentee might
lose that action because, the evidence being inconclusive, he
failed to prove infringement. So, both sides might lose as to
infringement, leaving the infringement question undecided, creating
uncertainty among the parties and others who seek to know just what
products and processes they are free to use.
The example is not
fanciful. The Restatement (Second) of Judgments says that
relitigation of an issue (say, infringement) decided in one suit
“is not precluded” in a subsequent suit where the
burden of persuasion “has shifted” from the
“party against whom preclusion is sought . . . to
his adversary.” Restatement (Second) of Judgments §28(4)
(1980). Rather, the
“[f ]ailure of one party to
carry the burden of persuasion on an issue should not establish the
issue in favor of an adversary who otherwise would have the burden
of persuasion on that issue in later litigation.” 18 C.
Wright, A. Miller, & E. Cooper, Federal Practice and Procedure
§4422, p. 592 (2d ed. 2002).
Thus the declaratory judgment suit in the
example above would have failed to achieve its object: to provide
“an immediate and definitive determination of the legal
rights of the parties.” Aetna, supra, at 241.
Moreover, to shift the
burden can, at least on occasion, create unnecessary complexity by
making it difficult for the licensee to understand upon just what
theory the patentee’s infringement claim rests. 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 judg-ment complaint, to negate every
conceivable infringement theory.
Finally burden shifting
here is difficult to reconcile with a basic purpose of the
Declaratory Judgment Act. In MedImmune, Inc. v. Genentech, Inc., a
case that similarly concerned a patent licensee that brought a
declaratory judgment action after the patentee accused it of
infringement, we wrote that the “ ‘very
purpose’ ” of that Act is to
“ ‘ameliorate’ ” the
“dilemma” posed by “putting” one who
challenges a patent’s scope “to the choice between
abandoning his rights or risking” suit. 549 U. S., at
129 (quoting Abbott Laboratories v. Gardner, 387 U. S. 136,
152 (1967) ). In the absence of the declaratory judgment procedure,
Medtronic would face the precise dilemma that MedImmune describes.
Either Medtronic would have to abandon its right to challenge the
scope of Mirowski’s patents, or it would have to stop paying
royalties, risk losing an ordinary patent infringement lawsuit, and
thereby risk liability for treble damages and attorney’s fees
as well as injunctive relief. See 35 U. S. C.
§§283–285 (providing for injunctive relief, treble
damages, and—in “exceptional
cases”—attorney’s fees as remedies for patent
infringement). As in MedImmune, the declaratory judgment action
rescues Medtronic from this dilemma.
The Federal
Circuit’s burden shifting rule does not deprive Medtronic of
the right to seek a declaratory judgment. But it does create a
significant obstacle to use of that action. It makes the
declaratory judgment procedure—compared to, say, just
refusing to pay royalties—dis-advantageous. To that extent it
recreates the dilemma that the Declaratory Judgment Act sought to
avoid. As we have made clear (and as we explain below), we are
un-aware of any strong reason for creating that obstacle.
B
We are not convinced
by the arguments raised to the contrary. First, the Federal Circuit
thought it had found support in a recent case of this Court,
Schaffer v. Weast, 546 U. S. 49 (2005) . In that case we
referred to the “ordinary default rule” as placing upon
the “plaintiffs” the “risk of failing to prove
their claims.” Id., at 56. We added that that is because the
plaintiffs are normally the parties “seeking relief.”
Id., at 58. And Medtronic, not Mirowski, is the declaratory
judgment “plaintif [f ]” here.
Schaffer, however, was
not a declaratory judgment case. And Schaffer described exceptions
to its basic burden of proof rule. E.g., id., at 57 (when an
element of a claim “can fairly be characterized as [an]
affirmative defens[e],” the burden of proof “may be
shifted to [the] defendants”); id., at 60
(“ ‘[T]he ordinary rule, based on considerations
of fairness, does not place the burden upon a litigant of
establishing facts peculiarly within the knowledge of his
adversary’ ” (quoting United States v. New York,
N. H. & H. R. Co., 355 U. S. 253 , n. 5 (1957)).
For the reasons we have set forth in Part III–A, supra,
declaratory judgment suits like the one at issue here constitute a
further exception to the basic rule Schaffer described.
Second, the Federal
Circuit emphasized that its holding applied only in “the
limited circumstance when an infringement counterclaim by a
patentee is foreclosed by the continued existence of a
license.” 695 F. 3d, at 1274. The fact that the Federal
Circuit’s opinion is limited, how-ever, does not support its
conclusion. The “limited cir-cumstance” it described is
often present when a patent licensee faces an ordinary but disputed
claim of infringement. And that “circumstance” is
virtually identical to MedImmune, where we found a declaratory
judgment action constitutionally permissible. In any event, the
fact that a rule’s scope is limited cannot, by itself, show
that the rule is legally justified.
Third, an amicus
supporting Mirowski fears that our holding, unlike the Federal
Circuit’s rule, will “burden . . . patent
owners” by permitting “a licensee . . .
—at its sole discretion—[to] force the patentee into
full-blown patent-infringement litigation.” Brief for
Intellectual Property Owners Association as Amicus Curiae 9. The
short answer to this argument, however, is that litigation can
occur only in the presence of a genuine dispute,
“ ‘of sufficient immediacy and
reality,’ ” about the patent’s validity or
its application. MedImmune, supra, at 127 (quoting Maryland
Casualty Co. v. Pacific Coal & Oil Co., 312 U. S. 270, 273
(1941) ). Indeed, it was Mirowski that set the present dispute in
motion by accusing Medtronic of infringement. And in such an
instance, we see no convincing reason why burden of proof law
should favor the patentee.
The public interest, of
course, favors the maintenance of a well-functioning patent system.
But the “public” also has a “paramount interest
in seeing that patent monopolies . . . are kept within
their legitimate scope.” Precision Instrument Mfg. Co. v.
Automotive Maintenance Machinery Co., 324 U. S. 806, 816
(1945) . A patentee “should not be . . . allowed to
exact royalties for the use of an idea . . . that is
beyond the scope of the patent monopoly granted.”
Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation,
402 U. S. 313 –350 (1971). And “[l]icensees may
often be the only individuals with enough economic incentive”
to litigate questions of a patent’s scope. Lear, Inc. v.
Adkins, 395 U. S. 653, 670 (1969) . The general public
interest considerations are, at most, in balance. They do not favor
a change in the ordinary rule imposing the burden of proving
infringement upon the patentee.
For these reasons the
judgment of the Federal Circuit is reversed, and the case is
remanded for further proceedings consistent with this opinion.
It is so ordered.
