WASHINGTON, D.C. - (Mealey's) The question of whether a
patent licensee bears the burden of proving that its products do not infringe
in a declaratory judgment action filed pursuant to MedImmune Inc. v.
Genentech Inc. (549 U.S. 118, 137 ) will be decided by the U.S.
Supreme Court, which on May 20 granted certiorari in a dispute over
cardiac resynchronization therapy (CRT) devices (Medtronic Inc. v. Boston
Scientific Corp. et al., No. 12-1128, U.S. Sup., See 5/20/13, Page 36) (lexis.com
subscribers may access Supreme Court briefs for this case).
According to Medtronic Inc.'s March 2013 petition for certiorari,
the Federal Circuit U.S. Court of Appeals erred in holding that an accused
infringer in a declaratory judgment action must establish noninfringement
because such a ruling "is contrary to the settled principle" that infringement
must "be shown by satisfactory proof" and "cannot be presumed."
"Nor does the procedural realignment of parties in a
declaratory judgment action reallocate the burden of proof - a principle the
Federal Circuit acknowledged. The Federal Circuit's conclusion that the
presence of a patent license justified a fundamental departure from these
principles is unsupported and deserves this Court's review," the petition
Medtronic filed the instant lawsuit before U.S. Judge Sue
L. Robinson of the District of Delaware in 2007, seeking a declaration that it
had not infringed respondent Mirowski Family Ventures (MFV) LLC's U.S. reissue
patents RE38,119 and RE39,897 with the sale of certain Medtronic CRT
products. MFV is the owner by assignment of the patents in suit, which it
in turn has licensed to co-respondents Guidant Corp. and Boston Scientific
Corp. (MFV, collectively). In 1991, however, Medtronic sublicensed the RE'119
patent from Eli Lilly & Co. According to the record, the agreement
allowed Medtronic to challenge the RE'119 patent's validity via declaratory
judgment; Medtronic did so, and the parties entered into a litigation tolling
agreement (LTA) that obligated MFV to inform Medtronic of which products it
believed were infringing.
"Because Medtronic remained MFV's licensee, MFV could not
counterclaim for infringement of either patent," the Federal Circuit noted in
its September 2012 ruling.
Judge Robinson construed claims "improving the
hemodynamic efficiency of a heart" and "bi-ventricular pacemaker" as limited to
the treatment of congestive heart failure. Accordingly, the judge deemed
the patents in suit valid. Medtronic's accused products were deemed
noninfringing, however, both literally and under the doctrine of equivalents.
The parties then cross-appealed to the Federal Circuit. Reversing and
remanding, the appellate panel turned to the question of which party bears the
burden of proving infringement. Citing MedImmune, in which the
Supreme Court found that a licensee should not be forced to cease royalty
payments and risk infringement liability before challenging the scope of a
license, the Federal Circuit held that the instant suit requires a
determination of "the proper allocation of the burden of persuasion in the
Siding with MFV, the Federal Circuit agreed that as a
declaratory judgment plaintiff, Medtronic must demonstrate that at least one
limitation of each claim of MFV's patents is not met by Medtronic's products because
Medtronic is "unquestionably the party now requesting relief from the court."
"In other words, it is Medtronic and not MFV that is
asking the court to disturb the status quo ante and to relieve it from a
royalty obligation it believes it does not bear. Consistent with the
above, for the court to disturb the status quo ante, Medtronic must
present evidence showing that it is entitled to such relief. If neither
party introduced any evidence regarding infringement or noninfringement there
is no principled reason why Medtronic should receive the declaration of
noninfringement it seeks," the Federal Circuit held.
"Because Medtronic, and ultimately the district court,
did not appreciate the appropriate allocation of the burden of proof and how
the burden affected the parties' conduct during discovery, it is within the
district court's discretion on remand whether to limit Medtronic to its current
interrogatory answer, or to allow Medtronic to amend its interrogatory answer
to include any additional noninfringement contentions it may wish to assert,"
the appellate panel added.
Should the Federal Circuit ruling stand, it "will have
numerous undesirable consequences," according to Medtronic.
"First and foremost, it dramatically undercuts the
holdings in MedImmune and the remedies it provided. Under the
Federal Circuit's new regime, a declaratory judgment under MedImmune
comes with a significant price: the duty to prove the negative
proposition that the involved products do not infringe - a formidable task
where, as here, the asserted patents include hundreds of individual claims and
liability could rest on any one of several infringement theories. The
only way a licensee could ensure that the burden of proof remains with the
patentee would be to repudiate the license and invite the patentee to sue for
infringement, thereby 'risk[ing] such serious consequences' as treble damages
and attorney's fees - the very outcome the Court allowed licensees to avoid in MedImmune,"
Medtronic asserts, citing MedImmune.
A related petition (Mirkowski Family Ventures LLC v.
Medtronic Inc. [No. 12-1116]), pertaining to the Federal Circuit's holding
that Judge Robinson's claim construction improperly restricted various claims
of the patents in suit, was not acted upon by the Supreme Court.
Medtronic is represented by Martin R. Lueck of Robins,
Kaplan, Miller & Ciresi in Minneapolis.
Arthur I. Neustadt of Oblon, Spivak, McClelland, Maier & Neustadt in Alexandria, Va.,
represents the respondents.
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