MEDTRONIC, INC. V. BOSTON SCIENTIFIC
CORP.:
DECLARATORY JUDGMENT’S BURDEN ON
LICENSEE OR PATENTEE?
In Medtronic, Inc. v. Boston Scientific Corp., the Supreme Court
of the United States will determine whether the plaintiff licensee,
seeking a declaratory judgment that its products do not infringe a
patent, or the defendant patentee bears the burden of proof.1 Under
the Declaratory Judgment Act, a court with jurisdiction over an
actual controversy may declare the rights and legal relations of any
interested party.2 A court may grant a declaratory judgment when the
alleged facts demonstrate an immediate, substantial controversy
between adverse parties.3 MedImmune, Inc. v. Genentech, Inc.
established that a patent licensee is not required to terminate or
breach a license before seeking a declaratory judgment that a patent
is invalid, unenforceable, or that the licensee’s products are
noninfringing.4 But MedImmune did not address whether the plaintiff
licensee must prove noninfringement or the defendant patentee must
prove infringement under 35 U.S.C. § 271.5
Medtronic is a manufacturer of medical devices and equipment.6
Mirowski Family Ventures, LLC (MFV) is the assignee of the
patents in this suit.7 MFV exclusively licenses the patents to Guidant,
and Guidant maintains a sublicense with Medtronic.8
Under a separate Litigation Tolling Agreement (LTA), if MFV
deems that any Medtronic product infringes MFV’s patents and is
subject to royalty, MFV must notify Medtronic.9 Also, if Medtronic
disagrees with MFV’s determination, Medtronic has the right to
retain the license but is obligated to file a declaratory judgment of
1. Brief for Petitioner at 2, Medtronic, Inc. v. Boston Scientific Corp., No. 121128 (filed July 26, 2013).
2. 28 U.S.C.A. § 2201 (Westlaw 2013).
3. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).
4. Id. at 137.
5. See Medtronic, Inc. v. Boston Scientific Corp., 695 F.3d 1266, 1273 (Fed.
Cir. 2012).
6. Id. at 1269.
7. Id.
8. Id.
9. Id. at 1269–70.
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noninfringement.10 The declaratory-judgment action in Medtronic is
a result of Medtronic’s disagreement.11
The district court held that MFV, as the patentee asserting
infringement, bears the burden of proof by a preponderance of the
evidence.12 The district court reasoned that the burden to prove
infringement is always on the patentee and never shifts to the other
party because ―the risk of decisional uncertainty stays on the
proponent of the proposition.‖13 So MFV bore the burden of proof
because it asserted infringement.14
On appeal, the Federal Circuit was dissuaded from placing the
burden on patentees because they do not have an infringement claim
if a license is not terminated or breached.15 Reasoning that the
continued existence of the license precludes MFV’s counterclaim for
infringement, the court held that the burden shifts to the licensee,
Medtronic.16 The court reasoned that, generally, the substantive
burden does not shift because the patentee ―must assert a
counterclaim for infringement to avoid risking the loss of that claim
forever.‖17 But under MedImmune, because the license remains in
effect, it acts as a shield against infringement liability for the
licensee.18 So the court concluded that shifting the burden to MFV, a
defendant unable to assert a counterclaim, effectively turns
Medtronic’s shield into a sword.19 So the Federal Circuit reversed
and remanded the case with instructions to appropriately allocate the
burden of proof.20
10. Id. at 1270.
11. Id.
12. Medtronic, Inc. v. Boston Scientific Corp., 777 F. Supp. 2d 750, 766
(D.Del. 2011).
13. Id. at 765 (quoting Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316,
1327 (Fed. Cir. 2008)) (citing Under Sea Indus., Inc. v. Dacor Corp., 833 F.2d
1551, 1557 (Fed. Cir. 1987)).
14. Id. at 766.
15. See Medtronic, 695 F.3d at 1273.
16. Id.
17. Id.
18. Id.
19. Id. at 1274.
20. Id.
2013] MEDTRONIC, INC. V. BOSTON SCIENTIFIC CORP.
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MEDTRONIC ARGUES THAT DECLARATORY-JUDGMENT ACTIONS ARE
PROCEDURAL ONLY AND PATENTEES ALWAYS BEAR THE BURDEN OF
PROOF
In its petition to the Supreme Court, Medtronic provides two
main arguments supporting its position that MFV bears the burden of
proof.21 First, Medtronic argues that although a declaratory-judgment
action effectively reverses the parties’ procedural roles, it does not
alter the substantive legal rules found in the equivalent coercive
suit.22 And second, it was improper to shift the burden to the accused
infringer because the patentee bears the burden of proof in a
traditional coercive suit for patent infringement.23 Medtronic
concludes that MFV’s demand for royalties equates to an assertion
that Medtronic infringed, and MFV should bear the burden of
proving that contention.24
To support that a declaratory-judgment action is procedural only,
Medtronic relies on Aetna Life Ins. Co. v. Haworth.25 Further,
Medtronic argues that to determine the substantive law in a
declaratory-judgment action, the court must look to the coercive
action giving rise to the dispute.26 Medtronic refutes the Federal
Circuit by stating: ―[T]he fact that the declaratory judgment
procedure causes a reversal in party status should not change the
substantive law’s allocation of the burden of proof.‖27 Medtronic
quotes Preferred Accident Ins. Co. v. Grasso, a non-patent case, to
support the notion that merely placing the burden on the first to sue is
anomalous and frustrates the purposes of the Declaratory Judgment
Act.28 Also, Medtronic asserts that shifting the burden undermines
declaratory judgments because failing to prove noninfringement is
not tantamount to proving infringement in the underlying coercive
action.29 This would greatly deteriorate the purpose to achieve
finality with declaratory-judgment actions and would result in
21. Brief for Petitioner, supra note 1, at 15-16.
22. Id. at 18.
23. Id. at 34.
24. Id. at 47.
25. Id. at 19–20 (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240
(1937)).
26. Id. at 20 (citing Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 16 (1983)).
27. Id. at 25–26.
28. Id. at 26, 29.
29. Id. at 31–32.
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additional litigation, costs, and preclusion issues.30 In summary, the
party bearing the burden in the coercive action would maintain the
burden in a declaratory-judgment action.
Medtronic’s second argument is that under patent law, the
patentee bears the burden to prove infringement.31 Further, Medtronic
asserts that it is unaware of any previous decision placing the burden
to disprove patent infringement on an accused infringer.32
Essentially, Medtronic argues that a patentee does not have to
counterclaim to accuse a licensee of infringement because the
demand for royalties is sufficient.33 Medtronic finds the Federal
Circuit’s rationale in allocating the burden of proof unavailing
because a licensee is unlikely to wield a declaratory judgment as a
sword to contest royalties unless a substantial controversy already
exists.34
MFV ARGUES THAT THE PARTY SEEKING RELIEF MUST BEAR THE
BURDEN AND MEDTRONIC’S ARGUMENTS ARE BASELESS
Countering Medtronic’s assertions, MFV argues ten separate
points that Medtronic should bear the burden of proving
noninfringement.35 But most of MFV’s arguments directly
correspond to the Federal Circuit’s rationales and conclusion. Of the
ten arguments, two are procedural, and the remaining eight fall into
one of two categories: (1) the party seeking relief, the licensee in this
case, must bear the burden; and (2) Medtronic’s arguments are
baseless and, if accepted, would create a strong disincentive to
license patents.
Basically, MFV argues that the court should follow the default
rule that ―the plaintiff bears the burden.‖36 MFV holds steadfast that
Medtronic should bear the burden because it is the only party seeking
relief.37 To support this argument, MFV provides that a counterclaim
is precluded because Medtronic has not breached or terminated the
30. Id. at 29–32.
31. Id. at 34.
32. Id. at 36–37.
33. See id. at 40–42.
34. Id. at 41–42.
35. See Brief for Respondent Mirowski Family Ventures, Medtronic, Inc. v.
Boston Scientific Corp., No. 12-1128 (filed Sept. 16, 2013).
36. Id. at 36.
37. Id. at 25–27.
2013] MEDTRONIC, INC. V. BOSTON SCIENTIFIC CORP.
5
license.38 Additionally, the patentee only bears the burden when
seeking relief for injunctions, damages, and willful infringement.39
And MFV repeatedly asserts that Medtronic’s arguments make
―no sense.‖40 MFV further postulates that a patentee will no longer
settle a licensee’s infringement with a license because ―[t]he day after
the license is signed, the licensee [can] bring[] a MedImmune type
action. . ..‖41 MFV continually argues that many of Medtronic’s
assertions are baseless but MFV generally fails to cite to any
precedent.
In its reply brief, Medtronic argues that both MFV’s two main
propositions
are
―unsound.‖42
Medtronic
presents
two
counterarguments: (1) the default rule is applicable to substantive
law, not the procedural aspect involved in a declaratory judgment;
and (2) Medtronic’s alternative to a declaratory-judgment action is to
refuse to pay and subject itself to an infringement suit and breach of
contract liability.43
THE SUPREME COURT SHOULD RULE THAT WHEN A LICENSEE IS
PROTECTED UNDER A LICENSE, THE PATENTEE BEARS THE BURDEN OF
PROOF
The parties’ positions are clear—the other party bears the burden.
Specifically, Medtronic supports its argument with significant case
law, such as MedImmune and Aetna. These cases demonstrate that
the default rule is not the applicable standard in declaratory-judgment
cases. Generally, the burden should rest with the party seeking relief
in the equivalent coercive suit. Here, MedImmune provides
Medtronic the ability to file a declaratory judgment without
breaching or terminating the license agreement.
MFV relies heavily on the license agreement clause obligating
Medtronic to seek a declaratory judgment if it disputes a demand for
royalties. Under that clause, MFV maintains that Medtronic is the
sole party seeking relief because MFV cannot counterclaim for
infringement. Therefore, Medtronic has two options: (1) breach or
terminate the license, subjecting itself to infringement; or (2) file a
38. Id. at 26–27.
39. Id. at 35.
40. Id. at 22, 35, 41.
41. Id. at 39-40.
42. Reply Brief for Petitioner at 2, Medtronic, Inc. v. Boston Scientific Corp.,
No. 12-1128 (filed Oct. 16, 2013).
43. Id.
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THOMAS M. COOLEY LAW REVIEW[Vol. Online:Michaelmas
declaratory-judgment action as obligated under the license
agreement.
But it makes no sense that a patentee should have the ability to
hide behind the ―cannot counterclaim‖ argument to shift the burden
to the licensee. MFV essentially attempts to turn Medtronic’s shield,
under MedImmune, into a sword for its own use. And despite MFV’s
assertions that noninfringement is easier to prove, one of the
purposes of a declaratory judgment, finality, would be frustrated.
Frustration would result because if a licensee fails to prove
noninfringment, it could then breach the license and, ultimately,
require the patentee to prove infringement.
The Supreme Court should find that the patentee bears the burden
of proof in a MedImmune-type case where the licensee is protected
under a license. Thus the patentee should bear the burden because the
declaratory judgment results from its demand for royalties. Also, the
mere fact that a licensee is protected under the license does not shift
the burden in the underlying coercive lawsuit. So to provide finality
and consistent judgments, the declaratory judgment should
substantively be treated as an infringement case. This would not
frustrate the purpose of the Declaratory Judgment Act and would
allow the parties to ―appreciate the appropriate allocation of the
burden of proof.‖44
ZACKERY T. HUGG
CONTRIBUTIONS MADE BY PROFESSOR DAVID BERRY
44. Medtronic, Inc. v. Boston Scientific Corp., 695 F.3d 1266, 1274 (Fed. Cir.
2012).