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Typically in patent litigation, the patent holder bears the burden of proving that the defendant infringed. The Federal Circuit recently created a limited exception to that rule in Medtronic, Inc. v. Boston Scientific Corp. (Fed. Cir. 2012) (PDF). It held that when a licensee in good standing seeks a declaratory judgment of non-infringement, the burden of proof shifts to the party seeking the judgment to prove non-infringement. On May 20, 2013, the Supreme Court granted certiorari and placed the case on its upcoming docket.
In 2007, the Supreme Court ruled in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) that licensees in good standing were not required to terminate or breach license agreement prior to seeking declaratory judgment of patent invalidity. An example would be a licensee who identifies indicia of invalidity, and wishes to raise the concerns without incurring the possibility of liability from infringing use without the license. Before MedImmune, the courts rejected requests for declaratory judgments from good faith licensees under the reasoning that it would unfair to the patentee, who could not have sued the current licensee for infringement. While the Supreme Court rejected the Federal Circuit’s “reasonable apprehension” test, it made clear that there must be an actual case or controversy to satisfy standing for the court.
Many believe that the ruling will be a quick 9-0 decision to reaffirm what was already put forth in MedImmune. The Supreme Court in Lear v. Adkins, 395 U.S. 653 (1969) already established an attitude encouraging patent challenges. However, the decision to hear the case could still be interesting for a number of reasons.
First, the Court has a chance to clarify whether the licensee’s ability to challenge is inalienable, or whether it may be contracted away when agreeing to the license. This nugget is not at issue in the case, however, so it is unlikely we will hear much about it. But the case is also interesting as an indication of the increasing importance of intellectual property law, as more and more cases are accepted to be heard by the highest court in the country.
Perhaps most entertaining however, is that the case provides an opportunity for the Court to chastise and attempt to reign in the Federal Circuit. Placing the burden of proof on the party seeking the declaratory judgment implies a presumption of infringement, the exact opposite of a normal litigation. The rationale seems to be that the patentee could claim infringement (because the would-be defendant has a license) and thus asked the court to shift the burden of proof. This is based on the same reciprocal-rights theory that was rejected by the Supreme Court in MedImmune.
Absent any surprises, oral arguments are scheduled for October 2013.
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