By
Andrew Williams —

As
we previously reported, the Supreme Court granted certiorari in the Medtronic
Inc. v. Boston Scientific Corp. case, where the sole issue on appeal is
whether the burden of proof shifts in a declaratory judgment action brought by
a licensee under Medlmmune, such that the licensee has the burden to
prove that its products do not infringe the patent.  The Federal Circuit had decided this issue in
the affirmative, thereby requiring Medtronic as the licensee to establish
non-infringement of the licensed patents.  As we suggested, it can be presumed that the Supreme Court disagreed
with this decision (because it agreed to hear the case), so the burden will
likely shift back to the patentee to prove infringement in the MedImmune context.

The
United States filed an Amicus Curiae brief on August 2, 2013, taking just this position — that the burden of proving
infringement should never shift from the patent holder.  Most of the arguments made by the Solicitor
General, however, do not adequately take into account the unique nature of this
particular type of declaratory judgment jurisdiction created by the Supreme
Court's MedImmune decision.  The brief does, however, highlight a few
flaws in the Federal Circuit's reasoning.  In any event, it is always worthwhile to consider any brief submitted by
the Solicitor General of the United States.

The
first argument presented in the brief was that "the burden of proving
patent infringement generally rests with the patent holder."  This is no different, however, than the
Federal Circuit acknowledged in the case below.  Unfortunately, the Solicitor General's brief did not take into account
the procedural uniqueness of MedImmune
declaratory judgment actions.  Instead,
it cited to several Supreme Court and Federal Circuit cases that predate the MedImmune case for the proposition that "the
burden to prove infringement never shifts . . . ."  Imhaeuser
v. Buerk, 101 U.S. 647, 662 (1880).  The
brief also noted that this is the first time since the enactment of the
Declaratory Jurisdiction Act that an "accused infringer" has had the
burden of proving non-infringement.  But
the use of the term "accused infringer" in the brief highlights the appropriateness
of this argument in this context — the declaratory-judgment plaintiff is a
licensee, and therefore is not necessarily being accused of infringing.  Rather, the licensee has entered into an
agreement by which it has a right to practice the patented technology.  Therefore, even though it cannot be presumed
that the declaratory-judgment plaintiff has conceded infringement because of
the existence of a license, the fact that
Medimmune creates a unique situation must be acknowledged.

To
highlight this problem, the Solicitor General takes the position that if a
declaratory-judgment plaintiff must prove non-infringement, it would need "to
identify and negate every conceivable theory on which the product could
infringe."  This appears to be an
exaggeration.  In fact, in order for a
licensee to have a good-faith basis to file a Medimmune-type non-infringement action, it should have at least one
reason why its product does not infringe. 
And, this single reason may be enough to satisfy the burden of proof,
even if the patent holder presents contrary (but not as persuasive) evidence.  The idea that the declaratory-judgment
plaintiff would have to anticipate and respond to every potential theory of
infringement, regardless of how unlikely, cannot be correct.

The
second argument in the brief filed by the United States was that "[t]he
declaratory-judgment posture does not require shifting the burden of proof
otherwise associated with the parties' underlying substantive dispute."  With this argument, the Solicitor General
appears to be saying that there is no reason under the rationale for declaratory-judgment
jurisdiction to support a switching of burdens. 
To support this proposition, the brief points out that the Supreme Court
has repeatedly said that the operation of the declaratory judgment act was only
procedural in nature — it allowed the establishment of jurisdiction in cases
where it might not have existed previously.  Instead, the reasoning went, if the rule established below stands, the
purpose behind this act will be disserved.  This is because the act was supposed to establish a mechanism by which
the patent enforcement suit could be resolved without subjecting the
declaratory-judgment plaintiff to potential liability.  By changing the burden of proof, the Solicitor
General pointed out, it would change the fundamental nature of that patent
enforcement suit.  Correspondingly, it
would change the procedural nature of the Act.

The
third argument made in the Solicitor General's brief was that "[t]he
existence of a license does not shift the burden of proving patent infringement
from a patent holder to its licensee."  The fact that the parties entered into a license agreement does not
alter the analysis for determining whether the product in question falls within
the scope of the patent.  Instead, the
agreement only precludes the patent holder from obtaining damages or an
injunction.

The
brief pointed out that the Federal Circuit was incorrect when it said that the
licensee was the only party that was seeking the aid of the Court.  In other words, the licensee was not the only
party seeking to "disturb the status quo."  The Solicitor General noted that Medtronic
was paying money into escrow, which the patent holder would only receive if it
was successful defending against the action. 
Therefore, the argument goes, the patent holder also stood to benefit
from the resolution of this case.  The
potential flaw in that argument is that it was the license itself in that case
which required the escrow payments and such payment are not inherent to such
license agreements.  Therefore, to create
a rule that took this into account would not necessarily be applicable in all
situations.

The
Solicitor General was correct, however, in that the status quo had already been
disturbed.  The device in question in
this case was after-arising, meaning it did not exist at the time the parties
entered into the agreement.  Instead, the
patent holder had to affirmatively state that this new product fell within the
scope of the patents, and therefore within the scope of the agreement.  This was a disruption of the then-current
status quo under the license.  It is
reasonable, therefore, to view Medtronic's efforts in bringing the suit as an
attempt to return the state of the parties to the status quo.

Probably
one of the better arguments made by the Solicitor General centered on the
chilling effect that this decision might have on a licensee that wishes to
bring such an action.  The Supreme Court
established MedImmune declaratory
judgment actions to make it easier for licensees to challenge the licensed patents.  If the Federal Circuit's burden shifting were
to stand, licensees might think twice before taking advantage of this process.  Therefore, the United States appears to be hoping
that the same policy concern that prompted the Court to decide MedImmune in the first place will
convince the Court to reverse the Federal Circuit's Medtronic decision.