Medtronic, Inc. v. Mirowski Family Ventures, LLC.

• Citation: 134 S.Ct. 843,187 L.Ed.2d 703,571 U.S. 191
• Decision Date: 22 January 2014
• Docket Number: No. 12–1128.,12–1128.
• Parties: MEDTRONIC, INC., Petitioner v. MIROWSKI FAMILY VENTURES, LLC.
• Court: United States Supreme Court

571 U.S. 191

134 S.Ct. 843

187 L.Ed.2d 703

MEDTRONIC, INC., Petitioner

v.MIROWSKI FAMILY VENTURES, LLC.

No. 12–1128.

Supreme Court of the United States

Argued Nov. 5, 2013.

Decided Jan. 22, 2014.

Seth P. Waxman, Washington, DC, for Petitioner.

Curtis E. Gannon for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Arthur I. Neustadt, Alexandria, VA, for Respondent.

Richard F. Phillips, President, Kevin H. Rhodes, Chair, Amicus Brief Committee, Intellectual Property Owners Association, Washington, D.C., Gary M. Hoffman, Counsel of Record, McLean, VA, Dawn L. Rudenko, Dickstein Shapiro LLP, New York, NY, for Respondents.

Sidney J. Silver, Silver, Freedman & Taff, LLP, Washington, D.C., Arthur I. Neustadt, Counsel of Record, Thomas J. Fisher, John F. Presper, Oblon, Spivak, McClelland, Maier & Neustadt, LLP, Alexandria, VA, for Respondent.

Martin R. Lueck, Counsel of Record, Jan M. Conlin, Stacie E. Oberts, Robins, Kaplan, Miller, & Ciresi LLP, Minneapolis, MN, Seth P. Waxman, Paul R.Q. Wolfson, Brian H. Fletcher, Carolyn Jacobs Chachkin, Weili J. Shaw, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, Mark C. Fleming, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, for Petitioner.

Bernard J. Knight, Jr., Nathan K. Kelley, Michael S. Forman, William LaMarca, Donald B. Verrilli, Jr., Stuart F. Delery, Malcolm L. Stewart, Curtis E. Gannon, Scott R. McIntosh, Daniel Tenny, for United States as amicus curiae supporting petitioner.

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, 19 L.Ed. 177 (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 (C.A.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, 70 S.Ct. 876, 94 L.Ed. 1194 (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, 73 S.Ct. 236, 97 L.Ed. 291 (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, 103 S.Ct. 2841, 77 L.Ed.2d 420 (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, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).

Amicus says that an infringement suit would be unlikely. 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., sup...