On January 22, 2014 in Medtronic, Inc. v. Mirowski Family Ventures, LLC, the US Supreme Court held that the patent owner bears the burden of proving infringement when a licensee seeks a declaratory judgment against a patent owner to establish that there is no infringement (No. 12-1128, (U.S. Jan. 22, 2014)). The Supreme Court's unanimous decision reversed the US Court of Appeals for the Federal Circuit's 2012 decision that the patent licensee should bear the burden of proving noninfringement when the licensee brings a declaratory judgment action.

In 1991, Medtronic entered into a license agreement through certain sublicensors to license patents from Mirowski directed to implantable heart stimulators. Under the agreement's terms, including a 2006 amendment, if Mirowski believed that any new Medtronic products infringed its patents, Medtronic could either pay the royalties owed or make royalty payments to an escrow account and bring a declaratory judgment action to challenge the infringement claim. In 2007, Mirowski notified Medtronic that it believed that certain of Medtronic's new products infringed two of its patents. Medtronic filed a declaratory judgment action against Mirowski in Delaware, seeking a declaration that its products did not infringe Mirowski's patents.

Although Mirowski was the defendant in the declaratory judgment action, the district court believed that Mirowski, as the patentee, bore the burden of proving infringement. After a bench trial, the district court found that Mirowski had not carried its burden and entered judgment against Mirowski. Mirowski appealed to the Federal Circuit and the Federal Circuit reversed the district court's decision. The Federal Circuit held that Medtronic, as the declaratory judgment plaintiff, bore the burden of proving noninfringement. For more information on the Federal Circuit's opinion, see Legal Update, Patent Licensee Held to Bear Burden of Proof in Declaratory Judgment Action: Federal Circuit.

Medtronic sought certiorari from the Supreme Court to resolve the issue of the burden of proof in patent litigation.

In a unanimous decision, the Supreme Court reversed the Federal Circuit and held that the patent owner bears the burden of proving infringement in a declaratory judgment action. The court based its holding on the following three legal propositions:

The Supreme Court also emphasized several practical considerations that support not shifting the burden, including that:

The Supreme Court also rejected several arguments raised in support of shifting the burden of proof. First, the court rejected the Federal Circuit's reliance on its decision in Schaffer v. Weast, 546 U.S. 49 (2005), which addressed certain exceptions to the default rule that plaintiffs bear the burden of proving their claims. The Supreme Court stated that declaratory judgment suits, like the one at issue here, constitute an exception to the basic burden of proof rule described in Schaffer. Second, the court rejected the Federal Circuit's claim that its earlier holding was limited to those cases where an infringement counterclaim is not allowed because of a license agreement. The court stated that the limited circumstances cited by the Federal Circuit were actually common to cases where a licensee faces an infringement claim and that the limited nature of the holding was not sufficient to justify the rule. Third, the court rejected the amicus argument that its holding would burden patent owners by allowing licensees in their sole discretion to force patent owners into patent litigation. In answer to this argument, the court stated that declaratory judgment actions can only occur where there is a genuine dispute between the parties.

The Supreme Court's decision clarifies that the burden of proving infringement always lies with the patent owner, even in a declaratory judgment action. This decision is important for patent licensees, who will now be able to challenge patents without fear that they will have to prove noninfringement before understanding the patent owner's infringement theories. Patent owners, on the other hand, will need to consider the risks of losing their infringement claim in a declaratory judgment action if they decide to notify licensees of potential infringement.