"Reverse" Patent Declaratory Judgment Actions: A Proposed Solution for Medtronic
The United States Supreme Court has taken an interest in shaping patent law in recent years, deciding many important cases, a number of which have involved special procedural rules created by the Federal Circuit. With the Court scheduled to hear Medtronic Inc. v. Boston Scientific Corp. in early November, this term is no exception. The issue in Medtronic is whether the burden of proof in patent declaratory judgment actions (DJ actions) should be on the patent owner (i.e., the defendant) to prove infringement or on the accused infringer (i.e., the plaintiff) to prove noninfringement. Ordinarily, the patent owner bears the burden of proving infringement, and the declaratory posture of a suit does not shift that burden. In Medtronic, however, the Federal Circuit created an exception for “MedImmune-type” cases—that is, declaratory judgment actions where the plaintiff is a licensee in good standing—since the patent owner cannot counterclaim for infringement. “Because the declaratory judgment plaintiff is the only party seeking the aid of the court,” the Federal Circuit reasoned, it should bear the burden of proving noninfringement.
Medtronic and its supporting amici (including the United States) argue that the Supreme Court should reverse the opinion below because the Federal Circuit misallocated the burden of proof as a legal matter and because the Federal Circuit’s rule undermines the policy goal of encouraging patent validity challenges. Without disputing Medtronic’s position, this short Essay suggests, first, that Medtronic sweeps more broadly than the parties have acknowledged, and, second, that there may be an additional—and perhaps simpler—ground for reversing the Federal Circuit.
The litigants all appear to believe that the Federal Circuit’s new exception is limited to MedImmune-type suits, but Medtronic could be interpreted more expansively. In Medtronic, the Federal Circuit shifted the burden of proof to the accused infringer because the patent owner could not counterclaim for infringement. Yet, there are declaratory judgment actions outside the MedImmune context where an infringement counterclaim is also precluded. For instance, plaintiffs sometimes file “anticipatory” declaratory judgment actions before engaging in any potentially infringing activities. In these suits, the patent owner cannot counterclaim for infringement because no infringing activity has occurred. Under the logic of Medtronic, therefore, the burden of proof would shift to the plaintiff in this category of cases even though there’s no license involved.
Whether limited to MedImmune-type suits or not, the Federal Circuit’s reasoning in Medtronic is significantly flawed. While it’s true that patent owners cannot counterclaim for infringement in certain types of declaratory judgment actions, they may always counterclaim for a declaration of future infringement. In other words, the patent owner in Medtronic was not, as the Federal Circuit determined, precluded from “seeking the aid of the court”; instead, the owner could have asked the court to resolve the infringement question by filing a “reverse” declaratory judgment action against the accused infringer. Thus, the Federal Circuit’s rationale for crafting this exception was wholly unjustified, and Medtronic should be reversed.