The Supreme Court addressed another lingering issue in patent law relating to declaratory judgment actions recently in Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843, 187 L. Ed. 2d 703 (2014). A declaratory judgment action is a type of lawsuit that is filed by a party that has been accused of patent infringement by the patent owner. Through this type of action, the accused infringer can obtain a declaration from a court indicating that it is not infringing the subject patent or that the patent is invalid. This type of declaration is unusual in American law because American courts are not supposed to issue advisory opinions.
Declaratory Judgment Actions
Ideally, a declaratory judgment action is supposed to allow an accused infringer to clear up a controversy as to whether the accused infringer is liable for patent infringement when the patentee refuses to sue the accused infringer. This type of action is supposed to prevent patent owners from making dubious threats of patent infringement in order to prevent potential or actual competitors from lawfully competing in the marketplace.
As a practical matter, declaratory judgment actions are typically used by larger companies or by parties that have significant leverage over patent owners to “turn the tables” on the patent owner. It is believed that declaratory judgment plaintiffs with such leverage can coerce a favorable settlement in many cases. In the author’s experience, however, declaratory judgment plaintiffs rarely succeed.
Declaratory judgment actions became a hot issue in patent law in the last decade after the Supreme Court issued its opinion in MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118, 128 (2007). That decision made it easier for patent licensees to sue their licensors to obtain more favorable licensing terms. Subsequent decisions by lower courts made it easier for all types of accused infringers to initiate declaratory judgment actions. See, e.g., Adenta GmbH v. OrthoArm, Inc., 501 F.3d 1364 (Fed. Cir. 2007); Sony Elecs, Inc. v. Guardian Media Tech., Ltd., 497 F.3d 1271 (Fed. Cir. 2007); Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330 (Fed. Cir. 2007); SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372 (Fed. Cir. 2007).
The Medtronic Decision
The Supreme Court’s decision in Medtronic was very straightforward. The case involved a patent licensee that was seeking to challenge whether it was actually infringing the patent-at-issue. The licensee filed a declaratory judgment action to resolve the issue.
In a traditional patent-infringement case in which the patent owner is the plaintiff, the law is very clear in that a patent owner, as the plaintiff, must prove patent infringement by a preponderance of evidence standard. The accused infringer, which is the defendant, must prove invalidity by a heightened “clear and convincing evidence” standard due to the fact that the patent is presumed valid by statute. See 35 U.S.C. § 282.
In a declaratory judgment action, the parties are switched. The accused infringer is the plaintiff. The patent owner is the defendant. The Supreme Court had to determine whether the fact that the parties were in different positions, procedurally, altered their respective burdens. Predictably, the Supreme Court determined that the positions of the parties did not matter and that the patent owner still had to prove infringement by a preponderance of evidence standard.