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High court returns normalcy to patent litigation

In a case closely watched in the patent community, the U.S. Supreme Court ruled patent holders still carry the burden of proving infringement even if they didn't initiate the legal action.

The justices voted unanimously to overturn a controversial U.S. Court of Appeals for the Federal Circuit decision in Medtronic v. Mirowski Family Ventures LLC (previously listed as Medtronic v. Boston Scientific), in which the appellate court said the burden of proof should shift, as a matter of fairness, to the licensee bringing the legal action.

"We hold that, when a licensee seeks a declaratory judgment against a patentee [patent holder] to establish that there is no infringement, the burden of proving infringement remains with the patentee," Justice Stephen Breyer wrote in the decision.

The decision is in line with what most local observers were predicting.

"It's not surprising based on the way oral arguments went," said San Diego attorney Boris Zelkind, an intellectual property partner with Knobbe Martens Olson & Bear. "It was pretty clear from their questioning that this was the way they were going. They were not crazy about the Federal Circuit decision. They felt it wasn't the right outcome."

The case centers on how patent disputes between patent holders and their licensees are litigated.

Since a 2007 Supreme Court ruling, licensees have been able to file a declaratory judgment action, seeking to sever their license agreement with a patent holder, while still paying royalties. In these instances, the patent holder has maintained the burden of proving infringement.

The Federal Circuit didn't think this was fair, and ruled that Medtronic (NYSE: MDT), which was seeking a declaratory judgment, had to prove that its product didn't infringe on technology patented by Mirowski.

David Zubkoff, a shareholder with Seltzer Caplan McMahon Vitek, said many attorneys in the patent litigation bar and those in the intellectual property community at large are relieved that the Supreme Court overturned the case.

"It's long been settled that the burden of proving patent infringement resides with the patentee, even when the patentee is the defendant," he said. "The Federal Circuit turned that principal on its head."

Zubkoff also said the Supreme Court decision eliminates several impracticalities that would have resulted had the Federal Circuit opinion been left standing. The licensee would have to prove a negative and, if the licensee lost a lawsuit, it could simply continue to infringe, forcing the patent holder to sue and re-litigate the same issues.

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