Supreme Court Overturns CAFC Yet Again; Explains Basic Patent Law To The 'Patent' Court

from the this-is-becoming-a-pandemic dept

Over the last few years, the Supreme Court has taken a renewed interest in patent law. After years of ignoring the issue, and leaving it in the hands of the appeals court for the federal circuit (CAFC -- which was established, in part, to hear all patent appeals), the Supreme Court has taken to regularly smacking down the CAFC, and telling it that it doesn't understand basic patent law. It's now happened again. The court has reversed yet another CAFC decision, this time concerning who has the burden of proving infringement. This was as case involved Medtronic filing for a declaratory judgment that it did not infringe on someone else's patent (Medtronic, it should be noted, has a history of being quite a patent bully itself at times). A district court had noted that the patent holder, in this case the Mirowski Family Ventures, has the burden of proof on showing infringement. CAFC said that since Medtronic brought the declaratory judgment suit that it was actually Medtronic's burden to prove that it did not infringe. The Supreme Court has reversed in an easy unanimous decision.
Simple legal logic, resting upon settled case law, strongly supports our conclusion. It is well established that the burden of proving infringement generally rests upon the patentee....
The ruling notes that a declaratory judgment filing is just a procedural issue, which doesn't change the basic substantive rights. Thus, it should be viewed as if it were the patent holder bringing the claim, leaving the burden on them. The court also points out that it would be kind of ridiculous to put the burden first on the party filing for declaratory judgment that it doesn't infringe if there's no proof that there's infringement in the first place. It would leave the plaintiff trying to prove a negative in the dark...
A patent holder is in a better position than an alleged infringer to know, and to be able to point out, just where, how, and why a product (or process) infringes a claim of that patent. Until he does so, however, the alleged infringer may have to work in the dark, seeking, in his declaratory judgment complaint, to negate every conceivable infringement theory.
Perhaps most interesting is, at the very end of the decision, Justice Breyer clearly notes that the purpose of the patent system is to benefit the public interest -- and that requires a "well-functioning" patent system, rather than a broken down patent system. As it notes, "patent monopolies" need to be "kept within their legitimate scope."


Reader Comments (rss)

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  1.  
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    That One Guy (profile), Jan 22nd, 2014 @ 7:53pm

    Seriously?

    Filing for declaratory judgement suddenly reverses the burden of proof during a case? Has anyone checked to make sure that the CAFC 'judges' actually studied the law, rather than just faked their way in, because that seems like a monumentally clueless ruling on their part that goes against pretty much all established legal precedent.

     

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  2.  
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    CK20XX (profile), Jan 22nd, 2014 @ 8:43pm

    Perfect KO

    I'm surprised at the bulletproof 9-0 ruling, seeing as the justices can't always agree on what flavor chocolate is. I hope they continue to say what we've been saying this whole time.

     

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  3.  
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    Anonymous Coward, Jan 22nd, 2014 @ 8:49pm

    CAFC precedent

    The CAFC judges were simply following the usual precedents in IP/copyright infringement.

    It's the website that has to prove that they're not infringing in DMCA.

    It's the person wearing Google Glass that has to prove he's not recording the movie.

    It's Google that has to prove they're not aiding infringement by serving up automated search results.

    When IP/copyright is involved, the burden has always fallen on the accused to prove that they're not infringing, and not on the accuser to show incontrovertible proof of infringment.

    Pity this ruling can't be applied everywhere else.

     

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  4.  
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    Anonymous Coward, Jan 22nd, 2014 @ 9:04pm

    The CAFC decision from which an appeal was taken was rendered by a single panel of the court, and not by the court sitting en banc. For those who say that the CAFC does not know patent law, perhaps if they read the CAFC's decision they would immediately note that the court was well aware of the rule that patentee's bear the burden of proof that a third party product infringes a patent.

    Here, however, there was a twist. A licensee was the party that filed for a Declaratory Judgment, placing the licensor in a difficult situation since it apparently was not permitted to file a counterclaim alleging infringement since the license remained in effect (but the licensor was receiving no royalties since the licensee decided to pay them into an escrow account). In the panel's view this created a situation where an exception to the general rule seemed both appropriate and fair. It is not that they did not know the law (they did), but an exception was believed to be the better approach (much like Judge Leon in his recent NSA decision).

    What this decision ultimately does is add uncertainty to licensing activities since the general thrust of the Supreme Court's opinion can possibly be avoided by the inclusion of various provisions in licensing contracts. Since the court did not decide if such provisions are permissible, it is to some extent a crap shoot about the enforceability of such provisions. I do not see how this uncertainty bodes well for both parties to such transactions.

    The logic underlying the Supreme Court decision seems to be spot on, but how parties will adjust to avoid the uncertainties it creates may very well establish exceptions that for all intents and purposes may render the rule irrelevant.

    Only time will tell if this decision will have any lasting impact, or if it will be displaced in its entirety and rendered an intellectual curiosity, and no more, by the application of contract law.

     

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  5. This comment has been flagged by the community. Click here to show it
     
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    Anonymous Coward, Jan 22nd, 2014 @ 9:58pm

    so this was not really about patent law, it is more a burden of proof and a contract law issue. Not a decision based on the technicalities or merits of the patent, as the title suggests it is.

    It is certainly NOT one court teaching "the patent court" about patents. I guess that's just TD spin..

     

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  6. This comment has been flagged by the community. Click here to show it
     
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    Anonymous Coward, Jan 22nd, 2014 @ 10:01pm

    can you point out where (if anywhere) does the Surpreme Court say "you don't understand basic patent law"

    >"and telling it that it doesn't understand basic patent law."

    where does it say that ??? and if it does not say that anywhere why say it?

     

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  7. This comment has been flagged by the community. Click here to show it
     
    identicon
    Anonymous Coward, Jan 22nd, 2014 @ 10:03pm

    what is it called ??

    when you say something has happened, when it really actually did not happen?

    what is that word again? (hint, it starts with L)

     

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  8.  
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    Justin Olbrantz (Quantam), Jan 22nd, 2014 @ 10:46pm

    Re:

    Would you have preferred the entirely accurate "and telling it that it doesn't understand basic law"?

     

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  9.  
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    That One Guy (profile), Jan 22nd, 2014 @ 11:01pm

    Re:

    Reading can be hard for some people, I know, so to help you out here's the quote in question, describing why they unanimously overturned the CAFC ruling:

    'Simple legal logic, resting upon settled case law, strongly supports our conclusion. It is well established that the burden of proving infringement generally rests upon the patentee....'

    Really, next time try reading the article in question before scrolling down to post your ranting about how it's wrong(all without actually presenting proof or even a coherent argument to back up your claims), it'll help you come across as more than just childishly objecting for no other reason than the fact that you don't like the person who wrote the article.

     

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  10.  
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    Anonymous Coward, Jan 22nd, 2014 @ 11:06pm

    darryl just abhors it when due process is enforced.

     

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  11.  
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    Anonymous Coward, Jan 22nd, 2014 @ 11:56pm

    Re:

    You've heard of the phrase benchslap, right?

    This is one of them. The SCOTUS judges can't even agree on the goddamned colour of the sky. To get a unanimous verdict here is like the First Sign of the Apocalypse.

     

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  12.  
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    Anonymous Coward, Jan 23rd, 2014 @ 1:42am

    Re: what is it called ??

    Lore?

     

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  13.  
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    Ninja (profile), Jan 23rd, 2014 @ 2:08am

    Obviously, if you shift the burden of proving anything to the accused the trolls won't think twice before filling whatever lawsuit they want. It's a safeguard.

     

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  14.  
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    Anonymous Coward, Jan 23rd, 2014 @ 5:52am

    Damn it, I was just about to go and try to patent a square and trademark the letter a

     

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  15.  
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    MonkeyFracasJr (profile), Jan 23rd, 2014 @ 6:21am

    Re: CAFC precedent

    ^THIS!^
    ^THIS!^
    ^THIS!^

     

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  16.  
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    Anonymous Coward, Jan 23rd, 2014 @ 6:26am

    My first reaction was "of course the party bringing the suit needs to prove its case".

    Then, after thinking for about two seconds, I remembered that you can only file for declaratory judgement in a case like this when the other side has already stated that you are infringing, to the point where they are demanding money or threatening legal action. So it's perfectly appropriate to make the patent holder prove their case. Declaratory judgement is just a tool so the patent holder can't hold the threat of a lawsuit over your head forever. And if the burden of proof was switched, then if relief was denied you'd need ANOTHER trial with the burden of proof switched back again if the patent holder wanted to collect any money, and that makes no sense.

    I'm not sure how the appeals court got that wrong - it seems pretty basic, and they had to overturn the trial court, which means the lawyers filed briefs on the subject. That's not quite the same as a trial court getting something wrong.

     

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  17. This comment has been flagged by the community. Click here to show it
     
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    out_of_the_blue, Jan 23rd, 2014 @ 6:33am

    Now, this is CENSORING, kids:

    This comment has been flagged by the community. Click here to show it

    Anonymous Coward, Jan 22nd, 2014 @ 9:58pm

    so this was not really about patent law, it is more a burden of proof and a contract law issue. Not a decision based on the technicalities or merits of the patent, as the title suggests it is.

    It is certainly NOT one court teaching "the patent court" about patents. I guess that's just TD spin..


    This comment has been flagged by the community. Click here to show it

    Anonymous Coward, Jan 22nd, 2014 @ 10:01pm

    can you point out where (if anywhere) does the Surpreme Court say "you don't understand basic patent law"

    >"and telling it that it doesn't understand basic patent law."

    where does it say that ??? and if it does not say that anywhere why say it?


    This comment has been flagged by the community. Click here to show it

    Anonymous Coward, Jan 22nd, 2014 @ 10:03pm

    what is it called ??
    when you say something has happened, when it really actually did not happen?

    what is that word again? (hint, it starts with L)


    Nothing even approaching limits of common law in those three comments -- which have cogent points -- yet gets censored here at "free speech" Techdirt.

    Anyone reasonable who wanders in should take note: Your "free" to agree with Techdirt's spin, otherwise entirely not wanted.

    By the way, it's highly likely that Mike himself censors these posts. I just can't believe enough people (though it may be set for very few...) would find those offensive. -- Since we can't audit Techdirt -- just have to "trust" -- it's perfectly legitimate to assume from the little evidence available that it's not readers who can't stand those opinion, but Mike censoring a particular person.

    Techdirt Axiom #1: Mike once quipped "Streisand Effect" = he's the authority on every topic.

    02:33:47[c-090-2]

     

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  18.  
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    Koby (profile), Jan 23rd, 2014 @ 6:35am

    Re:

    Here, however, there was a twist. A licensee was the party that filed for a Declaratory Judgment, placing the licensor in a difficult situation since it apparently was not permitted to file a counterclaim alleging infringement since the license remained in effect (but the licensor was receiving no royalties since the licensee decided to pay them into an escrow account). In the panel's view this created a situation where an exception to the general rule seemed both appropriate and fair. It is not that they did not know the law (they did), but an exception was believed to be the better approach (much like Judge Leon in his recent NSA decision).


    The licensor also put the licensee in a difficult situation by approaching them and claiming they infringed on their patents, so get a license or else. The licensee had a choice: either pay for the license or else risk a lawsuit. This was actually not such a difficult position for the licensor because their contract allowed the licensee to put the money into a escrow account and challenge the action in court. So the licensee was just following the contract! So who wins? The established case law STILL stands, that the patent holder has the burden of proof that there is infringement.

     

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  19.  
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    Anonymous Coward, Jan 23rd, 2014 @ 6:40am

    Re:

    The CAFC decision from which an appeal was taken was rendered by a single panel of the court, and not by the court sitting en banc


    But if the next step was the Supreme Court, that means they declined to hear it en banc. Which means they were going to let the wrong decision stand. So they're still at fault, as a group.

    A licensee was the party that filed for a Declaratory Judgment, placing the licensor in a difficult situation since it apparently was not permitted to file a counterclaim alleging infringement since the license remained in effect (but the licensor was receiving no royalties since the licensee decided to pay them into an escrow account)


    I fail to see how that is not fair. They actually had a contract which explicitly stated that the licensee could put the disputed money into an escrow account and file for declaratory judgement. If the licensee lost their declaratory judgement case, the licensor would have received the money in the escrow account - they would have been made whole. What else would they want?

     

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  20.  
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    Gwiz (profile), Jan 23rd, 2014 @ 6:58am

    Re:

    Anyone reasonable who wanders in should take note: Your "free" to agree with Techdirt's spin, otherwise entirely not wanted.


    Not true. Plenty of people come here who argue their opposing points of view in a rational and respectful manner and they are respected in return.

    However, you and darryl are not here for a respectful discussion, you are here to troll, preach and ignore rebuttals. You have no one to blame but yourself if your reputation precedes you now and nobody gives a shit what you have to say anymore.

     

    reply to this | link to this | view in thread ]

  21.  
    identicon
    Anonymous Coward, Jan 23rd, 2014 @ 7:02am

    Re:

    can you point out where (if anywhere) does the Surpreme Court say "you don't understand basic patent law"


    The spirit of that comment (which was not inside quotes in the article, by the way) is expressed in the decision here:

    Simple legal logic, resting upon settled case law, strongly supports our conclusion. It is well established that the burden of proving infringement generally rests upon the patentee.


    Saying that they're overturning them based on "simple legal logic," "settled case law," and "well established" principles, and in a 9-0 decision, pretty much supports the assertion that the Supreme Court thinks they don't understand basic patent law.

     

    reply to this | link to this | view in thread ]

  22.  
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    Baron von Robber, Jan 23rd, 2014 @ 8:35am

    Re: Re:

    I totally agree. ootb's behaivor is so bad, that even if he/she/it suddenly started to use reasoned, logical and thoughtful discussion, I would still have to hit 'report' for the next 100 (for a ratio of 1 to 100 bad to good) posts to make up for ootb's bullshit.

     

    reply to this | link to this | view in thread ]

  23.  
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    Anonymous Coward, Jan 23rd, 2014 @ 9:00am

    Re: Re:

    Actually, the have as of late issued a large number of (-0 decisions, most of which struck down arguments being presented by the DOJ.

     

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  24.  
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    Anonymous Coward, Jan 23rd, 2014 @ 9:06am

    Re:

    I believe the stated facts reflect that the patentee/licensor did not allege infringement, but that the licensee made a unilateral determination its product line was non-infringing and sought a DJ so stating. Since the documentary record is sparse, I cannot dismiss the possibility that such an allegation was made pre-filing.

     

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  25.  
    identicon
    Anonymous Coward, Jan 23rd, 2014 @ 11:06am

    Re: Re:

    I believe the stated facts reflect that the patentee/licensor did not allege infringement,


    But they did. From the decision:
    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).

     

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  26.  
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    Mason Wheeler (profile), Jan 23rd, 2014 @ 11:23am

    Re: CAFC precedent

    Now if we can only extend this, and get it taken to its logical conclusion: a company really does need to prove that you're using their IP illegally before they can stop you from using it. No more unconstitutional DRM!

     

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  27.  
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    Anonymous Coward, Jan 24th, 2014 @ 3:44am

    Re:

    I think Breyer's remarks about a well functioning patent system are a pretty broad hint that broad contractual terms that shift burden of proof will end up being unenforceable as against public policy.

    The Court seems very aware that a patent grant is the bestowing of a temporary monopoly, and it's well established that monopoly holders aren't as free to impose business conditions on clients that non-monopolists can attempt to do.

     

    reply to this | link to this | view in thread ]


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