Supreme Court of the United States

Transcription

1 No IN THE Supreme Court of the United States MEDTRONIC, INC., v. Petitioner, BOSTON SCIENTIFIC CORPORATION, GUIDANT CORPORATION, AND MIROWSKI FAMILY VENTURES, LLC, Respondents. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT REPLY BRIEF FOR PETITIONER MARTIN R. LUECK Counsel of Record JAN M. CONLIN STACIE E. OBERTS ROBINS, KAPLAN, MILLER & CIRESI LLP 2800 LaSalle Plaza 800 LaSalle Ave. Minneapolis, MN (612) SETH P. WAXMAN PAUL R. Q. WOLFSON BRIAN H. FLETCHER CAROLYN JACOBS CHACHKIN WEILI J. SHAW WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Ave., NW Washington, DC MARK C. FLEMING WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, MA 02109

2 RULE 29.6 STATEMENT The Rule 29.6 statement included in Medtronic s opening brief remains correct. (i)

3 TABLE OF CONTENTS Page RULE 29.6 STATEMENT... i TABLE OF AUTHORITIES... iv ARGUMENT... 2 I. A DECLARATORY ACTION S INVERSION OF PARTY STATUS DOES NOT SHIFT THE BUR- DEN OF PROOF... 2 II. THIS CASE IS GOVERNED BY THE PATENT LAW S REQUIREMENT THAT THE PATENT- EE PROVE INFRINGEMENT... 7 A. The Issues In This Case Are Identical To Those In An Infringement Action... 7 B. The Parties Agreements Provide No Reason To Shift The Burden C. The Federal Circuit s Decision Is Inconsistent With Sound Patent Policy III. JURISDICTION IS PROPER CONCLUSION (iii)

4 iv TABLE OF AUTHORITIES CASES Page(s) ABB Inc. v. Cooper Industries, LLC, 635 F.3d 1345 (Fed. Cir. 2011)... 4 Aetna Life Insurance Co. v. Haworth, 300 U.S. 227 (1937)... 2, 8 Alaska Department of Environmental Conservation v. EPA, 540 U.S. 461 (2004)... 5 Already, LLC v. Nike, Inc., 133 S. Ct. 721 (2013) American Eagle Insurance Co. v. Thompson, 85 F.3d 327 (8th Cir. 1996)... 5, 6 Arthur v. Unkart, 96 U.S. 118 (1878) Baseload Energy, Inc. v. Roberts, 619 F.3d 1357 (Fed. Cir. 2010) Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (1959)... 2, 4, 7 Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971) Cammeyer v. Newton, 94 U.S. 225 (1877)... 7 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) Davis v. FEC, 554 U.S. 724 (2008) F. Vitelli & Son v. United States, 250 U.S. 355 (1919)... 5

5 v TABLE OF AUTHORITIES Continued Page(s) Fireman s Fund Insurance Co. v. Videfreeze Corp., 540 F.2d 1171 (3d Cir. 1976)... 5 Franchise Tax Board of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1 (1983)... 4, 16, 19, 20 Garrett v. Moore-McCormack Co., 317 U.S. 239 (1942)... 3 Gunn v. Minton, 133 S. Ct (2013) Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) Healy v. Sea Gull Specialty Co., 237 U.S. 479 (1915) Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002) Household Bank v. JFS Group, 320 F.3d 1249 (11th Cir. 2003) Hydril Co. v. Grant Prideco LP, 474 F.3d 1344 (Fed. Cir. 2007) La Chemise Lacoste v. Alligator Co., 506 F.2d 339 (3d Cir. 1974)... 19, 20 Larami Corp. v. Amron, 1994 WL (S.D.N.Y. July 13, 1994)... 9 Lavine v. Milne, 424 U.S. 577 (1976)... 6 Lear, Inc. v. Adkins, 395 U.S. 653 (1969) Lebron v. National Railroad Passenger Corp., 513 U.S. 374 (1995)... 13

6 vi TABLE OF AUTHORITIES Continued Page(s) Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007)... passim Milprint, Inc. v. Curwood, Inc., 562 F.2d 418 (7th Cir. 1977) Nixon v. Fitzgerald, 457 U.S. 731 (1982) Product Engineering & Manufacturing, Inc. v. Barnes, 424 F.2d 42 (10th Cir. 1970) Railroad Co. v. Mellon, 104 U.S. 112 (1881)... 7 Reliance Life Insurance Co. v. Burgess, 112 F.2d 234 (8th Cir. 1940)... 6 Rockwell International Corp. v. United States, 549 U.S. 457 (2007) Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49 (2005)... 2, 3, 9 Southern Utah Wilderness Alliance v. Palma, 707 F.3d 1143 (10th Cir. 2013) Textron Lycoming Reciprocating Engine Division, AVCO Corp. v. UAW, 523 U.S. 653 (1998)... 4, 16, 17 Thiokol Chemical Corp. v. Burlington Industries, Inc., 448 F.2d 1328 (3d Cir. 1971) Under Sea Industries, Inc. v. Dacor Corp., 833 F.2d 1551 (Fed. Cir. 1987)... 7 United States v. United Foods, Inc., 533 U.S. 405 (2001)... 13

7 vii TABLE OF AUTHORITIES Continued Page(s) United States v. Williams, 504 U.S. 36 (1992) United Sweetener USA, Inc. v. Nutrasweet Co., 760 F. Supp. 400 (D. Del. 1991)... 9 Yee v. City of Escondido, 503 U.S. 519 (1992) Zenith Laboratories, Inc. v. Bristol-Myers Squibb Co., 1992 WL (D.N.J. July 21, 1992)... 9 STATUTES AND LEGISLATIVE MATERIALS 28 U.S.C. 1295(a)(1)... 15, (a)... 15, 21, U.S.C , 21 S. Rep. No (1934)... 8 OTHER AUTHORITIES 7 Chisum on Patents (2011)... 8 La Belle, Megan M., Reverse Patent Declaratory Judgment Actions: A Solution for Medtronic, U. Penn. L. Rev. Online (forthcoming 2013), available at com/sol3/papers.cfm?abstract_id=

8 IN THE Supreme Court of the United States No MEDTRONIC, INC., v. Petitioner, BOSTON SCIENTIFIC CORPORATION, GUIDANT CORPO- RATION, AND MIROWSKI FAMILY VENTURES, LLC, Respondents. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT REPLY BRIEF FOR PETITIONER Medtronic s opening brief established two points that resolve this case: First, the burden of proof in a civil action is determined by the applicable substantive law, and that burden does not shift when a declaratory action inverts the parties nominal status. Pet. Br Second, federal patent law places the burden on the patentee to prove that accused products infringe its patent. Id Together, these principles establish that, in a suit seeking a declaratory judgment of noninfringement, the burden of proof remains with the patentee. MFV identifies no reason to depart from that rule where as in this case and in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) the declaratory action is brought by a licensee.

9 2 Most of MFV s numerous arguments reduce to two propositions, both unsound. First, MFV asserts that this case is controlled by rote application of the ordinary default rule placing the burden of proof on the plaintiff. Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49, 56 (2005). But as Medtronic demonstrated, Schaffer s default rule cannot be applied mechanically to declaratory actions. Rather, that rule helps determine how the relevant substantive law allocates the burden, and that allocation is not altered where, as here, the declaratory judgment procedure inverts the parties nominal roles. Second, MFV insists that this case is not about patent infringement, but claim coverage. Yet MFV concedes (Br. 48) that Medtronic would have subjected itself to a suit for infringement had it refused to pay royalties on the accused products. Medtronic instead did what the parties envisioned and what MedImmune permits: It presented the infringement dispute in a declaratory action. Except for the remedy, the issues in this action are exactly the same as those that would have been presented in the infringement suit MFV would have brought had Medtronic refused to pay. The remaining arguments raised by MFV and its amici lack merit, as does Tessera s objection to jurisdiction. ARGUMENT I. A DECLARATORY ACTION S INVERSION OF PARTY STA- TUS DOES NOT SHIFT THE BURDEN OF PROOF The Declaratory Judgment Act s reforms were procedural only, Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937), leaving substantive rights unchanged, Beacon Theatres, Inc. v. Westover, 359 U.S.

10 3 500, (1959). The burden of proof is one such right: It is a part of the very substance of [the] claim and cannot be considered a mere incident of a form of procedure. Garrett v. Moore-McCormack Co., 317 U.S. 239, 249 (1942). Thus, when a party invokes the Act to seek a declaration of non-liability, it does not assume the burden merely because it is the plaintiff. Instead, to preserve the parties substantive rights, the burden must remain with the party that would have borne it had the same issue been litigated in a traditional coercive action. MFV scarcely disputes these premises, yet it insists that, absent a counterclaim, the burden always lies with the declaratory judgment plaintiff. Resp. Br. 2 & n.1. This erroneous assertion underlies nearly every argument in MFV s brief. See id. 1-2, 25-28, 34-36, 46-47, 49, 50-51; see also IPO Br. 6-7, 12. A. MFV rests entirely on Schaffer s observation that the burden of proof ordinarily lies with the plaintiff who generally seeks to change the present state of affairs. 546 U.S. at 56. But Schaffer did not address the allocation of the burden in inverted declaratory actions, where the plaintiff seeks a declaration of nonliability rather than a coercive judgment altering the status quo. Pet. Br. 28 & n.11. MFV also identifies no case applying Schaffer as it urges. In fact, Schaffer s default rule is a tool for determining where the relevant substantive law places the burden. See 546 U.S. at 56 ( [T]he touchstone of our inquiry is, of course, the statute. ). And nothing in Schaffer suggests that this or any other aspect of the substantive law governing a dispute changes when that dispute comes before the court through the declaratory judgment procedure; indeed, this Court has repeatedly emphasized the contrary. Pet. Br

11 4 In this regard, Schaffer s default rule thus resembles the well-pleaded complaint rule and the test for the Seventh Amendment jury-trial right: The rule in an inverted declaratory action is based on the one that would have governed in the equivalent coercive suit brought by the declaratory judgment defendant. See Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 16 (1983); Beacon Theatres, 359 U.S. at 504; Pet. Br B. Medtronic and the United States offered several additional reasons to reject a rule that the plaintiff always bears the burden in an inverted declaratory action. Pet. Br ; U.S. Br MFV and its amici have no persuasive response. First, MFV does not even cite, let alone distinguish, this Court s precedents holding that where the same parties could litigate a dispute through two procedures involving different party alignments, the burden should not depend on which party happens to be 1 As the United States notes (Br. 20 n.6), this Court has stated that it is not clear whether satisfaction of the well-pleaded complaint rule by the equivalent coercive action is sufficient to confer jurisdiction over an inverted declaratory action. Textron Lycoming Reciprocating Engine Div., AVCO Corp. v. UAW, 523 U.S. 653, 659 (1998); but see ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345, (Fed. Cir. 2011) (answering the question left open in Textron in the affirmative). But the relevant point for this purpose is that the well-pleaded complaint rule cannot be applied mechanically to inverted declaratory actions. Instead, courts must look to the equivalent coercive suit, because satisfaction of the well-pleaded complaint rule by that hypothetical suit is at least a necessary condition for jurisdiction. See Textron, 523 U.S. at (The question left open in Textron does not affect jurisdiction in this case, because both MFV s hypothetical infringement action and Medtronic s declaratory complaint satisfy the well-pleaded complaint rule. See id. at 659 n.4; infra n.12.)

12 5 the plaintiff. Pet. Br ; see Alaska Dep t of Envtl. Conservation v. EPA, 540 U.S. 461, (2004); F. Vitelli & Son v. United States, 250 U.S. 355, (1919). Second, MFV all but ignores the great weight of precedent and commentary concluding that the burden of proof does not automatically lie with a plaintiff seeking a declaration of non-liability. Pet. Br & nn.9-10; U.S. Br Instead, MFV merely echoes the Federal Circuit s erroneous characterization of the three insurance cases cited in the opinion below. But both American Eagle Insurance Co. v. Thompson, 85 F.3d 327 (8th Cir. 1996), and Fireman s Fund Insurance Co. v. Videfreeze Corp., 540 F.2d 1171 (3d Cir. 1976), placed the burden on the party that would have borne it in a coercive suit, even though that party (the insured) was the nominal defendant. MFV asserts (Br. 50) that in these cases both parties were seeking relief. But there was no counterclaim in American Eagle, and the defendant in that case was thus seeking relief only in the sense that MFV seeks relief here: Prevailing in the suit would have established the insured s right to payment from the insurer, just as a victory by MFV would establish its right to funds currently held by Medtronic. 2 The same is true in numerous 2 Fireman s Fund did involve a counterclaim, but the court did not suggest that its allocation of the burden would have changed had the counterclaim been absent. See 540 F.2d at 1176 ( The burden of proof which usually accompanies the affirmative of the issue of coverage should not be shifted merely due to the form of the action. ).

13 6 other cases placing the burden on the declaratory judgment defendant. Pet. Br. 26 & n.9 (citing cases). 3 Third, because the allocation of the burden of proof frequently may be dispositive, Lavine v. Milne, 424 U.S. 577, 585 (1976), MFV s rule would attach a substantial penalty to invocation of the declaratory procedure by parties seeking to establish their nonliability thereby undermining the usefulness of the Declaratory Judgment Act in one of the situations it was principally intended to address. Pet. Br. 4-7, Finally, MFV s argument would undermine the finality of declaratory judgments because an adverse result would not necessarily bind a plaintiff who failed to carry a burden it would not bear in a coercive suit raising the same issue. Pet. Br MFV asserts (Br. 51) that there is no problem with finality in cases of this type because, if a licensee loses a declaratory action yet refuses to pay royalties, it can be sued for infringement. But that is exactly the problem: If MFV s position were correct, then the parties could be required to relitigate the same question under a different allocation of the burden in a future infringement action. MFV does not defend that illogical result. 3 MFV s third insurance case is Reliance Life Insurance Co. v. Burgess, 112 F.2d 234 (8th Cir. 1940). But MFV offers no response to Medtronic s showing that, to the extent Burgess can be read to assign the relevant burden to the plaintiff insurer at all, it did so because the disputed issue was an affirmative defense on which the insurer would have borne the burden even as the defendant in a coercive action. American Eagle, 85 F.3d at 331; see Pet. Br. 27 & n.10.

14 7 II. THIS CASE IS GOVERNED BY THE PATENT LAW S RE- QUIREMENT THAT THE PATENTEE PROVE INFRINGE- MENT MFV and its amici do not dispute that federal patent law requires patentees to prove infringement. Railroad Co. v. Mellon, 104 U.S. 112, 119 (1881); Cammeyer v. Newton, 94 U.S. 225, 231 (1877). 4 Instead, they argue that the issue presented in this case is not really patent infringement, that the parties agreements justify a different placement of the burden, and that requiring patentees to prove infringement in suits brought by licensees would undermine various policy goals. All of these objections are unsound. A. The Issues In This Case Are Identical To Those In An Infringement Action MFV claims that, because Medtronic is a licensee and does not face a coercive counterclaim for damages, it is claim coverage and not infringement that is at issue here. Resp. Br. 26; see also id , That is both wrong and irrelevant. 1. MFV admits that, had Medtronic refused MFV s demand for royalties on Medtronic s newly developed products, Medtronic would have subjected itself to a suit for infringement. Resp. Br. 48; see also JA13 (license allows termination for nonpayment of royalties); MedImmune, 549 U.S. at 122 (breaching licensee could face an infringement action ). Like other prospective defendants who sue to establish their 4 Contrary to MFV s assertion (Br. 21, 28), Medtronic has not abandoned its argument based on Under Sea Industries, Inc. v. Dacor Corp., 833 F.2d 1551 (Fed. Cir. 1987); rather, Medtronic is simply relying on this Court s precedents establishing the same proposition Railroad Co. and Cammeyer.

15 8 nonliability, Beacon Theatres, 359 U.S. at 504, Medtronic is seeking a declaration that MFV would not have prevailed in that threatened action. Accordingly, even though a court could not find that Medtronic is presently infringing MFV s patents, the question presented is still one of patent infringement: The court must determine whether MFV would have prevailed in an infringement suit if Medtronic had refused to pay the demanded royalties. The same is often true when a party seeks a declaration regarding contemplated future conduct. For example, when parties in dispute[] over their rights over a contract sue for a declaration of rights, without breach of the contract, S. Rep. No , at 2 (1934), the court cannot declare that one of the parties is presently in breach; instead, the question is whether the contemplated action would constitute a breach. But the issue to be determined is essentially the same whether the dispute is presented in a coercive action or a suit seeking a declaration of non-liability. Aetna, 300 U.S. at 244. Thus, actions seeking declaratory judgments of invalidity or noninfringement are in substance infringement suit[s] with the parties initially reversed. 7 Chisum on Patents 20.03[4][c][vi] n.460 (2011). 2. In any event, even if MFV were correct that the issue here is claim coverage rather than infringement, the distinction is purely semantic. Either way, the court must decide whether Medtronic s products practice every element of one of MFV s patent claims. Either way, the answer turns on federal patent law governing claim construction, literal infringement, the doctrine of equivalents, and other matters. And either way, the result will determine whether Medtronic must pay MFV. The only difference is that the amount at stake has been fixed by contract rather than by a ju-

16 9 ry verdict. Accord U.S. Br MFV fails to identify any reason why that difference in remedy should shift the burden regarding liability. 3. MFV also repeats (Br , 37-38) the Federal Circuit s argument that declaratory judgment cases requiring the patentee to prove infringement are distinguishable because they involved infringement counterclaims. But those cases did not universally feature counterclaims. 5 In any event, neither the Federal Circuit nor MFV cited any authority, in any context, suggesting that the burden on a party s declaratory judgment claim should change depending on whether its opponent counterclaims. Instead, MFV relies entirely on its assertion that under Schaffer, the burden always rests on the plaintiff unless the defendant seeks relief by filing a counterclaim an assertion that fails for the reasons discussed in Part I. 6 5 See, e.g., United Sweetener USA, Inc. v. Nutrasweet Co., 760 F. Supp. 400, 408, 417 (D. Del. 1991) (placing burden on defendant patentee who did not counterclaim); Zenith Labs., Inc. v. Bristol- Myers Squibb Co., 1992 WL , at *1, *25, *32 (D.N.J. July 21, 1992) (same); see also Larami Corp. v. Amron, 1994 WL , at *8 (S.D.N.Y. July 13, 1994) (same in trademark action). 6 MFV and the opinion below sometimes suggest that the placement of the burden should turn on whether a counterclaim is possible rather than whether one is actually filed. Pet. App. 14a; Resp. Br But that rule finds no support even in MFV s erroneous reading of Schaffer, which would place the burden on parties that seek relief not those that could seek relief. And MFV would not prevail under such a rule in any event, because nothing prevented it from filing a counterclaim seeking a declaratory judgment of infringement. See La Belle, Reverse Patent Declaratory Judgment Actions: A Solution for Medtronic, U. Penn. L. Rev. Online (forthcoming 2013), papers.cfm?abstract_id= Contrary to MFV s unexplained assertion (Br. 27), there is no Article III obstacle to such a declara-

17 10 B. The Parties Agreements Provide No Reason To Shift The Burden MFV and amicus IPO assert that Medtronic should bear the burden because it is seeking to reopen matters settled by the parties agreements. But that argument mischaracterizes both the license and the Litigation Tolling Agreement, which expressly recognized the parties patent disputes and contemplated litigation to resolve them. 1. Medtronic is not seeking relief from its license or a better deal than the one it negotiated. Resp. Br. 11, 23, 36-37, 39, 47, 55; IPO Br If Medtronic s products are found not to infringe, it has no royalty obligation under the license. For the same reason, Medtronic is not challeng[ing] the express terms of the contract (IPO Br. 12), but upholding them. There is no presumption that Medtronic s new products fall within the license or MFV s patents. The parties certainly never intended that the license and LTA would settle an infringement dispute (Resp. Br , 39-40), nor did they fully negotiate[] a bargain (IPO Br. 9-10) that MFV entered into on the assumption that there will be no litigation costs (id. 13). To the contrary, as even MFV recognizes (Br. 9-10), the license expressly contemplated litigation to resolve disputes over validity and infringement, and the LTA the Litigation Tolling Agreement acknowledged an actual controversy over patent validity and scope and was designed to facilitate litigation, not settle it. JA20; see JA tory counterclaim. So long as the licensee s action presented a justiciable controversy, see MedImmune, 549 U.S. at , a counterclaim presenting the same dispute would satisfy Article III as well.

18 11 2. Relatedly, MFV and IPO contend that making a licensor bear the burden it would bear in any other patent litigation discourages settlements. Resp. Br. 23, 39; IPO Br. 10, 13. MFV even posits (Br ) that an accused infringer could settle a dispute through a license, only to reopen it the next day. But such a scenario can be easily avoided; a contract designed to settle litigation could make royalty obligations independent from infringement, such as by requiring lump sum payments or payments for net sales on existing products. It could also provide for license termination if the licensee seeks to reopen issues resolved by the settlement. It might even be able to expressly bar the licensee from challenging infringement. Cf. Baseload Energy, Inc. v. Roberts, 619 F.3d 1357, (Fed. Cir. 2010) ( [C]onsent decrees and settlement agreements may provide for a patent license while barring challenges to patent invalidity and unenforceability. ). This case presents no such scenario. A license that merely requires royalty payments on infringing products cannot be said to settle[] a dispute in which the licensee claims that the agreement does not call for royalties because their product does not infringe the patent. MedImmune, 549 U.S. at Such an argument is even less credible here, where the parties agreements expressly recognize their dispute and provide for its resolution through litigation. 3. IPO s remaining arguments seek to relitigate MedImmune. IPO s principal objection (Br. 12) is that a suit by a licensee may require a patentee to endure protracted litigation without the potential statutory damages and remedies available in infringement actions. But that describes every declaratory action under MedImmune, regardless of where the burden lies. And contrary to IPO s suggestion (Br. 8 n.6), MedIm-

19 12 mune clearly permits a licensee to challenge infringement, not merely validity and enforceability. See 549 U.S. at 137 (permitting licensees to seek a declaratory judgment that the underlying patent is invalid, unenforceable, or not infringed (emphasis added)). 4. Finally, there is no merit to MFV s claim (Br ) that the provisions of the license and LTA requiring Medtronic to bring the declaratory action amounted to an agree[ment] that Medtronic would bear the burden. 7 As MFV s own amici recognize, the agreements nowhere addressed the burden or suggested that the parties intended an allocation different from that imposed by the patent law. IPO Br. 2 n.3; Philips Br The fact that the agreements call for Medtronic to file the case simply gave Medtronic the option to agree to pay some or all of the royalties demanded, thus narrowing or obviating the litigation. And if anything, the parties repeated use of variations on the word infringe indicates an intent that the lawsuit operate like standard infringement litigation. JA13, 23, 28; accord U.S. Br & n.11. C. The Federal Circuit s Decision Is Inconsistent With Sound Patent Policy 1. MFV and its amici offer no persuasive response to the United States observation that the Federal 7 MFV made the same argument in opposing certiorari. Opp. 14. In granting review despite MFV s claim that the question presented is controlled by the particular contracts at issue, this Court necessarily considered and rejected that contention. United States v. Williams, 504 U.S. 36, 40 (1992). 8 The Court thus need not reach the question whether parties could contractually vary the burden of proof established by federal patent law. Cf. Philips Br. 4-7; Scholars Br. 22.

20 13 Circuit s burden-shifting rule would deter licensees use of the declaratory-judgment mechanism, disserving the public interest in definitive judicial resolution of disputed issues of patent scope. U.S. Br. 30; accord Pet. Br MFV first asserts (Br , 28-29) that this argument was not raised below. But parties are not limited to the precise arguments they made below. Yee v. City of Escondido, 503 U.S. 519, 534 (1992). Unlike United States v. United Foods, Inc., 533 U.S. 405, (2001), this case does not involve an attempt to raise a new claim, but merely a new argument to support what has been [Medtronic s] consistent claim, Lebron v. National R.R. Passenger Corp., 513 U.S. 374, 379 (1995). 9 On the merits, MFV objects (Br ) to describing a patentee s rights as a monopoly. But see Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313, 344, 350 (1971) ( patent monopoly ). Semantics aside, however, neither MFV nor the authorities on which it relies deny the importance of the public interest in full and free competition in the use of ideas which are in reality a part of the public domain, Lear, Inc. v. Adkins, 395 U.S. 653, 670 (1969). MFV also does not dispute that these policies are served by challenges to potentially overbroad patent claims as well as potentially invalid patents. See Markman v. Westview Instruments, Inc., 517 U.S. 370, 390 (1996). MFV instead maintains (Br. 31) that these considerations are not implicated here because a licensee is already free to challenge the scope of the licensed patent in a declaratory reason. 9 MFV s other waiver assertions (Br ) fail for the same

21 14 action. But MFV cannot deny that the decision below discourages such suits and thereby frustrates important patent policies because it requires a licensee to shoulder a potentially outcome-determinative burden that would otherwise belong to the patentee. Pet. Br ; U.S. Br ; Scholars Br Medtronic also relied on the established principle that the burden should lie with the party holding the affirmative of the issue, Arthur v. Unkart, 96 U.S. 118, 122 (1878), because of the difficulty of proving a negative. Pet. Br ; U.S. Br That difficulty is particularly acute in this context because patents often contain numerous claims, each of which might be infringed on a variety of theories. MFV responds (Br ) that, because infringement requires proof that the accused device practices all elements of the asserted claims, proving noninfringement is easier than proving infringement. But in any cause of action, the plaintiff seeking coercive relief must prove all elements of its claim, whereas the defendant need only negate one. Nonetheless, the law generally assigns the burden to the coercive plaintiff including patentees suing for infringement in part because it is easier and more efficient for a party to respond to a theory of liability than to anticipate and refute its opponent s potential theories in advance MFV is correct (Br ) that courts grant summary judgment of noninfringement, but the summary judgment standard incorporates the substantive law s placement of the burden of proof. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The fact that parties receive summary judgment of noninfringement when they do not bear the burden thus says nothing about the difficulty of carrying a burden to prove noninfringement.

22 15 MFV argues that even if licensees bore the burden of proof, they would not be required to anticipate patentees arguments. But MFV took the opposite position below, maintaining that because they have no burden, MFV and its codefendants had no obligation to set forth their contentions regarding their infringement assertions before Medtronic provided its noninfringement contentions. JA37. MFV also maintained that the party with the burden should submit the first brief on the issue of infringement. Pet. App. 40a. District courts might be able to ameliorate these difficulties through case-management orders or local rules, but there is no requirement that they do so. The better, simpler, and doctrinally correct course is to preserve the allocation of the burden that applies in every other infringement action. III. JURISDICTION IS PROPER Amicus Tessera s challenge to jurisdiction is unfounded. The district court had jurisdiction under 28 U.S.C. 1338(a) and thus the Federal Circuit had jurisdiction under 1295(a)(1) because federal patent law create[d] the cause of action at issue. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809 (1988). 11 This case involves a cause of action for patent infringement under 35 U.S.C. 271, and the fact that it 11 Tessera labels this Type 1 jurisdiction. MFV, in contrast, relies on what Tessera calls Type 2 jurisdiction, which applies where state law creates the cause of action but the case necessarily presents a substantial question of federal patent law. See Gunn v. Minton, 133 S. Ct. 1059, (2013). Medtronic agrees with MFV that the patent-law issues raised in suits like this one are more substantial than those found insufficient in Gunn, but the Court need not decide that question because this case involves a cause of action created by federal law.

23 16 is presented in inverted form as a declaratory action does not deprive the courts of jurisdiction. Tessera s contrary arguments which would have meant that jurisdiction was lacking in MedImmune as well are meritless. 1. Where a party seeks a declaration that it is not liable on a potential coercive claim, federal-question jurisdiction is determined by applying the well-pleaded complaint rule to the defendant s hypothetical coercive complaint raising the same issues. See Franchise Tax Bd., 463 U.S. at 19. If that complaint would have arisen under federal law, there is also jurisdiction over the equivalent declaratory action. This much is common ground. Tessera Br This suit arises under the federal patent laws because it seeks a declaration that Medtronic would not have been liable in an infringement action brought by MFV. See supra Part II.A. Medtronic s complaint recited MFV s assertion that certain of Medtronic s [products] infringe the patents-in-suit. JA40. And although the complaint described the parties agreements, Medtronic sought only declarations that the patents-in-suit were invalid, unenforceable, and not infringed. JA Such an action arises under federal law: [F]ederal courts have consistently adjudicated suits by alleged patent infringers to declare a patent invalid, on the theory that an infringement suit by the declaratory judgment defendant would raise a federal question. Franchise Tax Bd., 463 U.S. at 19 n Although there is a question whether jurisdiction lies where the declaratory-judgment complaint rais[es] a nonfederal defense to an anticipated federal claim, Textron, 523 U.S. at 659; see supra n.1, there is unquestionably jurisdiction where, as here, an alleged patent infringer[] seeks to declare a patent invalid

24 17 2. Tessera makes three arguments against jurisdiction, all flawed. First, Tessera asserts (Br. 18) that the only coercive claim by MFV that can reasonably be said to have been anticipated, impending, or threatened as of the filing date of the initial complaint is a contractual one, not an infringement action. As MedImmune makes clear, however, the extent to which a coercive suit is anticipated, impending, or threatened relates to the existence of an Article III case or controversy in the declaratory action. See 549 U.S. at 132 n.11 (rejecting the rule that the declaratory plaintiff must have a reasonable apprehension of suit to establish standing). Tessera s objection thus amounts to a claim that the only justiciable controversy presented here is a state-law breach-of-contract claim, not an infringement action. But that is simply wrong: As in MedImmune, MFV asserted that Medtronic s products infringe[d] its patents (JA30), and as MFV itself confirms (Br. 48) if Medtronic had not paid it would have subjected itself to a suit for infringement. Tessera s only basis for claiming that an infringement action by MFV was not anticipated, impending, or threatened is that (according to Tessera) there was no chance that Medtronic suddenly would abandon the contractual dispute resolution procedure... by ceasing to pay royalties. Tessera Br But that argument is foreclosed by MedImmune. There, too, the licensee preferred to pay royalties rather than risk an infringement action. 549 U.S. at 122. And there, too, the licensee s payments rendered the threat of an inor not infringed, Textron, 523 U.S. at 660 n.4. The defenses raised in such declaratory complaints invalidity, unenforceability, and noninfringement themselves raise a federal question. Id.

25 18 fringement suit remote, if not nonexistent. Id. at 128. But this Court held that there was nonetheless a justiciable controversy because those payments were coerced by the threat of an infringement suit. Id. at The same is true here: Although Tessera notes that various features of the parties agreements made it preferable for Medtronic to vindicate its rights through this declaratory action rather than risking an infringement suit, the relevant point is that if Medtronic had refused MFV s demands for payment, it would have faced an infringement action a point that Tessera does not and could not deny. 13 The cases on which Tessera relies are not to the contrary. As Tessera s citations indicate (Br. 16 & n.19), most of them found that a licensee s declaratory action did present a justiciable case or controversy arising under the patent laws. Tessera identifies only three cases that declined to allow a licensee to anticipate an infringement action. Two of them are no longer good law because like the decision reversed in MedImmune they held that the continuing existence of a license barred a declaratory action because it precluded an infringement suit. See Milprint, Inc. v. Curwood, Inc., 562 F.2d 418, (7th Cir. 1977) (finding jurisdiction lacking because the existence of the li- 13 Tessera s argument also proves far too much. So long as Medtronic was paying royalties into a set-aside account in compliance with the license and LTA, MFV could not sue for breach of contract any more than it could sue for infringement. On Tessera s logic, therefore, no state-law claim was anticipated, impending, or threatened either. (Tessera speculates (Br. 18) that MFV could have filed a contract action to require Medtronic to make payments directly to MFV rather than into a set-aside account, but the LTA expressly provides for the payment of disputed royalties into the set-aside account. JA27-28.)

26 19 cense precludes the possibility of infringement ); Thiokol Chem. Corp. v. Burlington Indus., Inc., 448 F.2d 1328, (3d Cir. 1971) (allowing a separate declaratory action brought after termination of the license to proceed). Tessera s third case did not even decide an issue of jurisdiction, but rather upheld a district court s discretionary decision declining to hear a declaratory action. See Product Eng g & Mfg., Inc. v. Barnes, 424 F.2d 42, 45 (10th Cir. 1970). Second, Tessera argues (Br ) that even if Medtronic did face an infringement action, there is no federal-question jurisdiction because, had Medtronic refused to pay royalties, MFV could also have brought a state-law breach-of-contract claim. This argument is well wide of the mark. Tessera relies on Franchise Tax Board s observation that [f]ederal courts have regularly taken original jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendant brought a coercive action to enforce its rights, that suit would necessarily present a federal question. 463 U.S. at 19. But Tessera does not cite a single case interpreting this statement as excluding jurisdiction if the opponent could also raise potential state-law claims. As Tessera admits (Br. 23 n.22), numerous courts have rejected this view. See Household Bank v. JFS Group, 320 F.3d 1249, (11th Cir. 2003) (citing decisions from seven other circuits) Neither Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002), nor La Chemise Lacoste v. Alligator Co., 506 F.2d 339 (3d Cir. 1974), supports Tessera s argument. The plaintiff in Holmes did not seek a declaration regarding patent rights patent issues entered the case only in a counterclaim. See 535 U.S. at 830. Contrary to Tessera s suggestion,

27 20 Third, Tessera argues (Br ) that the district court lacked jurisdiction because MFV s patents expired a few days before Medtronic filed its second amended complaint, meaning that when the operative complaint was filed Medtronic did not face the prospect of an infringement suit. That argument is likewise mistaken. Statutory jurisdiction and Article III standing are generally determined at the time the suit is filed. See Rockwell Int l Corp. v. United States, 549 U.S. 457, 473 (2007) ( [S]ubject-matter jurisdiction depends on the state of things at the time of the action brought. ); Davis v. FEC, 554 U.S. 724, 734 (2008) ( [T]he standing inquiry remains focused on whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed. ). When a plaintiff amends its complaint, the allegations in the amended complaint supersede those in the original complaint, but the question remains whether the amended allegations demonstrate jurisdiction when the original complaint was filed. See Rockwell, 549 U.S. at 473 ( The state of things and the originally alleged state of things are not synonymous; demonstration that the original allegatherefore, the Court s statement that the declaratory complaint did not assert any claim arising under federal patent law was not based on an obscure and unstated interpretation of Franchise Tax Board, but rather the fact that the declaratory complaint literally did not raise any patent issue at all. And La Chemise Lacoste did not hold that the mere possibility of a state-law claim defeated federal jurisdiction; rather, it found that the declaratory complaint did not specifically seek to anticipate a federal claim and that it was not clear that the defendant s threatened suit would have relied on federal law. See 506 F.2d at Here, in contrast, Medtronic s complaint expressly sought to anticipate an infringement action and as MFV itself confirms (Br. 48) Medtronic would have been sued for infringement had it refused payment.

28 21 tions were false will defeat jurisdiction. ); Southern Utah Wilderness Alliance v. Palma, 707 F.3d 1143, 1153 (10th Cir. 2013) (examining the allegations in [the plaintiff s] Amended Complaint to determine whether [the plaintiff] had standing when the original complaint was filed ). Accordingly, expiration of MFV s patents after this suit was filed did not affect either jurisdiction under 1338(a) or Medtronic s standing. Of course, an actual controversy must exist not only at the time the complaint is filed, but through all stages of the litigation. Already, LLC v. Nike, Inc., 133 S. Ct. 721, 726 (2013). But even if Tessera were correct that expiration of the patents precluded any possible new infringement suit by MFV, 15 this action plainly is not moot. The parties entered into a Litigation Tolling Agreement years before the patents expired. JA19, 29. At the time, Medtronic was not paying royalties on the products at issue here and MFV believed that those products infringed its patents; the LTA thus acknowledged an actual controversy under 35 U.S.C JA20. The parties agreed that they would resolve that infringement dispute through this declaratory action and further agreed that Medtronic would maintain a specified amount in a set-aside account to be paid over to MFV if MFV prevails. JA That assumption is debatable. Medtronic believes that it has complied with the parties agreements and so is not liable for infringement, but particularly if Medtronic simply refused payment rather than continuing to pursue this declaratory action MFV could well attempt to assert that some pre-expiration action by Medtronic constituted a breach and seek infringement damages on that basis. Cf. Hydril Co. v. Grant Prideco LP, 474 F.3d 1344, (Fed. Cir. 2007) (patentee asserted that a breach terminated the license and that the licensee was liable for infringement for post-breach use of the patented device).

29 22 Those funds now total more than $120 million and their disposition turns on the outcome of this suit. These agreements in the LTA neither eliminated the Article III controversy nor changed the action into something other than one arising under the patent laws. Parties can liquidate damages by agreeing to make specified payments depending on the courts liability determination. See Nixon v. Fitzgerald, 457 U.S. 731, (1982); Havens Realty Corp. v. Coleman, 455 U.S. 363, (1982). And an infringement action arises under the patent laws even if the parties have agreed to a license fixing the measure of infringement damages at the license royalty rate. See Healy v. Sea Gull Specialty Co., 237 U.S. 479, (1915) (Holmes, J.) (arising-under jurisdiction was not affected by the fact that the plaintiffs relied upon a contract in fixing the mode of estimating damages ). The lower courts therefore properly exercised jurisdiction over this case under Article III and 28 U.S.C. 1338(a) and 1295(a)(1).

30 23 CONCLUSION The judgment of the court of appeals should be reversed. Respectfully submitted. MARTIN R. LUECK Counsel of Record JAN M. CONLIN STACIE E. OBERTS ROBINS, KAPLAN, MILLER & CIRESI LLP 2800 LaSalle Plaza 800 LaSalle Ave. Minneapolis, MN (612) SETH P. WAXMAN PAUL R. Q. WOLFSON BRIAN H. FLETCHER CAROLYN JACOBS CHACHKIN WEILI J. SHAW WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Ave., NW Washington, DC MARK C. FLEMING WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, MA OCTOBER 2013