We posted about this case in May 2013, and on January 22, 2014, the Supreme Court decided this matter.
First, the Supreme Court held that the Federal Circuit did not lack subject-matter jurisdiction. Because federal courts determining declaratory judgment jurisdiction often look to the “character” of the declaratory judgment defendant’s “threatened action,” which in this case, the threatened hypothetical action would constitute the licensor terminating a license and bringing suit for infringement under federal patent laws, the declaratory judgment action would arise under federal patent laws.
Second, the Supreme Court held that when a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion on the issue of infringement. The Supreme Court based this ruling on three settled legal propositions: (1) a patentee ordinarily bears the burden of proving infringement; (2) the operation of the Declaratory Judgment Act is only procedural leaving substantive rights unchanged; and (3) the burden of proof is a substantive aspect of a claim.
By way of background, the United States Supreme Court granted cert. to hear argument on whether, in a declaratory judgment action brought by a licensee, the licensee has the burden to prove that its products do not infringe the patent, or whether the patentee must prove infringement. Medtronic Inc. (licensee) licensed a patent from Mirowski Family Ventures LLC (patentee / licensor) relating to a device used to stop imminent heart failure. Medtronic subsequently created new products and then filed a declaratory judgment action claiming that its new products do not infringe the patent. The Federal Circuit Court of Appeals held that Medtronic bears the burden of proving that its products do not infringe Mirowski’s patent. Medtronic argued that the U.S. Supreme Court should overturn the Federal Circuit’s ruling, which Medtronic argued is inconsistent with the Supreme Court’s decision in MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118 (2007). In MedImmune, the Supreme Court ruled that a patent licensee that believes that its products do not infringe the patent is “not required . . . to break or terminate its . . . license agreement before seeking a declaratory judgment in federal court that the underlying patent is . . . not infringed.” According to Medtronic, the Federal Circuit’s opinion undercut the MedImmune decision because it caused a licensee to take on the significant burden and cost of a presumption that its products infringe. In turn, Mirowski argued that this case is distinguishable from MedImmune because the licensing agreement at issue specifically required Medtronic to file a declaratory judgment action if a dispute arose. Mirowski submitted that the Federal Circuit correctly decided that, based specifically on the contract terms between the parties, Medtronic should bear the burden of proving that it should be let out of the contract for the new products.
It’s not just Apple that is suing Samsung in the smart phone arena. Last Friday, the Penn State Research Foundation (the technology transfer office for Penn State) sued Samsung in the United States District Court for the Middle District of Pennsylvania, Case No. 4:14-cv-00124, for allegedly infringing the Foundation’s US Patent No. 6,720,572, entitled “Organic Light Emitters with Improved Carrier Injection.”
In the complaint, the Foundation contends that at least Samsung’s Galaxy SIII and Galaxy S4 products infringe the ‘572 Patent. The Foundation also contends that Samsung willfully infringed the ‘572 Patent because it knew of the patent at least as early as May 12, 2010, when it was referenced by the USPTO in a office action involving one of Samsung’s patent applications.
The ‘572 Patent relates to:
A light emitting device with improved carrier injection. The device has a layer of organic light emitting material and a layer of organic semiconductor material that are interposed between first and second contact layers. A carrier transport layer, may optionally be included between the semiconductor and light emitting layers. When used as a diode, the first and second contacts are functionally the anode and cathode. The device can also be a field effect transistor device by adding a gate contact and a gate dielectric. The first and second contacts then additionally have the function of source and drain, depending on whether the organic semiconductor material is a p-type or an n-type. Preferably, the organic semiconductor is formed with pentacene.
As the case was just filed, there has been little activity in it. We will monitor this case as it progresses.
On December 17, 2012, U.S. District Judge Koh denied Apple’s request for a permanent injunction against Samsung. As a reminder, a jury awarded Apple $1.05 billion in damages in August after finding that Samsung had copied certain features of Apple’s iPhone and iPad. (See our earlier blog post summarizing this verdict). With respect to the court’s most recent ruling, Judge Koh followed the Federal Circuit’s heightened standard that requires patent-holders to show a direct link between lost market-share and a specific infringing feature of a competitor’s product. In fact, in a previous ruling related to another lawsuit between Apple and Samsung over the patented search technology used in Apple’s Siri feature, the Federal Circuit overturned Jodge Koh’s decision to grant a preliminary injunction against Samsung’s Galaxy Nexus phone. In the present matter, Judge Koh found that Apple’s evidence for injunctive relief fell short of the strict “causal nexus” standard because the lawyers did not prove that the copied features specifically drove consumers to buy Samsung devices.
Some attorneys believe that Apple’s main objective was to block Samsung’s sale of its products and not to obtain a financial remedy. In this regard, attorneys are of the opinion that the record verdict was a mere slap on the wrist to Samsung, which generates approximately $100 billion in annual revenues. Nonetheless, this recent ruling has a significant impact on the parties’ leverage in the mobile patent litigation arena.
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