We'll hear an argument this afternoon in case 12-1128, metronic versus Boston scientific corporation. Mr. Waxman? Thank you, Mr. Chief Justice, and may it please the court. Patent law places the burden of proving infringement on the patentee. And until this case, it was settled that the burden does not shift if the issue arises in a declaratory action seeking a judgment of non-infringement. The Federal Circuit imposed a different rule in suits brought under metamune, where the party seeking a declaration of non-infringement is a licensee. That was error. Allocation of the burden of proof in heirs in the governing substantive law, while the Declaratory Judgment Act is procedural only and does not change substantive rights. The burden of proof in metamune actions, like all other declaratory actions, remains where it would have regressed it in the equivalent coercive suit brought by that patentee. Now, this concerns just the risk of non-persuasion. It doesn't concern the burden of production. That's correct. That's the issue in this case, although as we point out, the word burden of proof, I think the word burden of proof used in the opinion below, could be thought to be addressed to both points. But the parties agree that the relevant consideration here is the burden of proof, and that trial judges do retain discretion to make rules about ordering the ordering of proof. If that's all that's involved, then the case doesn't seem to amount to quite as much as one might have thought otherwise. Does it? If suppose the patentee has the burden of production, so they would have to explain why there was infringement, they would have to introduce proof of infringement, and the only difference is who wins when the fact finder thinks that it's exactly an equipoise. Right. Well, that, of course, was not what happened, and not what the respondent maintained should happen in this case, but taking your question as it is, this Court has pointed it out repeatedly that the burden of where the burden of persuasion rests is very often outcome-outcome determinative, and that is certainly true in patent cases. What the jury has told about who has the burden of persuasion is surpassingly important in many cases, including many patent cases. And that's the issue in this case. I mean, the substantive, the reason why the Federal Circuit erred is clearly doctrinal, which is, this Court has said, over and over again, that burdens of proof, like standards of proof, are substantive. They in here in the substantive right, and the Court has also said repeatedly that the declaratory judgment action is procedural only and doesn't change substantive rights, but I think if you go to a poll to the policy question, Justice Alito, reversing the burden in a declaratory action would impair the purpose and utility of the Declaratory Judgment Act, which was enacted to provide a mechanism for determining how the equivalent coercive action would be resolved without the required, without requiring the declaratory judgment plaintiff to subject itself to retrospective liability. And indeed, shifting the burden would threaten the issue-proclusive effect of the Declaratory Judgment. It seems to me we can all that may be true, but we need to cut down to the basic issue, which is metamune changes all that. The idea is you're moving along with the license, everybody's happy. All of a sudden, you jump into court. Why shouldn't you have the burden as the party who seeks to disturb the status quo? Well, the reason, Mr
. Chief Justice, is the reason that the burden of proof is substantive and a declaratory judgment action under the Act is not, is aimed not to change any substantive rights, and that's why all of the decided cases in this area, except for the one below, left the burden exactly where substantive patent law left it. Does it help your answer or does it limit the theory of your case too much to say that in this case, there is a controversy satisfying the declaratory judgment rules, because the patent holder gave notice of potential of infringement. Am I right about that? You're right about that, and that would be true Justice Kennedy in all metadocations. Should we make the case turn on that, or can we say, with the declaratory judgment, there has to be a dispute. We know that a dispute is likely a controversy, so the formality of a notice is not important. Well, I don't know that it's a formality of a notice. I mean, the issue that this court addressed in metamune, the question that you're raising, I think, is one that goes to Article 3 jurisdiction. You can't use the declaratory judgment procedure to get the court to answer a hype of that. Well, it goes to me to a basic question of fairness. When I picked up this case, I thought, how is the patent holder supposed to know what all these new inventions are? What does it know about it? Then I answered my own question by saying, well, it gave notice of infringement, so that's why I've asked if the notice is essential to your position. I think the notice is the, well, it's essential to the Article 3 metamune question, whether or not there actually is a case or controversy. So in this case, it's perfectly obvious because the license requires metronic to affirmatively go to Murowsky within 30 days of introducing any product and not only help providing notice of the product, but providing the manual, the diagrams and the manuals that are given to physicians so that Murowsky can determine within 60 days whether or not to assert infringement. In metamune, you didn't have that procedure, but the court still held in the context of that case that because Genintech had made clear that it thought that the cabili patent covered the accused devices, there was sufficiently concrete controversy that metamune did not have to stop paying royalties and breach the license. And so therefore, I think I may be talking around your question, but I am trying to get to the point that the requirement of some notice, the patentee, there's no declaratory judgment jurisdiction if the patentee doesn't know about the product has never done anything to suggest that the product, that his or her patent reads on the product. But that is an article three question that would be, you wouldn't get to the burden of proof if you couldn't satisfy metamune. Mr. Hacksman, what do you make of the patents listing non-infringement as an affirmative defense in an infringement suit? We agree with the articulation of the point by the solicitor general in the United States brief, which is that the cases have recognized that non-infringement can either be a general defense. That is, when non-infringement is simply a general denial of a cause of a claim of infringement, it is not an affirmative defense. But there are particular types of non-infringement claims, and the ones that I am familiar with are prosecution, history, estoppel, and the experimental use exception that are affirmative defenses. In other words, those are situations in which the alleged infringer says, hey, I'm not saying that your patent doesn't read all the claims of your patent, don't read on my information invention. I'm claiming non-infringement because I was making experimental use, and that is affirmatively been determined by Congress not to infringe. Or, yes, the elements of your claim read upon my invention, but during the prosecution of the patent in the patent office, you disclaimed some claim scope and under prosecution history, estoppel, this court elucidated in Festo, there is no infringement. This is a case involving a general denial of infringement, and therefore it is not an affirmative defense. What you just responded, that would go as well for an alleged infringer who is not a licensee, right? Yes, I mean, absolutely. I mean, the point is that this case is about the difference between the licensee and the non-licency. Right. So a defense of non-infringement, a general defense of non-infringement is not an affirmative defense
. And in the potential or correlative coercive action, which would have been a suit for patent infringement by Murowsky had we ceased making the royalty payments, they would have borne the burden of proving infringement. Unless we raised an affirmative defense like prosecution, history, estoppel, or experimental use, in which case we would have the burden. The point of the Declaratory Judgment Act is that the burden is left exactly where it would have been, had there been no, had this identical issue were risen in the absence of the Declaratory Judgment procedure, and in this respect it is identical to the jury trial right, which this Court held in Beacon theaters versus Westovers also an element of the substantive claim, and also cannot be deprived by the peculiarity of a Declaratory Judgment being a claim for an equitable remedy. Mr. Waxman, as I understand it, the agreement in this case identified certain patents and contemplated that there would be disputes about whether particular products of metronic violated or infringed or practiced whatever those patents. But there might be some other kinds of agreements, which instead identify certain products, and essentially treat those as infringing products in the absence of a license. In that sort of agreement, would you make the same kind of claim that if metronic had that agreement, it identified certain products, but metronic woke up one day and said, you know what, we don't think that those products and fringes, we essentially want to relitigate our agreement, can metronic come to court and do that via a Declaratory Judgment Act, and if so, who would bear the burden of proof? So, if I understand your question, first to go to the license in this case, this case not only involves products that didn't, that aren't specifically articulated in the license agreement, neither the patents nor the products at issue in this case had even been conceived much less in existence at the time the license agreement was in effect. But if I understand your question in a situation in which I make a widget A, and you claim that you have the patent that reads on that widget, and you agree to license me to do it. If the license, if payment of the license depends upon a determination that it otherwise would be infringing, I can file a Declaratory Judgment Act and seek a declaration that it's not infringing, that is if the cover, if the license covers only products that otherwise would infringe, I can bring a deck action claiming non-infringement and you would bear the burden, assuming that you had threatened in some way to enforce your patent against me. In the situation that the sort of boogie man situation that Murawski and the intellectual property owners brief articulate, which is, imagine, which is, you license, I have a patent, you have a patent, you license it to me, and I turn around the next day and sue for a declaration of non-infringement. There are any number of ways that you as the patent could protect yourself from that extraordinary eventuality. You could provide, for example, that you would require me to issue a, you know, to pay a paid up royalty for all use. Or you could simply say, we don't care whether the patent infringers are not, you would agree to pay me $3 per unit sold. Or you could put a provision in that would say, if you sue for patent infringement, the royalty rate goes to 3x. Or for that matter, if you sue, that will, that can, I can deem that a breach of the license agreement. And, and recover the remedies that patent law allows, an injunction in travel damages and attorneys fees in the context of a, a willful action. I want to underscore, although the Federal Circuit made a broad rule, exactly what we have here. In this case, Murowsky, this license is from 1991, Murowsky, it's not in the record, but by does no dispute that Murowsky has received hundreds of millions of dollars of royalties from Medtronic for its patents. It gets as a benefit of this license. Notice, as I said, within 30 days of every new product and the manual, and it can require Medtronic to start accruing royalties and an interest rate of two, two points over prime. As soon as it sends us a notice, and moreover, in the litigation-tolling agreement, we agree that even though we are not a party in the reference St. Jude action, we would be bound by any determination in that adjudication, whereas otherwise we wouldn't. So this license agreement was enormously beneficial and couldn't be farther from the scenario of, I have a widget, I agree to license it, and the next day I turn around and sue you. But in that event, there would be lots and lots of remedies. I do want to underscore one other thing. The Federal Circuit said that it was applying this special rule only in metamune-type cases. But the rationale of the Court is that what causes the burden to shift is the absence of a counterclaim for infringement
. That would have, for example, caused the burden to shift in the myriad case that this Court decided last term where there was one researcher at NYU who had standing to bring a declaratory judgment action. There was no basis for myriad to claim infringement because he had made clear that he wouldn't engage in the research and clinical work that he was going to so long as he was in risk of patent infringement remedies. And that the source of the rule, the source of the law where the burden of proof lies is insubstantive patent law. And this Court has said for 125 years that it rests with the infringer. What neither the Federal Circuit nor my friend on the other side of this case has ever identified is what is the source of the rule that shifts the burden in a declaratory judgment action? It can't be the declaratory judgment act because that act is procedural only if I can reserve the balance it might go. Thank you, Council. Mr. Gannon? Mr. Chief Justice and may it please the Court. The government agrees that using the same burden of proof that would apply in the hypothetical coercive action that underlies the declaratory judgment act is the best thing to do in this mere image declaratory judgment action that best serves the purposes of the declaratory judgment act and allows for final resolution of the types of controversies that this Court contemplated in metamine. If I could turn to Justice Kagan's points about an incident in which the parties had actually agreed to whether certain products were covered by a particular license, that would be different from the situation we have here because the products in question here weren't actually an existence at the time of the underlying license agreement. The whole point of that aspect of the license agreement was to, as you said, channel future disputes into this particular dispute resolution mechanism. Are you suggesting that the burden shifting rule should be different in the hypothetical Justice Kagan? I was not about to suggest that, Justice Sotomayor. I was going to say that I think that that that would probably be the least logical way to deal with the quandary that might arise from thinking that somebody is then trying to breach the license. We don't think there's any license breach here because there wasn't any prior agreement on the fact that these future products were going to be covered by these patents, that they'd be practicing these patents. But even if there were some concern about the licensee turning around and challenging the agreement that it had previously made, it seems like the problem there is either that they should be stopped by what they already said in the agreement or lear needs to be extended to keep them from being stopped in that way. But shifting the burden of proof seems like an odd way to get it solving whatever the quandary there might be. And I think that at some point this also interweaves with a point that the Chief Justice made about whether metronik here is seeking to change the status quo. And we don't think that metronik is seeking to change the status quo here for a couple different reasons. One of them is, as I was just saying, that the agreement here didn't actually reach, the license agreement here didn't include a meeting of the minds about whether these particular future products would be covered by these patents, including one of the patents was reissued after the time of the license. And also this license agreement expressly preserved the party's ability, including metronik's ability to challenge both the validity and the enforceability of the patents. That's at page 13 of the joint appendix. And so there's no way in which I think it can be legitimately said that metronik is trying to either get out of its contractual obligations or to change the status quo. So the status quo right now is that the royalties are collecting in a certified account. And so in a sense, both parties are trying to change the status quo and trying to get the stream of royalties that either is applicable to these products or isn't on the basis of the resolution of a question that the parties had not decided, but said would be decided in a declaratory judgment action like this. And we think that the best way to think of a declaratory judgment action like this is that it is the mere image of the underlying coercive hypothetical action that could have been brought against metronik. Well, but I guess the argument is that it's a mere image of an action that could not have been brought because metronik is paying royalties
. Well, the same thing is true in metamune. And I think that the court noted that in metamune that the declaratory judgment action was intended to help get the party out of the dilemma it would be in deciding whether it should continue to be effectively coerced into paying royalties that it thinks it doesn't need to pay or exposing itself to the risks associated with reaching the license and being subject to treble damages attorneys fees and the other remedies that would be available under the patent act. And yet, even though there had been no infringement in that case and no breach of the contract in that case, which is also true here because so far everybody has been behaving the way the license expected them to behave. The court recognized the parties had a concrete dispute about the applicability of the patents to those particular products that the scope of the contract was not going to require payment of royalties where the patent did not apply. And said that the issues that were going to be resolved in the declaratory judgment action there were going to involve questions of patent validity, patent enforceability and scope of coverage, patents infringement, which is exactly what we have here. Metronik has raised in their complaints the well pleaded complaint that you would look to here is one that arises under the Patent Act and includes claims involving all three of those issues just as was the case in metamune. I think you disagree with the, we have one friend of the court brief that says this is not a case arising under the patent law arises under contract law, contract case with the patent issue. Yes, Justice Ginsburg, we do disagree with that. We think that this case involves a claim that arises under the patent laws for the reasons that I was just saying. I think that the way to, the way to conceptualize this is to look to what the well pleaded complaint would be in the hypothetical coercive action that would be being brought against metronik if we didn't have the problem presented by the fact that they have it actually reached the contract or infringed at this point. And we have every reason to think that that hypothetical coercive action is one that arises under the patent laws because it's one involving infringement. That's the dispute that the parties acknowledge that they have in the litigation tolling agreement at page 20 of the joint appendix. It talks about the fact that the parties have a dispute under section 271 of the patent act. That in the red brief here, Murowsky has told us on page 48 that if metronik were to cease paying royalties, that the recourse would be, that they would bring an infringement suit. And the complaint here in paragraph five alleges that the claim here arises under the patent act. And because it does arise under the patent act and because it's clear here that all of the defensive issues would also be federal. As I mentioned before, I think there is no dispute here that this would arise under the patent laws which would provide for district court jurisdiction under section 1338 and exclusive appellate jurisdiction in the federal circuit under section 1295A, even before the amendments in the American Events Act in 2011. I think that there's one other point that would be worth making in response to some of the amicus briefs about the potential problems here associated with whether the parties have an incentive to enter into these type of licensing arrangements as Mr. Waxman already explained. The patent holder here got lots of benefits out of entering into an agreement like this, notwithstanding the fact that they would leave themselves open to precisely the suits that the agreement contemplated which was a suit involving both infringement and validity questions. And that under the circumstances there's the they had plenty of incentive to enter into a license agreement, notwithstanding the fact that they would continue to bear the same burden of proof that they would bear in every other procedural context in which patent infringement claims have arisen up until now. And so I think that in that sense that's not a sea change from their perspective and yet even if they were to think it so as Mr. Waxman explained a license or in that context would have several mechanisms that they could use in order to rejigger the balance between the parties that they wanted to. And I think that we agree with everything on the list that Mr. Waxman mentioned, including having fully paid up licenses or allowing a suit for infringement or invalidity to constitute a termination of a license that would allow the patent holder to bring an infringement action. If there are no further questions, we'd urge the Court to reverse. Thank you, Council
. Mr. Nusnet. Thank you, Your Honor. Mr. Chief Justice and may please the Court. The Federal Circuit got it right in this case. The Federal Circuit took the well-settled law on burden of proof and it applied it to two stipulated facts and reached a conclusion that it had to reach. It was controlled by it. The two stipulated facts were number one when Rowsky's Council, me, wrote letters to Medtronic. That was not a notice of infringement. There could be no infringement in this case. In infringement is defined as using the patented invention without authority. Medtronic had authority. It was licensed. The second stipulated fact, and this is at page 51 of the Joint Appendix, is that Medtronic is a licensee. It cannot be an infringer. So everything that you say about infringement involves a completely different situation. There was no shifting of the burden of proof. The well-settled law that I referred to is the normal default rule. The normal default rule is perhaps one of the most fundamental tenets of our jurisprudence. It says that if a party files a complaint and seeks relief, it has the responsibility to prove that it is entitled to that relief. And the normal default rule has the word default in there because it refers to the fact that the statute doesn't decide the burden of proof. And there's no dispute in this case that the statute does not decide the burden of proof. But you could say that about any declaratory judgment action. You can say the person bringing the declaratory judgment action is seeking the relief. And if we follow what you said, then the burden shifts in every declaratory judgment action. And it clearly doesn't
. I mean, we've said time and again that the burden of proof normally does not shift. What's different here? I'll tell you what's different here. The difference is that there is no infringement. Metronica is a licensee. As a result, there can be no coercive counterclaim as the Chief Justice noted, they're paying royalties. There is no infringement. How about a permissive counterclaim? Pardon me? How about a permissive counterclaim? Permissive counterclaim by definition would have nothing to do with the issue that is involved in the case. But could the patent holder bring in the declaratory action a counterclaim for infringement? No. They cannot, because metronica is a licensee, they cannot be an infringer. And the difference is that they can be an infringer, Mr. News Dad. And they can be an infringer if they say we're ignoring our agreement, we're not paying royalties, but we're going to go on and continue making the product. Then, MVF would say they would be an infringer. And that's the world that metamune imagines is happening. No. I'm sorry. I didn't interrupt you. No, I'm finished. I'm sorry. I didn't mean to interrupt you. Okay. That's not what happened in metamune. First, if you change the facts and metronica starts infringing, because it stops paying royalties, of course you get different results. Here's what happened in metamune in our situation where you're not sure how you're receiving royalties. It's in an escrow account. Metronica is holding the money. Yeah, but it's in an escrow account
. You can't touch it, right? Well, we do not have access to the money that they're holding, correct? Right. So, how are you getting paid? Why isn't there a technical infringement? Well, they're keen because you're not receiving the money. Because we agreed to that and the agreement. That's part of our agreement. Yeah, but you're still not receiving the money. But we don't, we agree to not receiving the money. Everyone is operating in accordance with the license. We can't say you're withholding the money and not getting paid. You agree. They could sue you. Pardon me? They, you agree. They could sue you under a declaratory judgment act to find out whether or not they're infringing. Correct. Right. No, no, no, no, not infringing. I'm sorry. Why shouldn't you be bound by that agreement? Oh, we are bound by the agreement. They agree. But they're infringing. No, they're not infringing. It's claim coverage. Metronica cannot infring because they're a licensee. The dispute is over claim coverage. It's not infringement. That's why we cannot have a counterclaim for infringement. Just as a Scalia question, the big difference is that we cannot counterclaim for infringement. Under the normal default rule where the party seeking relief has the burden of proof, you have to look at the case and you have to ask yourself
. I don't understand. So suppose the licensee says this isn't covered by the agreement of all. We're not going to pay you anything. And it starts to manufacture its products. That's the whole point. This outside the agreement. They're not going to pay you anything. Probably. Or am I missing something? Yes, I believe you are. What metronica wants in this license is they want an insurance policy for their future products. The problem is that they could, if they don't have a license, they can get enjoined. So they build this insurance policy so that they're protected. And then they even have a provision whereby they can go and file a DJ action. Now, as I was saying, there are two types of DJ actions in this circumstance. One is where the accused infringer says, I am not infringing. I want a DJ to that effect. In that response where you're talking about infringement, not claim coverage, the patentee has to counterclaim. It's compulsory. The patentee then has the burden of proof in that case because he has claimed infringement. Look, it seems to me it is often the case in declaratory judgment actions that the defendant in the action cannot counterclaim. I mean, it typically occurs when somebody doesn't want to be in breach of contract and brings a suit to see no claiming. If I do this, I won't be in breach. The other side can't counterclaim because the person hasn't been in breach. The whole purpose of the declaratory judgment statute is to enable you to sue before the other side has a cause of action against you. That's the whole purpose of it. So why should the fact that the other side doesn't have a counterclaim change anything? That's usually the situation. Because under the normal default rule, if only one party is seeking relief, that party has the burden of proof
. You get into a more complicated situation. We're dealing with the normal default rule. We're dealing with the declaratory judgment statute. And we said time and time again that it doesn't alter the burden of proof. And your response is, well, it does when the other side can't counterclaim. And my response to that is, usually the other side can't counterclaim. If you take the normal default rule, set forth in Chaffer, which is the case we cite. And it's this court's precedent involving an individual education program. And this court specifically states, if the parents bring the suit, they have the burden of proof because they're seeking relief. And if the school district brings the suit, they have the burden of proof because they're the ones who are seeking relief. Wherever you have a case where only one party is seeking relief, the normal default rule is applicable. And the party that's seeking relief has to prove it. The least was not a patent infringement case. It wasn't a declaratory judgment, was it? It wasn't, but that doesn't make any difference because there's no exception for declaratory judgment cases in the normal default rule. Well, it's why shouldn't there be? I'm sorry. Why shouldn't there be? I take what you're saying is that their claim is, look, you called it claim scope or something. What did you call it? You called it claim coverage. They say, we have a product. And it doesn't violate the stat of the patent for the reason that the claims in the patent don't cover it. Correct. Now, you want to call that a claim coverage. I would call it no infringement. Call it what you wish. But it makes sense. But the fact is there are, and in moreover, you couldn't bring a counter claim because he's already agreed that if he loses his suit, he'll pay you the money. So there's nothing to claim for. That's correct
. Yes, I know. Now, all that's true. Yes. But nonetheless, the fact is, in many instances, though perhaps not yours, this kind of claim, I.E., that person's patent does not cover my product is actually a way of saying whether your product infringes the patent one way of saying that. So their point is call it what you wish. But where you have a claim, which amounts to a claim that my product does not infringes his patent, the rule that should apply is the person who owns the patent should have to prove that the claims do cover the product. And there are a lot of good reasons, et cetera, that they put in their brief why that should be so. It's easiest for the patent to know in respect it violates the claim. Normally, a patent being a monopoly should not have too many advantages beyond the scope of the monopoly, and we don't like false plat patents because that you'd have different results in the same kind of patent with different people depending upon whether in some other instance your client brought a suit or whether this was. I mean, you read the arguments. So looking at those functional arguments, is there any answer that you have to their point other than cases in different subject matters where burdens of proof did shift? Well, the answer to your question is that the normal default rule is a fundamental tenant. That you can't go into court and say it's the responsibility of the defendant to disprove the allegations of my complaint. In cases where you have a counter claim, of course, the patent is going to have the burden of proof. In cases where there can be no counter claim, you have only one party seeking relief, and that party has the burden of proof. And it follows from the normal default rule, which is the rule of this court. It's the established rule of the land. It's a fundamental tenant that a party cannot come into court. And the declaratory judgment act doesn't change. That's your position. What do you know about the rest of your decadent problem? Let's assume that we put the burden of proof where you want it. Okay? So this declaratory judgment action is defeated. All right? Nonetheless, they say still and all, we're going to go ahead and not pay any royalties. And then you bring an infringement action, right? Is the prior decision rest due to Cotta? Or are you going to have to relitigate the whole thing, but this time with the burden of proof on you? You're not going to have to relitigate the whole thing. Why not? You never litigate. You never establish the urine title to any infringement damages. I agree. But you're not going to have to relitigate the whole thing. This issue is going to be decided on preponderance of the evidence. And we don't have the burden. They have the burden on that. Once that's decided. No, no, you would normally have the burden as the burden. As the person claiming infringement. Oh, of course. Of course. Of course, right? So you'll have to relitigate the whole thing. Because you never established that there was infringement. In the declaratory judgment action, all you established is that they didn't prove non-infringement. Yeah, and that's all true, and I'm not arguing with it. So we have to relitigate the whole thing. No. What's the alternative? Okay, I'll give you two answers. The first answer is you're never going to get this situation because the last thing in the world metronic wants to do is give up his license. So it's not going to stop paying royalties. Same thing in my hypothetical. Okay. Now, to follow your hypothetical, the court who, say, tries the issue with respect to whether or not there's clean coverage. And let's say we prevail on that. When there's a subsequent infringement action, you're correct. We cannot say that there are stopped by raised judicata or issued preclusion. But we can say, Your Honor, you've seen this entire case. Now, where it was preponderance of the evidence before, it's now preponderance of the evidence on the other side
. I agree. But you're not going to have to relitigate the whole thing. This issue is going to be decided on preponderance of the evidence. And we don't have the burden. They have the burden on that. Once that's decided. No, no, you would normally have the burden as the burden. As the person claiming infringement. Oh, of course. Of course. Of course, right? So you'll have to relitigate the whole thing. Because you never established that there was infringement. In the declaratory judgment action, all you established is that they didn't prove non-infringement. Yeah, and that's all true, and I'm not arguing with it. So we have to relitigate the whole thing. No. What's the alternative? Okay, I'll give you two answers. The first answer is you're never going to get this situation because the last thing in the world metronic wants to do is give up his license. So it's not going to stop paying royalties. Same thing in my hypothetical. Okay. Now, to follow your hypothetical, the court who, say, tries the issue with respect to whether or not there's clean coverage. And let's say we prevail on that. When there's a subsequent infringement action, you're correct. We cannot say that there are stopped by raised judicata or issued preclusion. But we can say, Your Honor, you've seen this entire case. Now, where it was preponderance of the evidence before, it's now preponderance of the evidence on the other side. It may be the difference between 49.9 and 50.5. And we're going to bring a motion for summary judgment. So your answer is just as clearly you're right, but it doesn't matter very much. That's your answer, right? And I've got one further answer to that. And that is there is no exception to 100% lack of finality with respect to the normal default rule. The normal default rule is more important than saying that if there is a little bit chance of a lack of finality, we're going to throw out the entire normal default rule in favor of this rule and put the burden on proof on the party who is not even seeking any relief. And there was no shifting in this case. Shifting involves starting with a position, shifting to another position. As soon as they filed the suit and they're the only party seeking relief, they would have the burden approved. Now, if they are infringing, we can counter-claim. Then we're going to have the burden approved because that's an issue where you have two party seeking relief and that's a little more complicated. Why isn't that true here because you are seeking a release of the escrow funds? We're not seeking it in the suit. The way the agreement was between the parties was if metronic disagrees with our assessment, then they can go ahead and file a DJ action. And if they can prevail in that DJ action, they won't have to pay. We seek nothing in the suit. We have no counter-claim. We're asking for nothing. As to Justice Kennedy's question before, as notice of infringement. There was no notice of infringement. What we told them was there was claim coverage. And there's a big difference between claim coverage and infringement. If we tell them that we're asserting infringement, we're going to have the burden approved. We can asserting infringement because they're the licensee. Well, there would have been infringement if you had refused to pay the royalty. And if they had refused to pay the royalty and you were covered, then there would have been infringement
. It may be the difference between 49.9 and 50.5. And we're going to bring a motion for summary judgment. So your answer is just as clearly you're right, but it doesn't matter very much. That's your answer, right? And I've got one further answer to that. And that is there is no exception to 100% lack of finality with respect to the normal default rule. The normal default rule is more important than saying that if there is a little bit chance of a lack of finality, we're going to throw out the entire normal default rule in favor of this rule and put the burden on proof on the party who is not even seeking any relief. And there was no shifting in this case. Shifting involves starting with a position, shifting to another position. As soon as they filed the suit and they're the only party seeking relief, they would have the burden approved. Now, if they are infringing, we can counter-claim. Then we're going to have the burden approved because that's an issue where you have two party seeking relief and that's a little more complicated. Why isn't that true here because you are seeking a release of the escrow funds? We're not seeking it in the suit. The way the agreement was between the parties was if metronic disagrees with our assessment, then they can go ahead and file a DJ action. And if they can prevail in that DJ action, they won't have to pay. We seek nothing in the suit. We have no counter-claim. We're asking for nothing. As to Justice Kennedy's question before, as notice of infringement. There was no notice of infringement. What we told them was there was claim coverage. And there's a big difference between claim coverage and infringement. If we tell them that we're asserting infringement, we're going to have the burden approved. We can asserting infringement because they're the licensee. Well, there would have been infringement if you had refused to pay the royalty. And if they had refused to pay the royalty and you were covered, then there would have been infringement. But then you're changing all the facts around. That's not what we're dealing with in this case. All right, I understand. In metamune, the question you said, I think I just disagree with that. You keep on saying it's a question of claim coverage. But the question of claim coverage, all that is, is part of an infringement analysis. And that's the analysis, as Justice Kennedy said, that's the analysis that would have been appropriate. If metronic had stopped paying royalties, and MVF had sued metronic as a result for patent infringement. And that's the world that we're supposed to imagine after metamune. Is if, contract the actual agreement, the licensee stopped paying royalties, and we think about an infringement suit. No, that is permit me to disagree with you. Metamune was not involved with that. Here was the problem in metamune. The metamune did not want to continue to pay the royalties, but it needed the license. 80% of its product line was dependent upon that license. So as a matter of sheer rigidity, they could not not pay the royalty. They will lose their whole business. They wanted to get into federal court. At that time, the federal circuit had a Genpro ruling which says everyone's paying royalties, there's no dispute. In metamune, this court reversed. You said there's enough of a controversy for metamune to have this to go in with the DJ action. In that suit, it would be exactly like this suit. The patent he could not counter claim because there is no infringement. Metamune is still paying its royalties. So in the metamune case, but they never got to it because that metamune case was settled, you'd have the exact same situation we have here, which is that there is no counter claim. And therefore, metamune, who is seeking relief, has the burden to show its entitled to relief. What do you do with the government's argument here, which I take it as being on page 17, they make an argument, which as I understood it, which is a big qualification
. But then you're changing all the facts around. That's not what we're dealing with in this case. All right, I understand. In metamune, the question you said, I think I just disagree with that. You keep on saying it's a question of claim coverage. But the question of claim coverage, all that is, is part of an infringement analysis. And that's the analysis, as Justice Kennedy said, that's the analysis that would have been appropriate. If metronic had stopped paying royalties, and MVF had sued metronic as a result for patent infringement. And that's the world that we're supposed to imagine after metamune. Is if, contract the actual agreement, the licensee stopped paying royalties, and we think about an infringement suit. No, that is permit me to disagree with you. Metamune was not involved with that. Here was the problem in metamune. The metamune did not want to continue to pay the royalties, but it needed the license. 80% of its product line was dependent upon that license. So as a matter of sheer rigidity, they could not not pay the royalty. They will lose their whole business. They wanted to get into federal court. At that time, the federal circuit had a Genpro ruling which says everyone's paying royalties, there's no dispute. In metamune, this court reversed. You said there's enough of a controversy for metamune to have this to go in with the DJ action. In that suit, it would be exactly like this suit. The patent he could not counter claim because there is no infringement. Metamune is still paying its royalties. So in the metamune case, but they never got to it because that metamune case was settled, you'd have the exact same situation we have here, which is that there is no counter claim. And therefore, metamune, who is seeking relief, has the burden to show its entitled to relief. What do you do with the government's argument here, which I take it as being on page 17, they make an argument, which as I understood it, which is a big qualification. Some of these things are awfully complicated. You might have a claim or really it's a set of claims that cover 48 pages with all kinds of symbols and 42 different sort of division possibilities. And then the so-called infringer, or the first who falls outside the coverage, is looking at his product. It's one of the most complex things you've ever seen. And he has to think to himself, how does the claim cover this? And there are many, many, many possibilities. I take it, that's what they mean, when they say it makes sense to put the burden of demonstrating how the claim limitations map onto the accused product. Because infringement may be found only when the product falls within the scope of the asserted claim or claims in every respect. Your client who is the patentee knows how, otherwise he wouldn't be bringing this infringement suit or the inside the coverage suit, or responding to someone who says it's outside the coverage. But the person who is the alleged infringer might not know it. And therefore it makes sense to put everything in the same place. Notice of infringement, burden of production, burden of proof, and that way it will be easier to focus on what's at stake. That's what I take it, their argument is, if I've not got it right, you certainly should. I think it's pretty close. It's absolutely not true. First of all, well, the first answer, and I'll get to the second answer, is if you have that and say, well, it's more convenient for us to do it, you're creating a patent law exception to the normal default. And that's something you keep telling the federal circuit not to do. Like in eBay, don't create a separate patent rule for injunctions. So it's not a patent law exception. It's the recognition that a procedural device that simply changes the nominal status of the parties doesn't change the substantive rules and that the burden of proof counts as a substantive issue. But you only have that substantive rule where the patentee counterclams. When the patentee counterclams, you have two parties seeking relief. Naturally, the patentee has the burden of proof. If there is no counterclam, there can be no infringement. You're just talking about claim coverage. But it's the second part of your question, Justice Breyer. What happens is the patentee, when they give notice of claim coverage, they can tell them there's no mysteries to do. They have to tell them
. Some of these things are awfully complicated. You might have a claim or really it's a set of claims that cover 48 pages with all kinds of symbols and 42 different sort of division possibilities. And then the so-called infringer, or the first who falls outside the coverage, is looking at his product. It's one of the most complex things you've ever seen. And he has to think to himself, how does the claim cover this? And there are many, many, many possibilities. I take it, that's what they mean, when they say it makes sense to put the burden of demonstrating how the claim limitations map onto the accused product. Because infringement may be found only when the product falls within the scope of the asserted claim or claims in every respect. Your client who is the patentee knows how, otherwise he wouldn't be bringing this infringement suit or the inside the coverage suit, or responding to someone who says it's outside the coverage. But the person who is the alleged infringer might not know it. And therefore it makes sense to put everything in the same place. Notice of infringement, burden of production, burden of proof, and that way it will be easier to focus on what's at stake. That's what I take it, their argument is, if I've not got it right, you certainly should. I think it's pretty close. It's absolutely not true. First of all, well, the first answer, and I'll get to the second answer, is if you have that and say, well, it's more convenient for us to do it, you're creating a patent law exception to the normal default. And that's something you keep telling the federal circuit not to do. Like in eBay, don't create a separate patent rule for injunctions. So it's not a patent law exception. It's the recognition that a procedural device that simply changes the nominal status of the parties doesn't change the substantive rules and that the burden of proof counts as a substantive issue. But you only have that substantive rule where the patentee counterclams. When the patentee counterclams, you have two parties seeking relief. Naturally, the patentee has the burden of proof. If there is no counterclam, there can be no infringement. You're just talking about claim coverage. But it's the second part of your question, Justice Breyer. What happens is the patentee, when they give notice of claim coverage, they can tell them there's no mysteries to do. They have to tell them. Well, they always do. There's no mystery as if- You always do? Well, sure. I mean, if you go into the first question is interrogatory, why do you think this is covered? So there's no mystery as to that. And it's much easier to prove non-infringement that prove infringement. Because these are governed by the all elements rule. The all elements rule means that if the patentee wants to prove infringement of a claim that has 10 elements, he's got to prove 10 elements or in your example many more. For the person who is the licensee, you want to prove non-infringement, he has to only pick one of those elements and say, I don't have it. So that's a good thing. So what you're saying is that the page 9, or whatever I quoted, is a made up thing which doesn't ever never really exist in your experience. Oh, that's right. It's a first question to be, well, you tell me how this is important. And that argument wasn't even presented to the Federal Circuit before its decision. And the Federal Circuit would have openly rejected it and say, you got to be kidding. So you're saying, I don't really care about what is an action where there is an infringement action or there could even could be one in the circumstances before us. That's not my case because they could pay me forever if they lose this declaratory judgeance of there's no shift. And where there's no shift, you ought to follow the rules for where there's no shift, which is that the burden lies on the person bringing the suit. That's exactly the right. Yes. The analysis that the Federal Circuit did is, I got to burden a proof issue. Let me find the controlling law. The controlling law is the normal default rule. I've got only one party here seeking relief and that's the licensee. So why shouldn't you prove this? The argument is that the horribles don't exist because the one on page 19 never has come up. And as far as the no- no race, judicator, I don't care because I'll come to the same result with the different means. Yeah. And then the other part- Is there any other practical point that they brought up that you want to respond to? Oh, sure. Hundreds of claims
. Well, they always do. There's no mystery as if- You always do? Well, sure. I mean, if you go into the first question is interrogatory, why do you think this is covered? So there's no mystery as to that. And it's much easier to prove non-infringement that prove infringement. Because these are governed by the all elements rule. The all elements rule means that if the patentee wants to prove infringement of a claim that has 10 elements, he's got to prove 10 elements or in your example many more. For the person who is the licensee, you want to prove non-infringement, he has to only pick one of those elements and say, I don't have it. So that's a good thing. So what you're saying is that the page 9, or whatever I quoted, is a made up thing which doesn't ever never really exist in your experience. Oh, that's right. It's a first question to be, well, you tell me how this is important. And that argument wasn't even presented to the Federal Circuit before its decision. And the Federal Circuit would have openly rejected it and say, you got to be kidding. So you're saying, I don't really care about what is an action where there is an infringement action or there could even could be one in the circumstances before us. That's not my case because they could pay me forever if they lose this declaratory judgeance of there's no shift. And where there's no shift, you ought to follow the rules for where there's no shift, which is that the burden lies on the person bringing the suit. That's exactly the right. Yes. The analysis that the Federal Circuit did is, I got to burden a proof issue. Let me find the controlling law. The controlling law is the normal default rule. I've got only one party here seeking relief and that's the licensee. So why shouldn't you prove this? The argument is that the horribles don't exist because the one on page 19 never has come up. And as far as the no- no race, judicator, I don't care because I'll come to the same result with the different means. Yeah. And then the other part- Is there any other practical point that they brought up that you want to respond to? Oh, sure. Hundreds of claims. That's ridiculous. You know, the courts say, hey, you know, I have other cases on my dock. It get down to five claims. I anticipate any argument. The person suing the DJ licensee doesn't have to anticipate any argument. He said, you told me it was these claims. And we even had an agreement with them. We couldn't go over 30. And all I got to do is say, in claim one, we don't have element number six. We don't have element number four. It's a very simple matter. There's no problem whatsoever there. So what the Federal Circuit did is, I got a burden of proof issued. Let me find the controlling law. I'll look to the Supreme Court. The Supreme Court says there's a normal default rule and it's the party seeking relief. Yeah, but you're overlooking the elephant in the room, which is the relief they are seeking is protection against the relief that you would be seeking, but for the declaratory judgment act. We can never seek it because they are not infringing. And we do not have to file a counter claim for claim coverage because there's no requirement that we do. So there's no coercive complaint. If there's suing, if there was a non-infringent situation, we'd have to file the coercive complaint. The declaratory judgment act is addressed to potential coercion, not actual coercion. That's the whole point. You should be able to bring the suit before coercion is applied. Now, it is true that you're not applying coercion right now, but what they're worried about is if they stop paying the royalties, you will apply coercion. And the declaratory judgment act is a way of getting this on the table before a court without they're having to go into default and incurring all the penalties. But it is not intended to shift the burden of proof
. That's ridiculous. You know, the courts say, hey, you know, I have other cases on my dock. It get down to five claims. I anticipate any argument. The person suing the DJ licensee doesn't have to anticipate any argument. He said, you told me it was these claims. And we even had an agreement with them. We couldn't go over 30. And all I got to do is say, in claim one, we don't have element number six. We don't have element number four. It's a very simple matter. There's no problem whatsoever there. So what the Federal Circuit did is, I got a burden of proof issued. Let me find the controlling law. I'll look to the Supreme Court. The Supreme Court says there's a normal default rule and it's the party seeking relief. Yeah, but you're overlooking the elephant in the room, which is the relief they are seeking is protection against the relief that you would be seeking, but for the declaratory judgment act. We can never seek it because they are not infringing. And we do not have to file a counter claim for claim coverage because there's no requirement that we do. So there's no coercive complaint. If there's suing, if there was a non-infringent situation, we'd have to file the coercive complaint. The declaratory judgment act is addressed to potential coercion, not actual coercion. That's the whole point. You should be able to bring the suit before coercion is applied. Now, it is true that you're not applying coercion right now, but what they're worried about is if they stop paying the royalties, you will apply coercion. And the declaratory judgment act is a way of getting this on the table before a court without they're having to go into default and incurring all the penalties. But it is not intended to shift the burden of proof. It doesn't shift the burden of proof. For they are not paying the royalties that the agreement provides, okay? That's what they're worried about. The declaratory judgment act enables them to sue beforehand before they incur liability. That's its whole purpose. And its purpose is not to shift the burden of proof. In answer to your hypothetical, I agree with you on all of that. But as in metamune case, metamune ends up with the burden of proof. Metamune says, I've got to get a resolution of this question. I want you to overrule Gen Prove. I want to show why my product is not covered. Well, that's fine. There's nothing to matter with that. There's no coercion. It's just that when metamune does this, it's going to have the burden to show it. But you would agree with this. You would agree that if that agreement of yours read a little differently. If metamune, if they had said, you know, we're not going to pay royalties until your client brings an infringement suit which you intend to do. At that point, if you've made that promise, you would have the burden of proof because you bring a infringement suit. And if they said either an infringement suit or a declaratory judgment action, then again, you'd have the burden of proof even in the declaratory judgment action because then they'd be totally parallel. I mean, then you'd have, if you brought the infringement suit, it's yours. And then in the declaratory judgment action, it should be true to, in your view. Well, the way it is is if you have one party seeking relief, a license to take that out. And then you would have the burden of proof in either suit either we, yes, we, the patentee, will bring a suit in which case you'll defend it. Or if you bring it first, you can bring a declaratory judgment action for the same thing. If it had said that and the agreement had held up the royalties until one or the other was decided, then your client, the patentee, would have the burden of proof in either because it's exactly the same thing. You could have brought, are you following it? No, I'm afraid not. Okay, skip it
. It doesn't shift the burden of proof. For they are not paying the royalties that the agreement provides, okay? That's what they're worried about. The declaratory judgment act enables them to sue beforehand before they incur liability. That's its whole purpose. And its purpose is not to shift the burden of proof. In answer to your hypothetical, I agree with you on all of that. But as in metamune case, metamune ends up with the burden of proof. Metamune says, I've got to get a resolution of this question. I want you to overrule Gen Prove. I want to show why my product is not covered. Well, that's fine. There's nothing to matter with that. There's no coercion. It's just that when metamune does this, it's going to have the burden to show it. But you would agree with this. You would agree that if that agreement of yours read a little differently. If metamune, if they had said, you know, we're not going to pay royalties until your client brings an infringement suit which you intend to do. At that point, if you've made that promise, you would have the burden of proof because you bring a infringement suit. And if they said either an infringement suit or a declaratory judgment action, then again, you'd have the burden of proof even in the declaratory judgment action because then they'd be totally parallel. I mean, then you'd have, if you brought the infringement suit, it's yours. And then in the declaratory judgment action, it should be true to, in your view. Well, the way it is is if you have one party seeking relief, a license to take that out. And then you would have the burden of proof in either suit either we, yes, we, the patentee, will bring a suit in which case you'll defend it. Or if you bring it first, you can bring a declaratory judgment action for the same thing. If it had said that and the agreement had held up the royalties until one or the other was decided, then your client, the patentee, would have the burden of proof in either because it's exactly the same thing. You could have brought, are you following it? No, I'm afraid not. Okay, skip it. So really with the federal circuit did said there was no shifting here. First, you got to look to who's got the burden of proof. You get that from shaffer the normal default rule, only one party seeking relief. And then they said, and besides the patentee could not have brought suit because you can't accuse him of infringement. So you have a simple case, only one party seeking relief, that party has the burden. And you would have that anyway, even without this agreement, because only one party can bring suit. It's just like in shaffer, this party brings suit. They have the burden, the other party brings suit. They have the burden. So they're actually really looking at it, though, from the point of view of a contract action rather than a patent action. Well, it can't be a patent action because the whole purpose of the license is not to have an infringer. And it is a contract action, and that gets into the jurisdictional question and to answer Justice Ginsburg's question, yes. There isn't the usual jurisdiction that you would have an patent infringement action. And this comes from the unanimous opinion of this court earlier this year in Gunn v. Mitten, in which I think your honor was the author, which says that that's just the contract action, just having a patent question doesn't get you into the court. But Mr. News said, I was under the impression that according to this contract, if metronics stops paying royalties, you can bring not only a contract suit, but in fact a patent suit. Well, that has been suit. That has nothing to do with the contract because then they breach the contract. But you can bring an infringement suit according to the very agreement that you signed. It's not an accordance with the agreement. We can bring an infringement suit, they're not infringing. They're infringing if they break the contract and they stop paying royalties. Oh, sure. And then you can bring an infringement suit. Well, of course, but that's not the situation we face here. That's always been true
. So really with the federal circuit did said there was no shifting here. First, you got to look to who's got the burden of proof. You get that from shaffer the normal default rule, only one party seeking relief. And then they said, and besides the patentee could not have brought suit because you can't accuse him of infringement. So you have a simple case, only one party seeking relief, that party has the burden. And you would have that anyway, even without this agreement, because only one party can bring suit. It's just like in shaffer, this party brings suit. They have the burden, the other party brings suit. They have the burden. So they're actually really looking at it, though, from the point of view of a contract action rather than a patent action. Well, it can't be a patent action because the whole purpose of the license is not to have an infringer. And it is a contract action, and that gets into the jurisdictional question and to answer Justice Ginsburg's question, yes. There isn't the usual jurisdiction that you would have an patent infringement action. And this comes from the unanimous opinion of this court earlier this year in Gunn v. Mitten, in which I think your honor was the author, which says that that's just the contract action, just having a patent question doesn't get you into the court. But Mr. News said, I was under the impression that according to this contract, if metronics stops paying royalties, you can bring not only a contract suit, but in fact a patent suit. Well, that has been suit. That has nothing to do with the contract because then they breach the contract. But you can bring an infringement suit according to the very agreement that you signed. It's not an accordance with the agreement. We can bring an infringement suit, they're not infringing. They're infringing if they break the contract and they stop paying royalties. Oh, sure. And then you can bring an infringement suit. Well, of course, but that's not the situation we face here. That's always been true. I mean, if they want to, if they've approved or so, burn some to them, just go ahead and breach and then we'll sue them and we'll have the burden approved. You can always say that in declaratory judgment actions. That is not the situation we face. The declaratory judgment act posits a hypothetical situation. It always does. You cannot say that we're going to agree that you're going to sue me later. You're not suing me now. That's not the situation I face. But I worry that you'll sue me later. But you have you, how can I sue and later if you continue to pay royalties? That was the metamune situation. Metamune said I've got to pay you royalties. They don't want to, they don't want to continue to pay royalties. That's the point. That's right. That's why they bring the declaratory judgment act. So that the court can tell them you don't have to pay royalties because this stuff is not covered. Well, that's absolutely right. But in that case, and the court didn't rule upon it because it got remanded, they would have the burden approved because they're the only party seeking relief. You can't say not only to- You think that default rule when you rely on that totally, but there are other rules on burden approved, for example, the party who has better access to the information. So it's not as though there is this firm rule with no exceptions. I take it from your answers to Justice Scalia that you are saying in every declaratory judgment action where only one party seeking relief, that party has the burden approved. So you're not limiting this to patent cases, is that right? Oh, that's correct. That's a normal default rule. And there should be no exception. I see my light is red. Thank you, Council. Mr
. Waxman, you have three minutes remaining? I'd be happy to respond to any questions that the Court has, otherwise I think we'll submit on the briefs. Thank you, Council. Council, the case is submitted