diff --git a/java/java-psi-api/src/com/intellij/psi/util/TypesDistinctProver.java b/java/java-psi-api/src/com/intellij/psi/util/TypesDistinctProver.java
index 8c354a5daa31..89e6caad21ad 100644
--- a/java/java-psi-api/src/com/intellij/psi/util/TypesDistinctProver.java
+++ b/java/java-psi-api/src/com/intellij/psi/util/TypesDistinctProver.java
@@ -40,7 +40,8 @@ public class TypesDistinctProver {
       }
 
       if (type2 instanceof PsiCapturedWildcardType) {
-        return provablyDistinct((PsiWildcardType)type1, ((PsiCapturedWildcardType)type2).getWildcard());
+        return ((PsiWildcardType)type1).isExtends() ||
+               provablyDistinct((PsiWildcardType)type1, ((PsiCapturedWildcardType)type2).getWildcard());
       }
 
       if (type2 instanceof PsiClassType) {
diff --git a/java/java-psi-impl/src/com/intellij/psi/impl/PsiSubstitutorImpl.java b/java/java-psi-impl/src/com/intellij/psi/impl/PsiSubstitutorImpl.java
index 4634c7eb8f88..feb757c54883 100644
--- a/java/java-psi-impl/src/com/intellij/psi/impl/PsiSubstitutorImpl.java
+++ b/java/java-psi-impl/src/com/intellij/psi/impl/PsiSubstitutorImpl.java
@@ -156,6 +156,7 @@ public class PsiSubstitutorImpl implements PsiSubstitutor {
           if (wildcardType.isExtends() != wildcard.isExtends()) {
             return wildcard.isBounded() ? PsiWildcardType.createUnbounded(wildcardType.getManager()) : newBound;
           }
+          if (!wildcard.isBounded()) return PsiWildcardType.createUnbounded(wildcardType.getManager());
         }
 
         return PsiWildcardType.changeBound(wildcardType, newBound);
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/ClassLiteral.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/ClassLiteral.java
index e47447315a1e..6dc9fd8734f3 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/ClassLiteral.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/ClassLiteral.java
@@ -2,6 +2,7 @@ import java.lang.reflect.*;
 
 class Example {
     private void demo() {
-        <error descr="Cannot resolve symbol 'TypeVariable'">TypeVariable</error><Class<? extends Example>>[]  typeParameters  =  getClass().getTypeParameters();
+        <error descr="Incompatible types. Found: 'java.lang.reflect.TypeVariable<java.lang.Class<capture<? extends Example>>>[]', required: 'java.lang.reflect.TypeVariable<java.lang.Class<? extends Example>>[]'">TypeVariable<Class<? extends Example>>[]  typeParameters  =  getClass().getTypeParameters();</error>
+        Object typeParameters1  =  <error descr="Inconvertible types; cannot cast 'java.lang.reflect.TypeVariable<java.lang.Class<capture<? extends Example>>>[]' to 'java.lang.reflect.TypeVariable<java.lang.Class<? extends Example>>[]'">(TypeVariable<Class<? extends Example>>[]) getClass().getTypeParameters()</error>;
     }
 }
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/UncheckedCasts.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/UncheckedCasts.java
index 6b00dc69bfe8..76ab83f8b925 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/UncheckedCasts.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/UncheckedCasts.java
@@ -45,7 +45,7 @@ class AllPredicate<T>
     }
 
     public static void foo(SortedMap<?, ?> sourceSortedMap) {
-        new TreeMap<Object, Object>(<warning descr="Unchecked cast: 'java.util.Comparator<capture<? super capture<?>>>' to 'java.util.Comparator<? super java.lang.Object>'">(Comparator<? super Object>) sourceSortedMap.comparator()</warning>);
+        new TreeMap<Object, Object>(<warning descr="Unchecked cast: 'java.util.Comparator<capture<?>>' to 'java.util.Comparator<? super java.lang.Object>'">(Comparator<? super Object>) sourceSortedMap.comparator()</warning>);
     }
 }
 
diff --git a/java/mockJDK-1.7/jre/lib/rt.jar b/java/mockJDK-1.7/jre/lib/rt.jar
index 092cc248e10c..b0f53dc9a037 100644
Binary files a/java/mockJDK-1.7/jre/lib/rt.jar and b/java/mockJDK-1.7/jre/lib/rt.jar differ