Supreme Court heard oral arguments in MedImmune v. Genetech

Oral arguments in MedImmune v. Genentech were heard on October 4. MedImmune had licensed one patent from Genentech; Genentech obtained rights to a related patent. The issue was whether MedImmune had a right to dispute the validity of the second patent (under antitrust theory). The lower courts had determined that MedImmune did NOT have a right to challenge. Petitioner MedImmune argued against the CAFC's rule that a patent licensee cannot bring a declaratory judgment action questioning the validity of the licensed patent as long as the licensee has not breached the license agreement. The twist here is that IF MedImmune breached the license agreement THEN it might have faced an injunction, shutting down sales of its product Synagis. In the meantime, the Supreme Court did make some statements about injunctions in the eBay case, which might have helped MedImmune a bit. MedImmune also brings up Lear v. Adkins, 395 U.S. 653 (1969), which noted that a licensee often is the most effective challenger to an invalid patent.

AP wrote:

Chief Justice John Roberts appeared to be concerned that companies could make continuous patent challenges if they were allowed to file lawsuits but not face stiff penalties for breaking license agreements by stopping royalty payments.

"How do you ever end these things? Let's say they have this dispute, they bring it to litigation, and they settle it," he said. "Instead of paying a license fee of 50 cents, it's going to be 40 cents, and we'll go on. Then they can sue again, I take it."

Patent attorneys said if the case is decided in MedImmune's favor, it could lead to a flood of patent lawsuits because companies could challenge patents without risking legal penalties. But Washington attorney Harold C. Wegner, who watched Wednesday's arguments, said Roberts did not seem convinced by MedImmune's case.

"The chief justice was very troubled by the idea," Wegner said. "What would stop the licensees from suing again and again?"