For the past three years Maryland-based MedImmune Inc. has been trying to have it both ways.
While paying royalties to license a patent from Genentech Inc., MedImmune also had been suing in attempt to invalidate that same patent. The only reason it continued to pay the royalties was out of fear the California-based biotech company would sue for infringement. The district court threw out MedImmune's declaratory judgment suit, and the Federal Circuit affirmed. Both courts held that because MedImmune was a licensee in good standing, it couldn't reasonably fear that Genentech would sue it for patent infringement--so there was no "case or controversy" as required under Article III of the Constitution.
However, this approach ran into a roadblock in the Federal Circuit. The court has repeatedly stated that for a plaintiff to bring a declaratory judgment action that challenges a patent, the plaintiff must satisfy a two-part test. The plaintiff must have "a reasonable apprehension ?? 1/2 that it will face an infringement suit" and must be currently engaged in activity "which could constitute infringement."
As a licensee in good standing, MedImmune meets neither part of this test. So the company is asking the Supreme Court to overturn the Federal Circuit's rule, claiming it contradicts the Court's 1969 decision, Lear Inc. v. Adkins.
But it is anyone's guess as to which way the court will rule. If MedImmune were to win this case, patentees would probably be less interested in granting licenses, because they could no longer use these licenses to stop competitors from challenging their patents, according to Michael Rader, an IP litigator at Boston's Wolf, Greenfield & Sacks. Patent litigation would thus increase. And to compensate patentees for the increased risk of challenges to their patents, royalty rates for granted licenses would likely go up, says J. Mark Wilson, an IP litigator in the Charlotte, N.C. office of Alston & Bird.
If MedImmune were to lose this case, the status quo would remain in place, which would be good for many patent owners, but might be bad for society.