MedImmune v. Genentech (Supreme Court 2006).
In MedImmune, the Supreme Court will answer the question of whether a licensee in good standing can challenge the validity of the patents it has licensed. A hidden issue within this case is whether a licensee has the freedom to contract-away its right to challenge the validity of the patents during the license.
In Lear v. Adkins, The Supreme Court gave the boot to the doctrine of “licensee estoppel” and allowed a licensee to challenge the validity of a licensed patent after termination of the license. Based on Lear, license terms that bar a licensee from later challenging the patent’s validity are (usually) unenforceable. Those decisions, however, are based on cases arising after termination of a license agreement.
Danger for Cross-License Agreements: The reality is that many license agreements are based on the desire for “patent peace” between the parties. Often two companies will cross-license their patents and forgo any hopes of a cash payout in favor of the certainty afforded by the agreement. Those companies are willing and ready to give-up their rights to challenge the patents in district court (during the license term). If MedImmune has its way, however, those license agreements would actually open the door to litigation rather than achieve the hoped security.
The potential inability to fully settle lawsuits as they arise also has interesting implications for the sale of patent rights. Any purchase review (due diligence) will need to look much more closely at ongoing license agreements associated with the patent to determine the extent that the license gives the licensee a right to sue.
Briefing at the Supreme Court will continue this summer to prepare for oral arguments in the October 2006 term.
Links:
- Discussion of the Supreme Court briefs;
- CAFC Decision in MedImmune v. Genentech;
- CAFC Decision in MedImmune v. Centocor;
- MedImmune Petition Granted
- Lear v. Adkins;
- Professor Miller’s comments;
- Supreme Court on the March.
Documents:
- Merits Stage:
- Party Briefs:
- Amici in Support of Petitioner
- Amici in Support of Neither Party
- Petitions Stage
