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Medimmune: New Rules for Patent Licenses?

By John Cone

The Supreme Court's Medimmune decision relates directly to the federal courts' jurisdictional requirement of case or controversy, but by overruling the Federal Circuit's Gen-Probe decision it may also have changed the balance of power between patentees and licensees.

Medimmune's Synagis' drug accounted for 80% of its sales revenue. Genentech claimed that a patent license to Medimmune under Genentech's Cabilly II patent entitled it to royalties on those sales. Medimmune considered the patent invalid, but did not want to repudiate the license and risk an injunction, treble damages, and attorneys' fees and so paid royalties on sales of the SYNAGIS drug 'under protest.' Was there an 'actual controversy' between Medimmune and Genen- tech to provide jurisdictional basis for a declaratory judgment action or the issues of patent infringement and validity? 'No,' held the Federal Circuit, on the basis of
its earlier Gen-Probe decision, because the license protected Medimmune from the reasonable apprehension of a lawsuit. Medimmune, Inc. v. Genentech, Inc., 427 F.3d 958, 964, 965 (Fed. Cir. 2005). The Supreme Court, however, reversed, holding that Medimmune did not have to 'bet the farm' by repudiating the license in order to provide the jurisdictional basis for a federal declaratory judgment action. Medimmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007).

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