US Supreme Court Gives a Gift to Patent Licensees

With its much anticipated decision in MedImmune v Genentech, the US Supreme Court has paved the way for licensees to challenge the validity of the patents they license (for a summary of the issues in dispute see E-TIPS®, "Does a US Patent Licensee Have Standing to Invalidate its Licensor's Patent?" Vol 5, No 9, October 25, 2006). In an 8-1 majority decision, the Court held that MedImmune, a patent licensee of Genentech's "Cabilly II" patent, could pursue an action intended to invalidate the patent, even though it continued to pay Genentech royalties and was not in breach of the licensing agreement. The court noted that even though MedImmune eliminated the threat of an imminent patent infringement action against it when it signed the license agreement, it was not barred from bringing an action to invalidate the patent because, in effect, it was coerced by Genentech, through the threat of an infringement action, into signing the licensing agreement. Since licensees may now challenge innovators' patents free of a downside risk, the decision is likely to spark a wave of invalidity challenges. Licensees may feel that they can have their "cake" of protection from infringement actions and "eat" it too. For the full reasons for judgment, visit: http://www.supremecourtus.gov/opinions/06pdf/05-608.pdf For commentaries on the decision see: http://www.law.com/jsp/article.jsp?id=1168336930333; and http://tinyurl.com/2qvx2j Summary by: Michael Migus