MedImmune v. Genentech The Supreme Court heard oral arguments in MedImmune v. Genentech on October 4, 2006. The question before the Court was whether ââ?¬Å?Article III’s grant of jurisdiction of “all Cases . . . arising under . . . the Laws of the United States,” implemented in the “actual controversy” requirement of the Declaratory Judgment Act, 28 U.S.C. Ã?§ 2201(a), requires a patent licensee to refuse to pay royalties and commit material breach of the license agreement before suing to declare the patent invalid, unenforceable or not infringed.ââ?¬Â? The Federal Circuit’s decision stated that any licensee in good standing may not challenge the validity of a patent. The underlying case involves a Genentech patent that describes how recombinant DNA technology can be used to manufacture human antibodies. MedImmune used this technology to develop a pharmaceutical treatment for a respiratory illness in children, respiratory syncytial virus (RSV). The drug, called Synegis, has been successful in treating RSV and accounted for approximately 80% of MedImmuneââ?¬â?¢s revenue in 2005. The controversy in the instant case stems from the license agreement between MedImmune and Genentech. At some point Genentech notified MedImmune that Synegis was covered by the Genentech patent. Genentech requested that MedImmune enter into a license agreement and pay license royalties to Genentech. MedImmune agreed and has been a licensee in good standing since the inception of that agreement. However, although MedImmune has continued to pay royalties under the license agreement, MedImmune simultaneously refutes the validity and enforceability of Genentechââ?¬â?¢s patents. MedImmune contends that the royalty payments were made ââ?¬Å?under protestââ?¬Â? for the purpose of protecting the revenue generated by Synegis. Arguments were presented by MedImmune, Genentech and the Solicitor General. Questions from the Court included whether the purpose of the Declatory Judgment Act was to allow parties of a contract to resolve a dispute through declatory judgment without getting rid of the contract and whether MedImmune should be estopped from challenging the validity of the patent by the license agreement. With respect to the estoppel question, the Court asked whether the license agreement constitutes a compromise or a settlement of a dispute such that MedImmune should be estopped from challenging the validity of the patent while simultaneously reaping the benefits of the agreement. MedImmune takes the position that the license agreement cannot be construed as a compromise because the royalties are paid under protest to avoid the risks of litigation, including threat of injunction against their top-selling product and exposure to treble damages. Genentech counters with the argument that the license agreement was not coerced and represented a settlement precisely calculated to avoid those risks. The oral arguments have recieved treatment in the SCOTUSblog and the briefs have been discussed in Patently-O.

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