A New License To Sue?

Over the past several years, the Federal Circuit Court of Appeals has decided several cases involving the right of a licensee to sue for patent invalidity without first having to breach a license agreement. See Gen-Probe, Inc. v. Vysis, Inc., 359 F.3d 1376, 1380-81 (Fed. Cir. 2004) (licensee in good standing estopped from suing licensor for patent invalidity), overruled by MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764, 774 (2007); MedImmune v. Centocor, 409 F.3d 1376, 1381-82 (Fed. Cir. 2005); MedImmune, Inc. v. Genentech, Inc. 427 F.3d 958, 964 (Fed. Cir. 2005), rev’d, 127 S. Ct. 764 (2007). In these cases, the Federal Circuit applied a declaratory judgment (DJ) standard requiring that there be an explicit threat by the patentee to give the plaintiff a reasonable apprehension of a lawsuit by a patentee before the DJ action could be ripe for adjudication. The U.S. Supreme Court granted cert. on one of these cases, MedImmune, Inc. v. Genentech, Inc., 126 S. Ct. 1329 (2006).

In 1997, Genentech entered into a patent license with MedImmune. The license covered Genentech’s issued patent, known as Cabilly I, and one pending with the U.S. Patent and Trademark Office (PTO), known as Cabilly II. The Cabilly II patent issued in 2001. In 2001, Genentech advised MedImmune that Cabilly II had granted, and of Cabilly II’s purported application to one of MedImmune’s main products � Synagis � a drug used to prevent respiratory tract disease in infants and young children. Rather than terminating its license agreement with Genentech, MedImmune, as a licensee in good standing, initiated a DJ action to invalidate Cabilly II. Genentech opposed with a motion to dismiss for lack of subject matter jurisdiction, which was granted by the district court. At the Federal Circuit, MedImmune asserted that it must be allowed to bring suit as licensee estoppel had been long since abolished under Lear, Inc. v. Atkins, 395 U.S. 653 (1969). The Federal Circuit disagreed: Lear simply allowed a former licensee to sue after breaching or terminating a licensing agreement; and in the opinion of the Federal Circuit, a current licensee in good standing has no justiciable case or controversy. The Supreme Court granted certiorari, and reversed the Federal Circuit.