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In overturning the Federal Circuit’s ruling, Scalia wrote that the dispute leading up to the patent challenge was a real and “lively” controversy that was sufficient to trigger a challenge to the patent’s validity, even if the royalties were still being paid.
Badke, who worked on the case for MedImmune at an earlier stage, says that in the long run, the ruling will help clear out invalid patents that impede innovations in areas like biotech and software.
‘There will be an explosion in litigation by these licensees.’� Jim Badke
Ropes & Gray
But the decision also introduces more uncertainty into the status of patents, says George Best, senior counsel at Foley & Lardner. Under the old rules, a licensing agreement amounted to an insurance policy against litigation over patent validity or infringement. But now, he says, “unhappy licensees” can challenge patents that both parties previously thought were settled and protected by the license agreement.
“By allowing licensees that are taking full advantage of the benefits of the license, including immunity from a patent infringement lawsuit, to challenge the patents in the agreement, patentees lose the quid pro quo in the arrangement,” says Raymond Van Dyke of Nixon Peabody.
“Countlesslicensed patentsare now potentially open to a new attack from even good licensees. To the IP community, this is yet another curtailment of the strength of patent rights.”
The decision also represents another bad day for the Federal Circuit, which handles patent appeals and is on a long-term losing streak at the Supreme Court. Several analysts on Tuesday said the ruling does not bode well for KSR International v. Teleflex, the other Federal Circuit patent ruling that is under challenge before the court this term, involving the test for determining whether an innovation is so obvious that it does not deserve patent protection.
Tony Mauro is the U.S. Supreme Court correspondent for Legal Times, a Recorder affiliate based in Washington, D.C. His e-mail address is [email protected].
