Case Name: MedImmune, Inc. v. Genentech, Inc. et al
Case Cite: 549 U.S. 118 (2007)
Facts:
Genentech and the City of Hope (“Genentechâ€) owned technology for cell cultures used to make human antibodies protected by their U.S. Patent and U.S. Patent application. In 1997, MedImmune entered into a licensing agreement with Genentech for the antibodies protected by the U.S. patent and the U.S. patent application. When Genentech’s patent application issued into a patent, they asserted MedImmune’s drug, Synagis, was covered by this patent and demanded royalties under the licensing agreement. MedImmune complied with Genentech’s demands under the licensing agreement.
Procedural Posture:
MedImmune instituted a declaratory judgment action in the Central District of California alleging the subsequent issued patent was invalid, unenforceable, and not infringed by Synagis. The District Court dismissed the case for lack of subject matter jurisdiction and the United States Court of Appeals for the Federal Circuit affirmed. In its opinion, the Federal Circuit asserted jurisdiction in the context of the Declaratory Judgment Act requires: (1) a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity by the declaratory judgment plaintiff which could constitute infringement. It further held that not threat of apprehension of an infringement suit can be established by a non-repudiating licensee, which MedImmune was.
Holding: The Supreme Court reversed and remanded the Federal Circuit’s ruling.
Analysis:
The Supreme Court majority characterized the case as a contractual dispute, and held that the requirements of a case or controversy are met where payment of a claim is demanded as of a right and where payment is made, but where the involuntary or coercive nature of the exaction preserves the right to recover the sums paid or to challenge the legality of the claim. Finding that MedImmune’s compliance with the licensing agreement did not destroy the subject matter jurisdiction, the Court reasoned that the plaintiff is not required to expose himself to liability before bringing suit to challenge the basis of the threat. The plaintiff’s own action or inaction in ailing to violate the law eliminates the imminent threat of prosecution, but nonetheless does not eliminate Article III jurisdiction. MedImmune, as a licensee, therefore need not breach a license agreement prior to seeking a declaratory judgment action. Further the Court noted the mere promise to pay royalties under a license agreement does not prevent a licensee from challenging the validity of the underlying patent.
Justice Thomas in dissent argued that with limited exception, the Court has only found a case or controversy to exist in situations involving an identifiable action that causes an actual controversy, such as a contractual breach or a claim of infringement justifying an affirmative defense. Justice Thomas argued the Declaratory Judgment Act does not allow federal courts to give advisory rulings on the potential success of an affirmative defense, such as patent invalidity, before a cause of action has even accrued. Thomas stated that by extending a narrow exception involving coercive governmental power, the majority has conferred an anticipatory cause of action for private contractual disputes. Further Thomas stated now patent licensees have a free pass around Article III’s requirements. And without any limiting principle, the majority’s ruling could be extended to any case outside the patent context.
Case Cite: 549 U.S. 118 (2007)
Facts:
Genentech and the City of Hope (“Genentechâ€) owned technology for cell cultures used to make human antibodies protected by their U.S. Patent and U.S. Patent application. In 1997, MedImmune entered into a licensing agreement with Genentech for the antibodies protected by the U.S. patent and the U.S. patent application. When Genentech’s patent application issued into a patent, they asserted MedImmune’s drug, Synagis, was covered by this patent and demanded royalties under the licensing agreement. MedImmune complied with Genentech’s demands under the licensing agreement.
Procedural Posture:
MedImmune instituted a declaratory judgment action in the Central District of California alleging the subsequent issued patent was invalid, unenforceable, and not infringed by Synagis. The District Court dismissed the case for lack of subject matter jurisdiction and the United States Court of Appeals for the Federal Circuit affirmed. In its opinion, the Federal Circuit asserted jurisdiction in the context of the Declaratory Judgment Act requires: (1) a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity by the declaratory judgment plaintiff which could constitute infringement. It further held that not threat of apprehension of an infringement suit can be established by a non-repudiating licensee, which MedImmune was.
Holding: The Supreme Court reversed and remanded the Federal Circuit’s ruling.
Analysis:
The Supreme Court majority characterized the case as a contractual dispute, and held that the requirements of a case or controversy are met where payment of a claim is demanded as of a right and where payment is made, but where the involuntary or coercive nature of the exaction preserves the right to recover the sums paid or to challenge the legality of the claim. Finding that MedImmune’s compliance with the licensing agreement did not destroy the subject matter jurisdiction, the Court reasoned that the plaintiff is not required to expose himself to liability before bringing suit to challenge the basis of the threat. The plaintiff’s own action or inaction in ailing to violate the law eliminates the imminent threat of prosecution, but nonetheless does not eliminate Article III jurisdiction. MedImmune, as a licensee, therefore need not breach a license agreement prior to seeking a declaratory judgment action. Further the Court noted the mere promise to pay royalties under a license agreement does not prevent a licensee from challenging the validity of the underlying patent.
Justice Thomas in dissent argued that with limited exception, the Court has only found a case or controversy to exist in situations involving an identifiable action that causes an actual controversy, such as a contractual breach or a claim of infringement justifying an affirmative defense. Justice Thomas argued the Declaratory Judgment Act does not allow federal courts to give advisory rulings on the potential success of an affirmative defense, such as patent invalidity, before a cause of action has even accrued. Thomas stated that by extending a narrow exception involving coercive governmental power, the majority has conferred an anticipatory cause of action for private contractual disputes. Further Thomas stated now patent licensees have a free pass around Article III’s requirements. And without any limiting principle, the majority’s ruling could be extended to any case outside the patent context.