Currently in the US a company which licenses and uses a
patented technology cannot sue its owner claiming that the
invention should not be patented because the law says that a
licence agreement means that the two companies cannot be in
dispute.
One biotech firm, MedImmune, hopes to change that in a Supreme
Court case that has the patent world transfixed. It is claiming
that it should be allowed to challenge what it sees as 'bad
patents' held by Genentech.
Lower courts said that because MedImmune uses a piece of
Genentech technology under patent licence, it cannot challenge the
patent. The law treats the licence as the settlement of any dispute
between the two companies.
The Federal District Court ruled that no case was possible
because there is no "case of actual controversy" between the two
companies. That decision is being appealed to the Supreme Court,
which heard oral arguments last week.
MedImmune is arguing that cancelling its licence with Genentech
would either open it up to a patent infringement law suit but
discontinuing the product based on the patent would cost them lost
revenues of up to the $1 billion a year that its product earns the
company.
While some argue that nobody is better positioned to assess
whether or not a patent is valid than a licensee, there are worries
that a precedent set by a MedImmune victory would create havoc.
During the oral hearings one of the judges, Anthony Kennedy, said
that a result in favour of MedImmune could "flood the courts" with
cases.
Genentech is arguing that the courts cannot hear a case because
they have no jurisdiction where there is not a breach of contract
or an actual dispute between two companies. It claims that
MedImmune is trying to use the case as a testing ground for how
courts would rule if it did break its contract.
The US government is now involved in the case. The Solicitor
General wrote a brief to the court which seemed to support
MedImmune. "Some patents are invalid, and there is a strong federal
policy in ridding the economy of such patents," wrote Paul
Clement.
Clement said that licencees are well placed to judge the value
and nature of patents. Supporters of MedImmune's view hope that
allowing licence holders to take cases would help to weed out weak
patents. Supporters of Genentech's view, such as universities in
the US, believe that building litigation expenses into licences in
order to cover the costs of future cases would raise the cost of
patent licences and of innovation.
A decision in the case is expected before next June.
