Decision in Medimmune IP Case Gives More Power to Licensees

Here is what the blog, Patent Baristas, had to say about the case.  Jaffe Legal News offered these insights today...The decision, its editors say, will:  a. Shift Strength to Licensees The Court's decision shifts strength within a license agreement from the licensor to the licensee. "Prior to this decision, under the Federal Circuit's interpretation of Lear v. Adkins, a licensee faced with a licensed patent it believed was invalid or unenforceable would have to make the difficult choice between breaching the license and foregoing its challenge to the patent," says Joshua Rich, a partner with the intellectual property law firm McDonnell Boehnen Hulbert & Berghoff LLP (Chicago). Now, the licensee can have its cake and eat it too ” it can avoid the jeopardy of patent infringement damages by continuing to pay royalties, limiting its liability to only past royalties paid." b. Send a Message to USPTO "The Supreme Court's ruling that the lower courts erred in dismissing MedImmune's declaratory judgment complaint for lack of subject matter jurisdiction, may reflect the Supreme Court Justices' recent unsettling experience with patents, notably with the possible loss of the use of their Blackberry Wireless Handheld devices, that was narrowly averted by the last-minute settlement of the patent dispute between Research In Motion, Ltd., and NTP, Inc," says Timothy J. Vezeau, a partner in the Patent Litigation Practice at Katten Muchin Rosenman LLP (Chicago). "The Court may be signaling its concern that too many 'shaky' patents are being issued by the USPTO and that the public would benefit by facilitating Court challenges to patents by those with an economic interest in doing so, namely, patent licensees." c. Continue Trend of Supreme Court Reversing CAFC In the MedImmune ruling, the Supreme Court continued its recent trend of disagreeing with almost everything the Federal Circuit does in the Medimmune case. "The Court reversed not only the decision below but also the CAFC's GenProbe line of cases that prevented a licensee from seeking declaratory relief that a licensed patent was invalid," says Kevin E. Noonan, a partner with the intellectual property law firm McDonnell Boehnen Hulbert & Berghoff LLP (Chicago). "This put the licensee in a Catch 22, wherein it either paid royalties on a patent it considered invalid or not infringed, or refused to pay the royalties, breaching the license and being liable for treble damages and attorneys' fees if it did not prevail in a patent infringement lawsuit." d. Lead to More Settlements "The MedImmune decision will almost certainly change the landscape of patent licensing and could possibly lead to settlements of legal disputes in which the accused infringer takes a license," says Jonathan Hudis, a partner with intellectual property law firm, Oblon, Spivak, McClelland, Maier & Neustadt, P.C. (Alexandria, Va.). "The Supreme Court's majority opinion also shifts the negotiating balance from the licensor to the favor of the licensee. Not only will this have a significant impact on patent licensing negotiations, but it may spill over to impact copyright and trademark licensing as well." e. Open the Door to More Litigation In this important patent decision by the Supreme Court, the Court held that a patent licensee can raise, not only a contract claim under a threat of breach of a license agreement, but may also raise, pursuant to the Constitution, patent invalidity, unenforceability, and noninfringement, and that no royalties are owed under the license agreement. "This case opens the door for more patent litigation involving licensee/licensor disputes, as well as a new avenue for attacking patent validity," says Joseph Manak, Counsel with the intellectual property law firm Ostrolenk, Faber, Gerb & Soffen, LLP. -AMS