IP Briefs: The Shifting Landscape of Patent Licensing - The MedImmune v. Genentech ruling provides a significant new protection to patent licensees and potential licensees - BioPharm International

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IP Briefs: The Shifting Landscape of Patent Licensing
The MedImmune v. Genentech ruling provides a significant new protection to patent licensees and potential licensees


BioPharm International
Volume 21, Issue 9

In the course of its analysis, the Supreme Court criticized the Federal Circuit test for declaratory judgment jurisdiction in patent cases. The Federal Circuit test required that there be both: (1) an explicit threat or other action by the patent holder that creates "a reasonable apprehension of imminent suit" and (2) current infringement activity or concrete steps taken towards infringement.3 According to the Supreme Court, its prior decisions allowing declaratory judgment jurisdiction when a licensee paid royalties under an injunction4 and when an appellate court affirmed non-infringement of the patent5 contradicted the Federal Circuit test.

Thus, as a result of this Supreme Court ruling, patent holders now can be sued by licensees in good standing and as by prospective licensees who fear a patent infringement suit. This ruling provides a significant new protection to patent licensees and potential licensees who believe that they are being unfairly targeted by patent holders.

FURTHER CHANGES

Three months after the MedImmune decision, the Federal Circuit further altered the patent landscape by holding that an offer to license a patent, in certain circumstances, may allow a declaratory judgment suit to determine patent validity and infringement—even if the patent holder promises not to sue. In SanDisk v. STMicroelectronics, 5 STMicroelectronics (ST) owned several patents that it wished to license to SanDisk. During the course of several meetings, ST offered to license its patents and presented in-depth analyses of SanDisk's infringement. During these negotiations, ST representatives stated that ST had "no plan whatsoever to sue SanDisk." SanDisk, however, concerned that ST might in fact sue, filed a declaratory judgment suit against ST asking the court to rule on the validity of the patents and whether they had been infringed.

Based on the MedImmune decision, the Federal Circuit abandoned its reasonable apprehension test and allowed SanDisk to bring its declaratory judgment suit. In the SanDisk decision, the Federal Circuit held that a "case or controversy" arises if a patent holder attempts to license its patent based on the activity or planned activity of a prospective licensee and if the prospective licensee contends that it does not require that license.

In spite of these rulings, the specific actions of a patent holder that would give rise to the right to file a declaratory judgment lawsuit are not yet well defined by the courts. It is now clear, however, that a prospective licensee does not need to risk an infringement suit by engaging in the identified activity before seeking a declaratory judgment. The concurring opinion in SanDisk pointed out that this decision implies that practically any offer by a patent holder to license a patent opens the patent holder to a declaratory judgment lawsuit.

In light of these recent decisions, patent holders must devise new strategies for patent enforcement and licensing. For instance, the concurring opinion in SanDisk suggested that holding negotiations under an existing confidentiality agreement may prevent a prospective licensee from being able to seek a declaratory judgment. It is still unclear, however, exactly how such a confidentiality agreement would affect a declaratory judgment suit, particularly since prospective licensees can now safely resist offers for confidential negotiations if they believe the patents to be invalid or not infringed, and licensees may file for declaratory judgments once the license is negotiated. Professionals representing licensors are now seeking to use various contract provisions in license agreements to impose adverse consequences if a licensee brings a declaratory judgment suit.

Jennifer Carter, PhD, is an associate in Perkins Coie LLP's licensing and technology group, Seattle, WA, 206.359.8069,

REFERENCES

1. MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007).

2. 28 U.S.C. 2201(a).

3. Altvater v. Freeman, 319 U.S. 359 (1943).

4. Cardinal Chem. Co. v. Morton Int. Inc., 508 U.S. 83 (1993).

5. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372 (Fed. Cir. 2007).


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