Recent Significant Patent Law Decisions

By David Elkins

Intellectual property practitioners and owners are awaiting what could be a revolutionary decision from the United States Supreme Court in KSR International Co. v. Teleflex, Inc., a challenge to the Federal Circuit Court of Appeals' teaching-suggestion-motivation test for determining obviousness. In the meantime, two recent patent decisions - while perhaps not as sweeping in scope - merit attention. One decision will affect past and future patent licensing. The other may rein in claims of inducing infringement and spark an independent reason to seek opinions of counsel as to noninfringement and/or invalidity.

Freedom to Challenge Existing Licenses?

Continuing its recent interest in reviewing important Federal Circuit patent decisions, the United States Supreme Court shook up the world of patent licensing with its January 9, 2007 decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. __, 127 S. Ct. 764 (2007). The 8-1 decision, authored by Justice Scalia (Justice Thomas dissented), reversed prior Federal Circuit case law that held a patent licensee who was not in breach lacked the "case or controversy" necessary to bring a declaratory judgment action challenging the licensed patent.

The Legal Landscape Before MedImmune

The Supreme Court's landmark decision in Lear, Inc. v. Adkins, 395 U.S. 653 (1969), held that a patent licensee is not estopped from contesting the validity of a licensed patent. Federal Circuit decisions had held, however, that challenging a patent's validity under Lear required the licensee to (i) stop paying royalties, thereby breaching the license, and (ii) provide notice to the licensor that royalty payments have ceased because the relevant patent claims are invalid. Studiengesellschaft Kohle, M.B.H. v. Shell Oil Co., 112 F.3d 1561, 1568 (Fed. Cir. 1997). The Federal Circuit more pointedly held in Gen-Probe Inc. v. Vysis, Inc., 359 F.3d 1376, 1381 (Fed. Cir. 2004), that a licensee in good standing cannot establish a case or controversy regarding the validity, enforceability or scope of a patent because the license agreement "obliterate[s] any reasonable apprehension" that the licensee would be sued for infringement, thus precluding subject matter jurisdiction.

The Case Below

In 1997, MedImmune licensed an existing patent (Cabilly I) and a then-pending patent application, which in 2001 ripened into the Cabilly II patent. Genentech gave notice soon afterward that it believed MedImmune's Synagis drug was covered by the claims of the Cabilly II patent, and that Genentech expected MedImmune to start paying royalties for Synagis sales. MedImmune believed the patent to be invalid and...