The CAFC has held on a number of occasions that a current licensee has no standing to sue for declaratory judgment because there is no immediate threat of being sued for patent infringement. However, this conclusion pushes against the Supreme Court’s 1969 decision in Lear v. Adkins which held that a public policy interest in invalidating bad patents was strong enough to warrant a limitations on a licensee’s ability to give up its right to challenge a patent’s validity. After MedImmune, a licensee, is appealing the dismissal of its DJ action and has presented the following question to the Supreme Court for review:
Does Article III’s grant of jurisdiction of "all Cases . . . arising under . . . the Laws of the United States," implemented in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a), require a patent licensee to refuse to pay royalties and commit material breach of the license agreement before suing to declare the patent invalid, unenforceable or not infringed?
Briefs are all in and oral arguments are scheduled for October 4, 2006.
The potential impact of this case should not be underestimated. A license agreement is generally thought of as a settlement of a dispute. If MedImmune is right, however, an ongoing license agreement could actually be a litigation ticket.
DDC's Two comments:
Although I didn't file a brief, I agree with much of the analysis of the two law professor briefs in support of the Respondent (Hricik & Cotter). In general, however, what's wrong with Professor Epstein's free-market approach -- allowing validity challenges be a negotiated contract term. Although the public has a strong interest in mooting invalid patents, it is rare a licensed patent has only one potential licensee and we now have a number of public interest organizations that are becoming experts of challenging bad patents through reexamination and litigation.
Post Lear decisions are a mess. Hopefully the Court will at least use this case as a vehicle for clarifying the law.
- Party Briefs:
- Amici in Support of Petitioner
- Amici in Support of Neither Party
- Amici in Support of Respondent
- Petitions Stage