CAFC: Patent Licensee in Good Standing has No Standing for Declaratory Relief

MedImmune v. Centocor (Fed. Cir. 2005).

Centocor is the exclusive licensee of a patent on lymphocytic cells that produce chimeric immunoglobulins. (U.S. Patent No. 5,807,715). After a period of negotiations, MedImmune sub-licensed the patent and began paying royalties. Even after signing the agreement, MedImmune asserted to Centocor that it did not infringe and that the patent was unenforceable/invalid.  Centocor responded that “it expected MedImmune to continue to adhere to its license obligations.”

MedImmune then filed suit, asking for declaratory judgment that it owes no royalties. The district court, however, dismissed the case for lack of an actual controversy.  On appeal, the CAFC affirmed — finding Gen-Probe v. Vysis (Fed. Cir. 2004) dispositive.

In Gen-Probe, we considered the case of a licensee in good standing who sought a declaratory judgment that it was not infringing the licensed patent, and that the licensed patent was invalid. . . . [W]e determined that the license, “unless materially breached, obliterated any reasonable apprehension of a lawsuit,” and that once the licensor and licensee “formed the license, an enforceable covenant not to sue, the events that led to the formation [of the license] became irrelevant.”

MedImmune argued that Gen-Probe should not be followed because it is “inconsistent with Supreme Court Precedent and with prior Federal Circuit precedent.”  The CAFC rejected that argument — finding the cited opinions to be consistent with Gen-Probe.

From a policy perspective, the Court rejected MedImmune’s argument that Gen-Probe creates an unacceptable “Hobson’s choice.”

Every potential infringer who is threatened with suit, or who is sued, for patent infringement must decide whether to settle or fight. In short, the “Hobson’s choice” about which MedImmune complains arises not from Gen-Probe, but from Article III’s requirement that, before a district court exercises jurisdiction in a declaratory judgment suit, there must be an actual controversy between the parties. For the reasons set forth above, such a controversy does not exist here.

Dismissal affirmed.