[Ecommerce] Biotech firm fights to challenge 'bad patents'

[Michelle Childs]

http://www.theregister.co.uk/2006/10/09/medimmune_patent_challenge/
Biotech firm fights to challenge 'bad patents'
Landmark case could upend US law
By OUT-LAW.COM →
Published Monday 9th October 2006 14:49

Businesses based on the licensing of patented technologies could be able
to sue the owners of the patents while still using those patents if a
biotech firm wins its landmark US case. The case could upend the basis of
much US patent law.

Currently in the US, a company which licenses and uses a patented
technology cannot sue its owner claiming that the invention should not be
patented because the law says that a licence agreement means that the two
companies cannot be in dispute.

 One biotech firm, MedImmune, hopes to change that in a Supreme Court case
that has the patent world transfixed. It is claiming that it should be
allowed to challenge what it sees as "bad patents" held by Genentech.

Lower courts said that because MedImmune uses a piece of Genentech
technology under patent licence, it cannot challenge the patent. The law
treats the licence as the settlement of any dispute between the two
companies.

The Federal District Court ruled that no case was possible because there
is no "case of actual controversy" between the two companies. That
decision is being appealed to the Supreme Court, which heard oral
arguments last week.

MedImmune is arguing that cancelling its licence with Genentech would
either open it up to a patent infringement law suit, but discontinuing the
product based on the patent would cost them lost revenues of up to the $1
billion a year that its product earns the company.

While some argue that nobody is better positioned to assess whether or not
a patent is valid than a licensee, there are worries that a precedent set
by a MedImmune victory would create havoc. During the oral hearings one of
the judges, Anthony Kennedy, said that a result in favour of MedImmune
could "flood the courts" with cases.

Genentech is arguing that the courts cannot hear a case because they have
no jurisdiction where there is not a breach of contract or an actual
dispute between two companies. It claims that MedImmune is trying to use
the case as a testing ground for how courts would rule if it did break its
contract.

The US government is now involved in the case. The Solicitor General wrote
a brief to the court which seemed to support MedImmune. "Some patents are
invalid, and there is a strong federal policy in ridding the economy of
such patents," wrote Paul Clement.

Clement said licencees are well placed to judge the value and nature of
patents. Supporters of MedImmune's view hope that allowing licence holders
to take cases would help to weed out weak patents. Supporters of
Genentech's view, such as universities in the US, believe that building
litigation expenses into licences in order to cover the costs of future
cases would raise the cost of patent licences and of innovation.

A decision in the case is expected before next June.

Copyright =A9 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.


--
Michelle Childs -Head of European Affairs
Consumer Project on Technology in London
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