Transcript Slide 1

MedImmune v. Genentech
FREDERICK F. CALVETTI
UNITED STATES COURT OF APPEALS FOR
THE FEDERAL CIRCUIT
PSYCHOLOGY
• Psychology of CAFC
•
’80’s Patent Pre-eminent
•
’90’s Notice Function of Claims
• CAFC Surprises
• Construction of Claims Determined by Judge –
Not Jury
PSYCHOLOGY OF CAFC
• 35 USC 112 Used to Restrict Equivalents
• means plus function – paragraph 6
• restricted to virtually embodiment
disclosed by inventor
• known equivalent must be disclosed in
specification (Valmont)
• exact function (Penwalt)
• corresponding structure linked in
specification (Braun Medical)
PSYCHOLOGY OF CAFC
• insubstantial change test (Valmont)
• identity of function (Chiminotta)
• written description – paragraph 1
• Genetic materials (Regents of
University of California)
• Predictability (Gentry Gallery, YBM)
• Dedication (Maxwell)
PSYCHOLOGY OF CAFC
• Doctrine of Equivalents restricted
• element by element analysis replaces
invention as a whole analysis (Warner
Jenkins/Hilton Davis)
• Presumption Amendment Generates
Prosecution History Estoppel (Warner Jenkins)
PSYCHOLOGY OF CAFC
• CAFC – No Surprise
• Absolute Bar Rule (Festo)
• CAFC Changed Settled Expectations of the Inventive
Community (Festo)
• U.S. Supreme Court Makes Doctrine of Equivalent
Friendlier Than CAFC But Narrowed Scope of
Protection/Devaluation of Patent Property Continues
with Elevated Supreme Court Interest
United States Supreme Court
• Medlmmune v. Genentech (January 9, 2007)
 Promising to pay royalties on patents that have not
been held invalid does not amount to a promise not to
seek a holding of their invalidity
 After Medlmmune, a licensee in good standing can
 initiate a declaratory judgment action to invalidate a
licensed patent.
 avoid liability for willful infringement by paying
royalties
MedImmune v. Genentech
 Product: MedImmune’s respiratory drug for children,
Synagis, which provides 80% of MedImmune’s sales
revenue
 Facts:
 MedImmune and Genentech enter a license on several
patents and a pending patent application, which issued
in 2001 as the Cabilly II patent
 Genentech informs MedImmune that Synagis was
covered by the Cabilly II patent, demanded
MedImmune pay royalties
MedImmune v. Genentech
 MedImmune pays royalties under protest and with
reservation of all of its rights to avoid risking treble
damages and attorney fees on Synagis
 Issue: whether the actual controversy requirement of
the Declaratory Judgment Act requires a patent
licensee to terminate or be in breach of its license
agreement before it can seek a declaratory
judgment that the underlying patent is invalid,
unenforceable, or not infringed
MedImmune, Inc. v. Genentech, Inc.,
127 S.Ct. 764 (2007)
Former Declaratory Judgment Standard:
Reasonable Apprehension of Imminent Suit
•
In a case of actual controversy . . . any court of the
United States, . . . may declare the rights and other legal
relations of any interested party. 28 U.S.C. § 2201(a)
•
CAFC developed a two-part inquiry to determine whether
there is an actual controversy . . .
1. an explicit threat or other action by the patentee which
creates a reasonable apprehension on the part of the
declaratory judgment plaintiff that it will face an
infringement suit; and
Former Declaratory Judgment Standard:
Reasonable Apprehension of Imminent Suit
2. present activity by the declaratory judgment plaintiff
which could constitute infringement, or concrete steps
taken with the intent to conduct such activity
Teva Pharma. USA, Inc. v. Pfizer, Inc.,
395 F.3d 1324, 1333 (Fed. Cir. 2005)

A declaratory judgment plaintiff must be able to
demonstrate that it has a reasonable apprehension of
imminent suit
Demise of the Reasonable Apprehension Test

We hold that a licensee was not required, insofar as
Article III is concerned, to break or terminate its license
agreement before seeking a declaratory judgment in
federal court that the underlying patent is invalid,
unenforceable, or not infringed
MedImmune, 127 S.Ct. at 776
Demise of the Reasonable Apprehension Test

The reasonable-apprehension-of-suit test also conflicts
with . . . Supreme Court cases where jurisdiction
obtained:

even though collision-victim defendant could not have
sued the declaratory-judgment plaintiff-insurer . . .

even though . . . the insured had given no indication
that he would file suit. . .

even after appellate affirmance of a judgment of
noninfringement, eliminating any apprehension of suit
where declaratory judgment claim of invalidity
Id. at 774 n. 11
CAFC post-MedImmune analysis:
SanDisk v. STMicroelectronics (March 27, 2007)


Background:
 During negotiations, ST presented an element-byelement claim analysis of SanDisk products
 District court found no actual controversy, applying
Teva v. Pfizer
CAFC
 Jurisdiction generally will not arise merely on the basis
that a party learns of the existence of a patent owned
by another or even perceives such a patent to pose a
risk of infringement without some affirmative act by the
patentee
Sandisk Corp. v. STMicroelectronics, Inc.,
82 USPQ2d 1225 (CAFC 2007)
CAFC post-MedImmune analysis:
SanDisk v. STMicroelectronics (March 27, 2007)

We hold only that where a patentee asserts rights under
a patent based on certain identified ongoing or planned
activity of another party, and where that party contends
that it has the right to engage in the accused activity
without license, an Article III case or controversy will
arise
CAFC post-MedImmune analysis:
Teva v. Novartis (March 30, 2007)

Background:

Teva filed an abbreviated new drug application
(ANDA) for generic Famvir

Novartis challenged Teva’s ANDA, based on 1 of 5
Famvir patents

Teva brought declaratory judgment action, District
Court dismissed under Teva v. Pfizer
CAFC post-MedImmune analysis:
Teva v. Novartis (March 30, 2007)

Other Considerations:

Novartis’ pending action against Teva, based on the
same technology:

related litigation involving the same technology and
the same parties is relevant in determining whether a
justiciable declaratory judgment controversy exists on
other related patents
Teva Pharms. USA, Inc. v. Novartis Pharms. Corp.,
82 USPQ2d 1173 (CAFC 2007)
CAFC post-MedImmune analysis:
Teva v. Novartis (March 30, 2007)

Possibility of future suits, because Novartis challenged
Teva’s ANDA on only 1 of the 5 patents:

If Teva is successful in defending the pending ‘937
infringement suit, it remains subject to four additional
infringement actions
CAFC post-MedImmune analysis:
Teva v. Novartis (March 30, 2007)

Federal Circuit:

In light of . . . MedImmune, Inc. v. Genentech, Inc.,
which finds that our declaratory judgment test for noninfringement or invalidity conflicts with its precedent,
we reverse

Under 35 U.S.C. § 271(e)(2), Novartis would have an
immediate justiciable controversy against Teva as
soon as Teva submitted the ANDA . . . the same action
should create a justiciable declaratory judgment
controversy for the opposing party
CAFC post-MedImmune analysis:
Teva v. Novartis (March 30, 2007)

The new test

A controversy is ripe if the question presented is fit for
judicial review, meaning it is entirely or substantially a
question of law and postponing a decision would work
a substantial hardship on the challenging party
MedImmune – Effect on Licensing

Licensor discourage licensees from challenging patent
validity

License provisions barring MedImmune-style suits by
licensee are likely precluded by Lear v. Adkins . . . but
may be not for non-repudiating licensees – Supreme
Court did not opine on this issue

Royalty rate jump in event of a patent challenge

Automatic termination on filing of patent challenge
MedImmune – Effect on Licensing


Policy is set against:

These prohibitions may be tantamount to licensee
estoppel (Lear)

Patent challenges are encouraged: Cardinal
Chemical v. Morton
Effect of this uncertainty:

Licensees may use threat of validity suit to push down
royalty
 a cap on liability
 and then bring a suit

Front-loaded license payments
MedImmune – Effect on Settlement

U.S. legal system strongly encourages settlement


Asahi Glass Co. v. Pentech Pharms, Inc.,
289 F. Supp. 2d 986 (N.D. Ill. 2003)
Res judicata precludes later challenges when suit is
dismissed with prejudice :

Licenses negotiated outside of litigation can be
challenged in court

Licenses negotiated through settlement are suit-proof.

Effect: licensors refuse any licensing deal until after
litigation, leading to more litigation?

Patent Misuse/Antitrust Consideration