SCOTUS Reverses MedImmune On Standing Grounds

On January 9, 2007, the Supreme Court issued its opinion in MedImmune, Inc. v. Genetech, Inc., No. 05-608. This case originally involved antitrust claims, but the high court's opinion was based on the standing requirements of Article III.

The patent licensee had brought a declaratory judgment action against the patent owner challenging the validity of a biotech patent and a violation of the Sherman Act based on an interference settlement between the patent owner and another biotechnology company. The Federal Circuit affirmed the district court's dismissal of the suit for lack of jurisdiction because a patent licensee in good standing cannot bring a declaratory judgment action to challenge a patent it had licensed. The Federal Circuit also rejected the patentee's theory that the interference settlement was per se illegal under the Sherman Act.

The Supreme Court's decision reversed the Federal Circuit's jurisdictional ruling but did not address the antitrust issue. The Court held that the "case or controversy" requirement did not require the licensee to materially breach the license agreement before challenging the licensed patent. Justice Scalia wrote: "The rule that a plaintiff must destroy a large building, bet the farm, or (as here) risk treble damages and the loss of 80 percent of its business, before seeking a declaration of its actively contested legal rights finds no support in Article III." The Court rejected the patent owners argument that the parties settled this dispute when they first entered into the licensing agreement and distinguished the common law rule that a party to a contract cannot at one and the same time challenge its validity and continue to reap its benefits. The Court left it up to the lower courts on remand to consider whether there were any prudential or merits-based arguments for denial of declaratory relief.