The Supreme Court agreed to consider allowing a lawsuit by MedImmune Inc. that seeks to end royalties the company pays on its drug Synagis to go forward. The Court agreed to review a Federal Circuit decision that a licensee may not use a declaratory judgment action to challenge the validity of the licensed patent where the licensee is paying royalties and observing the terms of the patent license agreement.
The Federal Circuit ruling rejected the view that licensee rights established under Lear v. Atkins, 395 U.S. 653 (1969), permit the validity challenge, stating that this case is governed not by the bar against licensee estoppel, but by the Constitution’s requirement of a case or controversy.
MedImmune, Inc., a licensee of a patent owned by Genentech, Inc., sought a declaratory action to challenge the validity and enforceability of the licensed patent on various grounds flowing from the settlement of a patent interference between Genentech and Celltech R&D, Ltd. The U.S. District Court held that because MedImmune continues to comply fully with the license terms, leaving no possibility of infringement suit or license cancellation by Genentech, there is no “case of actual controversy” as required by the Declaratory Judgment Act, 28 U.S.C. §2201. The district court also dismissed MedImmune’s antitrust and unfair competition counts claiming that Genentech illegally obtained a patent on an antibody synthesis technology used in the production of Synagis, a MedImmune drug that prevents certain respiratory infections in babies.
The U.S. Court of Appeals for the Federal Circuit affirmed (See MedImmune Inc. v. Genentech, 04-1300, -1384) holding that:
The settlement of disputes such as priority in patent interferences is not a presumptive violation of antitrust law; such violation requires a showing of market power and other antitrust predicates. A patent does not of itself confer market power or a presumption thereof for purposes of the antitrust laws. See C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1368 (Fed. Cir. 1998) (“It is not presumed that the patent-based right to exclude necessarily establishes market power in antitrust terms.”); Abbott Labs., 952 F.2d at 1354 (Fed. Cir. 1991) (“A patent does not of itself establish a presumption of market power in the antitrust sense.”); American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1367 (Fed. Cir. 1984) (“patent rights are not legal monopolies in the antitrust sense of the word”); Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 18 (1984) (“any inquiry into the validity of a tying arrangement must focus on the market or markets in which the two products are sold, for that is where the anticompetitive forcing has its impact”); In re Independent Service Organizations Antitrust Litigation, 203 F.3d 1322, 1329 (Fed. Cir. 2000) (“patent alone does not demonstrate market power”); Independent Ink, Inc. v. Illinois Tool Works, Inc. 396 F.3d 1342, 1348 (Fed. Cir. 2003) (“the Supreme Court has held that there is a presumption of market power in patent tying cases”), cert. granted, 125 S. Ct. 2937 (June 20, 2005); Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition and its Practice §10.3 (3d ed. 2005) (“most patents confer absolutely no market power on their owners”).
MedImmune claims that Genentech violated antitrust law by colluding with Celltech in obtaining an extension on the antibody production patent, and MedImmune is seeking to have Genentech’s patent declared invalid.
The U.S. Patent and Trademark Office is also reviewing Genentech’s Cabilly patent under concurrent proceedings for an Inter Partes Reexamination (RE Appl. No. 90/007,542) and an Ex Parte Reexamination (RE Appl. No. 90/007,859). In an earlier ruling, the U.S. Patent and Trademark Office (USPTO) issued an obviousness-type double-patenting rejection and a “Schneller-type” double patenting rejection on the Genentech patent indicating that the patent, awarded in 2001, covered basically the same invention as an earlier Genentech patent that was set to expire next March.
For background, on March 25, 1983, Celltech filed in the United Kingdom a patent application directed to methods of making recombinant antibodies and antibody fragments, together with vectors and host cells useful in these processes. Celltech filed a related patent application in the United States, which issued as U.S. Patent No. 4,816,397 (“the Boss Patent”). On April 8, 1983, about two weeks after Celltech’s original U.K. filing, Genentech filed a United States patent application directed to similar technology, which issued as U.S. Patent No. 4,816,567 (“the Cabilly Patent”). The Boss Patent and the Cabilly Patent issued on the same day, and both were scheduled to expire on March 28, 2006.
The USPTO ultimately revoked the Boss Patent and issued a new United States patent, U.S. Patent No. 6,331,415 to Genentech (“the New Cabilly Patent”). All the claims originally issued in the revoked Boss Patent subsequently issued in the New Cabilly Patent. As a result, while the disputed invention was originally scheduled to pass into the public domain in 2006 upon expiration of the Boss Patent, it is now owned exclusively by Genentech until 2018, which is when the New Cabilly Patent is scheduled to expire.
MedImmune is now claiming that Genentech and Celltech conspired improperly to secure for themselves, through 2018, a dominant and exclusive position in the recombinant antibody field. As we’ve said before, it’s too early to try to predict the outcome so it is not clear yet if companies developing recombinant antibody-based products will become free and clear of the Boss Patent and the Cabilly Patent in 2006.
