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Licensed Unlicensed Requires Authentication Published by De Gruyter February 26, 2009

Biomedical and Biotechnology Licensing Issues after MedImmune

Bradley J. Olson
From the journal

Abstract

The U.S. Supreme Court's opinion in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 S. Ct. 764, 166 L. Ed.2d 604 (2007) created new licensing challenges for biomedical and biotechnology companies. At issue in MedImmune was whether Article III of the U.S. Constitution limiting jurisdiction of federal courts to just “Cases and Controversies,” as expressed in the Declaratory Judgment Act, 28 U.S.C. § 2201(a), requires a patent licensee to first terminate or breach its license agreement before it can seek a declaratory judgment that the underlying patent to the license is invalid, unenforceable, or not infringed. The MedImmune Court held that a patent licensee need not repudiate its licensing agreement and cease making royalty payments to satisfy the “actual controversy” requirement for filing a declaratory judgment action in order to challenge the validity of the licensed patent. Presented herein are suggested provisions whereby licensors in the biomedical and biotechnology fields can attempt to neutralize the licensee skewed effects of MedImmune. The suggested provisions include mechanisms to shift what triggers termination of the license; financial penalties on the licensee upon challenge or its success; and reserving the licensor's right to the licensor to drastically reduce the scope of the license upon challenge to the validity of the licensed patent if brought by the licensee. Subsequent legal challenge will likely be necessary to determine whether the suggested provisions and similar strategies will be enforceable in view of MedImmune and on public policy grounds as the Supreme Court expressly declined to rule whether a licensor may impose such conditions in a license as a condition for a license grant.

Published Online: 2009-02-26
Published in Print: 2008-November