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DECLARATORY JUDGMENT ACTIONS AND
PATENT LICENSING
Patent litigation is expensive. It
can easily exceed $100,000. It is
likely to be significantly more.
Recently, the US Supreme Court
MedImmune v. Genentech, Inc.
changed the ground rules with govern
when a party may initiate a
declaratory judgment action, thereby
initiating patent litigation. Prior
law required that the initiating
party have a “reasonable
apprehension” of suit. Now, if the
initiating party can demonstration
that a patentee (patent holder)
asserts rights based upon the
identified ongoing or planned
activity of initiating party and
the initiating party contends it has
the right to engage in the activity
without a license to the patent
holder’s patent, then the initiating
party can file (initiate) a law suit
(declaratory judgment) against the
patent holder.
The
Court of Appeals for the Federal
Circuit, the final stop for most
patent disputes, recently applied
the Supreme Court decision and
remanded (returned) a District Court
decision that had refused to allow a
declaratory judgment action to be
commenced.
A
very practical outcome of the change
in ground rules is that a patent
hold may not simply approach a third
party and attempt licensing
discussions without triggering a
declaratory judgment. A promise not
to sue in not sufficient.
Note this same case was discussed in
the recent article entitled
Cease and Desist.
This issue was more recently
addressed by the Federal Circuit in
Merck & Co. v. Apotex. The
Court applied MedImmune and affirm
that the dispute must be definite
and concrete, touching the legal
relations of parties having adverse
legal interests: ... real and
substantial and admit of specific
relief through a decree of a
conclusive character, as
distinguished from an opinion
advising what the law would be upon
a hypothetical state of facts.
In the Merck Apotex dispute, the
Court found it could not provide any
realistic relief: even with prompt
action ... the final judgment sought
by Apotex cannot be provided in time
to be meaningful. Accordingly,
the Court concluded, the dispute
presented does not admit of specific
relief through a decree of a
conclusive character and , thus,
does not present a justiciable case
or controversey.
April 28, 2007 (Updated October 10,
2008)
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