The U.S. Court of Appeals for the Federal Circuit affirmed there is no "case or actual controversy" as required by the Declaratory Judgment Act to challenge the validity and enforceability of a patent where, at the time the licensee brought the declaratory judgment action and thereafter, the licensee honored and continued to honor its obligations under the license agreement. MedImmune, Inc. v. Genetech, Inc, Case Nos. 04-1300,-1384 (Fed. Cir. Oct. 19, 2005) (Newman, J.; dissenting in part by Clevenger, J.)
Genetech is owner of the Cabilly patents. Celltech owns the Boss patent. During prosecution of the Cabilly application, the U.S. Board of Patent Appeals and Interferences (the Board) declared an interference between the Boss patent and the Cabilly patent application. Priority was awarded to the Boss patent. Genetech filed a civil action in the district court where the parties were urged to settle the suit. Ultimately, the parties arrived at a cross-licensing settlement with Boss conceding priority to Cabilly. The court entered judgment and ordered the Board to vacate its decision, revoke the Boss patent and issue the Cabilly application as a patent. After the Board entered an order returning the Cabilly application to the examiner to consider information presented by Genetech, the examiner issued the Cabilly patent. The Board declared the Boss patent cancelled by operation of law.
MedImmune licensed the Cabilly patent and had also taken a license from Celltech under the Boss patent. After the Cabilly patent issued, Genetech advised MedImmune that its Synagis product was covered by the Cabilly patent and was subject to royalties in accordance with the terms of the license. MedImmune paid royalties under the license but filed a declaratory judgment action to have the Cabilly patent declared invalid and unenforceable, but it continued to pay license royalties. The district court dismissed the suit, citing Gen-Probe v. Vysis. MedImmune appealed, asserting that the Gen-Probe decision improperly resurrected licensee estoppel, a preemption doctrine that was abolished by the Supreme Court in Lear v. Adkins.
On appeal, the Federal Circuit did not find the Gen-Probe and Lear cases to be inconsistent, noting that as was the case in Gen-Probe, MedImmune assiduously avoided breach of the license agreement.
The Federal Circuit rejected MedImmune’s argument that public policy is served by permitting it to attack the Genetech patent and that licensee estoppel had been eliminated in the field of intellectual property as a matter of public policy; the Court noted the issue before it was declaratory judgment jurisdiction, not estoppel.
According to the Court, the Declaratory Judgment Act requires a "definite and concrete controversy," and the test to be applied is the "totality-of-the circumstances test." Declaratory judgment relief requires "both (1) a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit, and (2) present activity by the declaratory judgment plaintiff which could constitute infringement …."
The Court also stated, by continuing to pay royalties under the license, MedImmune avoided the apprehension of suit and could not show a definite and concrete controversy of sufficient immediacy to warrant declaratory judgment relief.
The Court also rejected MedImmune's argument Genetech misrepresented to the district court that it was entitled to priority, noting that priority was an issue in that litigation and therefore the concession did not constitute a misrepresentation.
The Federal Circuit found no error in the district court's refusal to consider MedImmune's argument that Genetech committed fraud during the prosecution of the Cabilly application based on its failure to present information to the examiner before the interference was declared. It dismissed the argument as not part of the pleadings and denied MedImmune leave to amend its complaint. The Federal Circuit noted:
A person not under reasonable apprehension of suit cannot overcome the absence of declaratory standing simply by challenging the patent prosecution and asserting fraud. There is neither statutory nor precedential authority for collateral attack on patent examination procedures, by a person who does not meet the requirement of declaratory judgment standing.
Finally, MedImmune requested that, should the Federal Circuit affirm the district court on the patent counts, it transfer the antitrust and unfair competition counts to the Ninth Circuit and argued the Federal Circuit did not have jurisdiction over these counts because they did not arise under the "patent laws." The Federal Circuit refused, explaining that it "would be contrary to [the] careful balance and efficient design for the Federal Circuit to decide part of an appeal and then, depending on the outcome of that part, to ship the residue to another circuit."
Judge Clevenger disagreed with the majority on this issue; he found that when dismissing those portions of MedImmune’s complaint arising under patent law, the district court "eliminate[d] all issues of patent law from MedImmune’s well-pleaded complaint and thus divest[d] [the Federal Circuit] of jurisdiction over the case" as to the antitrust and unfair competition issues.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
