Following up on our May 30, 2007 posting, MedImmune has finally settled its lawsuit with Genentech over a patented component of Synagis, MedImmune’s best-selling drug, which is aimed at preventing respiratory infections in infants, according to a report by the Washington Post.  The settlement comes just over a year after the Supreme Court decision was issued allowing MedImmune to challenge the validity of the Genentech patent while continuing to pay royalties incurred in a license agreement with Genentech. 

No details of the settlement have been released thus far; however, the parties are reported to be filing a stipulation of dismissal in the next few weeks.

A petition has been filed with the U.S. Supreme Court, which challenges the constitutionality of the appointments of more than two-thirds of the USPTO’s board of patent appeals and interferences ("BPAI") judges, reported The National Law Journal.

The National Law Journal reported on the filing of the petition as follows:

The company’s petition, drafted by veteran high court litigator Robert Long of Washington’s Covington & Burling, contends that one of the three panel judges in its case was named to the board in violation of the Constitution’s appointments clause. Translogic Technology v. Dudas, No. 07-1303. . . .

Such a constitutional flaw, if legitimate, could call into question the hundreds of decisions worth billions of dollars in the past eight years. The flaw, discovered by highly regarded intellectual property scholar John Duffy of George Washington University Law School, could also afflict the appointment of nearly half of the agency’s trademark appeals judges.

According to The National Law Journal, forty of the sixty-one of the BPAI judges were appointed after March 29, 2000, which was the date when a law changing the appointment process came into effect.

The National Law Journal reported:

The Intellectual Property and Communications Reform Act of 1999, according to Duffy, was intended to give more authority and status to the director of the PTO, but also to keep the agency firmly within the Department of Commerce. A provision of the act transferred the power to appoint BPAI judges from the secretary of Commerce to the PTO director.

BPAI judges exercise "significant authority," argue Duffy, Long and others, and qualify as "inferior officers" under the appointments clause. The clause requires that inferior officers be appointed either by the president, the courts of law or heads of departments. The PTO director is not a head of a department.

Given the large number of judges appointed after March 2000, Duffy said, the odds are that the vast bulk of appeals since then had at least one invalidly appointed judge sitting on the panel.

With respect to the current petition, Long has is arguing that the Supreme Court should vacate the BPAI decision in the Translogic case; however, he denies that such an action by the Supreme Court would call into question all of the decisions by the BPAI since 2000. 

The National Law Journal states as follows:

[Long] contends that the de facto officer doctrine does not apply, and that the PTO’s claim — that failure to apply it would cast a cloud over "many thousands of Board decisions" — is inaccurate.

"Our position is this affects only decisions that are still subject to a direct appeal — those pending in the Federal Circuit or in the Supreme Court — a much smaller group. . . . "

We will continue to follow this matter as it develops, and keep you posted here at the California Biotech Law Blog.

The U.S. Supreme Court has postponed making a decision on whether or not to grant review on a case challenging the right of universities to enforce their own patent rights whileremaining immune from patent infringement lawsuits by private companies, reported Bernadette Tansey for SFGate.  The Court is requesting input from the Bush Administration legal representative before making a decision.

SFGate reported on the case as follows:

The plaintiff in the case, Biomedical Patent Management Corp., is asking the high court for a sweeping decision that would strip California’s immunity to patent infringement suits on grounds that the University of California routinely submits to federal court jurisdiction when it pursues damages and settlements from the private sector for alleged violations of its own patent rights. UC’s use of the patent system amounts to a waiver of the state’s immunity, the company maintains.

That argument was rejected by a San Francisco trial court judge and a federal appellate court, which cited prior Supreme Court rulings upholding the immunity of states from federal suit. That "sovereign immunity" of the states is based on the 11th Amendment of the U.S. Constitution, which limits the authority of the federal government over the states.

Each side to this case interpreted the action by the Court to seek Bush Administration input on the issue differently.  SF Gate reported:

[Andrew Dhuey, an attorney for the plaintiff] said the Supreme Court’s request for advice from the U.S. solicitor general on the case is "a very positive development."

"To be in the situation we’re in has drastically shortened the odds" that the high court will take up the case, Dhuey said.

Supervising Deputy Attorney General Karin Schwartz, who represents the state in the case, said the high court’s action may only mean that a few justices wanted additional information. The Supreme Court could deny review even if the solicitor general recommends it, she said.

This case, of course, raises an interesting public policy question: should universities be able to sue when they can’t themselves be sued by the same party they are suing?  While of course there is an argument that a state university is for the public good and is funded with taxpayer dollars, and therefore should be immune, but at the same time it seems fundamentally unfair and to permit the same immune institution to enforce its own intellectual property rights against third party private companies.  Aren’t technology transfer offices essentially acting as commercial institutions  engaging in commercial activities when they enter into licensing and other related transactions with private companies? Shouldn’t they be governed by the same rules as private companies?

I would be interested in hearing blog reader thoughts on this issue.  If you have an opinion that you would like to share, please write me and I’ll make your remarks available to all blog readers.

The Supreme Court declined yesterday to review a ruling by the U.S. Court of Appeals for the Federal Circuit that there is no constitutional right to access experimental drugs, reported the Associated Press. 

The California Biotech Law Blog reported on this case back in August 2007:

My best guess without reading the decision is that the Court felt that this is a policy issue that should be decided by Congress, which seems to be what was reported. . . .

It will be interesting to see what the Supreme Court says on this case, if it is indeed heard by the Court.  As those of us who have studied Constitution Law know, the concept of "rights" has been liberally interpreted on occasion, according to Constitutional scholars, to reach a particular result that seems "just" from a policy perspective.  Could the current Court do the same? 

I somehow doubt it.  We have a "conservative" Court in place right now, so I doubt this Court will be reading new rights into the Constitution.  Granted, I am not a Constitutional Scholar, but that is my take on the current Court.

The California Biotech Law Blog accurately predicted that the Court would decline to read a new right into the Constitution.  While the Court did not provide any explanation of its decision not to hear the case, it can be assumed that the Court agreed with the Federal Circuit’s decision: that no right to experimental drugs exists, even when the patient is terminally ill.

So where does the Court’s decision leave this issue?

Clearly, a ruling on the issue in one federal appellate court does not preclude other appellate courts from hearing cases on similar facts and ruling differently on the same issue.   Thus, the possibility exists that another appellate court will revisit the issue down the road.

Having said this, in my opinion, a more likely scenario is that Congress decides to take up the issue at some point in the future.  This issue raises some valid public policy issues, and Congress is arguably the most appropriate forum to address them. 

I continue to take the position that there should be some mechanism by which the terminally ill can access experimental medications that offer a real promise to treating the terminal illness.  While I agree that perhaps the moral arguments in favor of making experimental medications available to the terminally ill do not rise to the level of a Constitutional right, I still think those arguments are compelling.  Doesn’t this issue merit some additional debate?

The Medimmune v. Genentech case has received extensive media coverage since the Supreme Court decision earlier this year, but if you still have questions about the case and its anticipated impact, you should check out the recap published on IP Frontline by attorney Dennis Fernandez and college student Brian Bensch.

In their article "The Impact of MedImmune v. Genentech," the authors describe the potential implications of MedImmune as follows:

The major implication of MedImmune is that potential and current licensees will find it incredibly easier to file a declaratory judgment action. . . . After MedImmune, licensees will be able to recklessly challenge contracts knowing that the worst possible consequence is that the contract is upheld. . . .

[T]he implications of MedImmune are already taking shape. Since the MedImmune ruling only four months ago, the Federal Circuit Court of Appeals has begun to clarify the impact of MedImmune by dropping the "reasonable apprehension" clause of its subject matter jurisdiction test in its decision in SanDisk Corporation v. STMicroelectronics, Inc. . . .

 [I]n its decision on March 26 of this year, the CAFC established a new test that "holds that "where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license," the party may bring a declaratory judgment action."

In the end, the authors conclude that the impact of the ruling will be as follows:

[T]he Supreme Court’s MedImmune decision weakened the stability of both future and current licensing agreements. While the federal circuit’s precedent had been rather unambiguous, the Supreme Court accepted the circularly reasoning and exaggerated risk claimed by MedImmune and allowed it to file for declaratory judgment relief against its licensor without first ending their licensing agreement. The decision gives a blank check to licensees to challenge their licensor on patent invalidity charges if they feel they have any chance at success.

As a licensing attorney looking at this case and the subsequent San Disk ruling, I can’t help but wonder if the impact of these decisions is really going to be as severe as legal commentators are predicting.  While certainly this line of cases enables licensees to challenge licenses more easily, I question whether this will really happen with the kind of frequency you might expect from the commentary.  Is it possible that they are looking at these cases from litigator’s perspective rather than considering the business realities that would often caution against souring an otherwise cordial business relationship?

The vast majority of licensing negotiations are not done at the end of a big stick, and that there are generally sound business reasons to maintain a good relationship with the other side of the negotiating table.  While it is true that these cases make it easier for licensees to challenge a licensing relationship, I question whether it will make good business sense for licensees to do so as frequently as it has been suggested they will do.  Will licensors really want to do deals with licensees who have challenged other licensing agreements with third parties?  Will licensors really want to develop relationships with licensees who have challenged  other licensing arrangements with prior licensors? 

In the end, I suspect that the application of these cases will depend largely on the realities of the business world.  I find it hard to believe that regularly challenging license agreements will ultimately prove to be a good business strategy as the dust settles on these decisions.  I anticipate that in the end declaratory judgments will be used a little more judiciously to challenge relationships that have already soured, in much the same way that litigation and the threat of litigation have been used prior to the MedImmune ruling.  When a relationship can be managed outside of the courtroom, I continue to believe that, despite the hype to the contrary, the average licensee is going to stick with negotiation and stay away from the courts.