An Answer to Chief Justice Roberts' and Justice Ginsburg's Questions at Oral Argument in MedImmune, Inc. V. Genentech, Inc.

Abstract:     
This very short paper (three pages) addresses a question raised by Chief Justice Roberts and later Justice Ginsburg in oral argument in MedImmune, Inc v. Genentech, Inc. The Justices asked whether a patentee, having granted a license that is still in force, could seek a declaratory judgment that the licensed patent is valid, in order to dispel legal uncertainty surrounding the patent and demand a higher royalty rate. The oral argument produced no clear answer, but there is an answer: based on two well-established legal doctrines, such a dispute would not be justifiable. The first well-established doctrine is Article III's requirement of resolvability - that the requested judgment resolve a dispute without further litigation. A declaratory judgment of patent validity would not have that effect because of the second well-established doctrine - a rule of black-letter contract law under which the validity of a contract depends only on the existence of consideration, not its value or amount. A patentee-licensor with a declaratory judgment of validity in her pocket would have to sue the licensee again, this time for a declaratory judgment that the contract was voidable for mutual mistake. That claim would be doubtful; and even if it succeeded the court would have no basis for redetermining the royalty rate but would have to remit the parties back to private bargaining. Thus the putative declaratory judgment of validity would not finally resolve the dispute. In contrast, a licensee with a declaratory judgment of invalidity would simply stop paying royalties, while continuing to manufacture products covered by the invalid patent's claims. The patentee would have no basis for suing, whether for patent infringement (because an invalid patent cannot be infringed) or for breach of contract (because of total failure of consideration). There is thus an asymmetry in the availability of declaratory judgments to patentee-licensors and licensees when a patent license is in force, but it follows from well-established principles of Article III and contract law.

Keywords: MedImmune, Genentech, declaratory judgment, justiciability, case or controversy, patent, Article III, validity, reasonable apprehension

JEL Classifications: K21, L41, O31, O33, O34, O38

Working Paper Series