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12:00 AM
 | 
Oct 09, 2006
 |  BioCentury  |  Politics, Policy & Law

'Pay and sue' reaches high court

The U.S. Supreme Court heard oral arguments last week in MedImmune Inc. v. Genentech Inc., a case that could fundamentally affect the relative strength of IP owners and their licensees, and modify incentives for granting licenses.

In 1997, MEDI agreed to pay royalties on sales of its Synagis palivizumab vaccine for respiratory syncytial virus (RSV) as license payments for a group of patents owned by Genentech (DNA, South San Francisco, Calif.) covering antibody synthesis technology, including the Cabilly I patent (U.S. Patent No. 4,816,567) and several pending patents. In December 2001, when DNA's Cabilly II patent (U.S. Patent No. 6,331,415) was issued, it asked MEDI to pay royalties on it.

In 2002, MEDI sued DNA, seeking to have Cabilly II invalidated and thereby to eliminate its royalty obligations.

The Supreme Court is not considering the validity or ownership of the Cabilly patents, which have been the subject of extensive litigation (see BioCentury, Oct. 3, 2005). Rather, the case turns on MEDI's right to challenge the validity of Cabilly II.

MEDI's version of events, as related in its brief to the Supreme Court, is that it licensed the Cabilly patents because it "was a new company unable to afford extended litigation and unwilling to risk crippling infringement judgments,...

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