Patent Law's New Math: Medimmune + KSR ≥ Your License Agreement

MedImmune, Inc. v. Genentech, Inc. and KSR International Co. v. Teleflex Inc.

Combined, the decisions MedImmune, Inc. v. Genentech, Inc. and KSR International Co. v. Teleflex Inc. may very well become the catalysts for a patent litigation explosion. Who will drive this next wave?  Licensees seeking either an escape from their contracts and/or a downward renegotiation of their royalty rates.

MedImmune provides the vehicle, and KSR provides the fuel.

Under MedImmune, licensees no longer need to actually breach their license agreements in order to have standing to file declaratory judgment actions.  Instead, under MedImmune, they can initiate a lawsuit against the patent holder/licensor without incurring the risks previously associated with license non-compliance.

And now, after KSR, licensees can use obviousness to re-engage on the validity fight.  KSR gives creative licensees a lot of ammunition to attack patents.  Many licensees will read KSR as giving them a leg-up on the merits in any threatened litigation.  But before charging down this path, patent holders should review their licenses for the type of provisions that prevent a licensee from challenging the licensed patent in a future proceeding, or at least provide hard consequences for such a challenge.  Despite the force of MedImmune and KSR, such provisions remain, for now, enforceable, and may offer licensors a "safe harbor" in what could likely be a new round of litigation.  Nevertheless, there may be much to be gained by challenging a royalty bearing patent license. 

All this adds up to a potential new chapter in patent litigation--one where the pending actions are initiated by licensees and where patent holders have the most to lose.  That's a change to the patent litigation equation some may have thought previously solved and, under that scenario, patent law's new right answers have yet to be revealed.

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