- The Washington Times - Tuesday, January 9, 2007

The U.S. Supreme Court yesterday made it easier to challenge the patents of drug maker Genentech Inc. and other companies that receive royalties on their products.

Lawyers who participated in the lawsuit by MedImmune Inc. against Genentech Inc. said consumers are likely to pay lower prices for manufactured products after a series of lawsuits gets rid of questionable patents.

The case is MedImmune v. Genentech, 05-608.

“It should make prices go down because it facilitates challenges to invalid patents,” said Harvey Kurzweil, attorney for MedImmune.

However, some lawyers said the court’s ruling could discourage companies from risking large amounts of money to develop new products.

“It will be more difficult to protect your patent,” said Edward Reines, attorney for the American Intellectual Property Law Association.

Gaithersburg-based MedImmune was paying Genentech royalties for rights to make Synagis, a respiratory-infection treatment for infants.

MedImmune then filed a lawsuit to challenge whether Genentech’s patent for manufacturing the drug using recombinant DNA covered Synagis.

Genentech said in court documents that MedImmune could not challenge the patent while it was distributing the drug under a commercial license.

MedImmune argued the patent lawsuit should not interfere with its right to distribute the drug.

The company also said its business would be hurt severely if it was forced to stop selling Synagis while the lawsuit was pending. Synagis produces more than $1 billion a year in sales for MedImmune.

The court sided with MedImmune by an 8-to-1 vote.

“The rule that a plaintiff must destroy a large building, bet the farm or, as here, risk treble damages and the loss of 80 percent of its business” to sue in a patent case is not supported by the Constitution, Justice Antonin Scalia wrote for the majority.

The ruling supports critics of the patent system who say the government grants patents so easily that they impede new product development by making inventors easy targets for infringement lawsuits.

Erik Belt, an attorney who filed a brief in the case for the Boston Patent Law Association, said the court’s ruling would change the way licensing agreements are negotiated.

“There might be something in the license contract itself spelling out what happens” if a licensee sues to challenge patent rights, Mr. Belt said.

Possibilities could include a requirement of higher royalty payments if a licensee sues, he said.

Justice Clarence Thomas, who cast the only dissenting vote, said that MedImmune had no right to sue Genentech while their licensing agreement was in effect.

Major corporations that develop patents supported Genentech, saying that making it easier for licensees like MedImmune to challenge a patent would threaten thousands of patents and license agreements worth billions of dollars. General Electric, 3M, Procter & Gamble and DuPont filed court papers siding with Genentech.

The Bush administration supported MedImmune, telling the Supreme Court that invalid patents hurt efficient licensing, impede competition and undermine incentives for innovation.

Thomas F. Cotter, a University of Minnesota intellectual property law professor, said the ruling could strip many patent holders of their property rights through lawsuits.

“I would expect to see significantly more litigation,” Mr. Cotter said.

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