Patent law has long been used as an incentive-based monopoly system for encouraging the development of science and technology. The government’s power to grant a legal monopoly in the form of a patent was originally expressed in the Constitution. Congress may grant exclusive rights “[t]o promote the [p]rogress of [s]cience and useful [a]rts, by securing for limited [t]imes to . . . [i]nventors the exclusive [r]ight to their . . . [d]iscoveries.”
Since its Constitutional foundation, United States patent law has evolved to thesystemweknowtoday. Claims,currentlythemetesandboundsoftheproperty right granted in the patent, were originally considered unn ecessary; the specification was the vital part of the patent. Similarly, patent prosecution and examination procedures were originally viewed as cumbersome to the government and thus were not rigorously applied. Not until the nineteenth century were examination procedures, similar to the burdensome ones employed today by the United States Patent and Trademark Office (“USPTO”), made part of the Patent Act.
One of the more drastic changes to patent law has arisen from a series of cases, originating with the U.S. Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc. In MedImmune, the Court allowed a licensee to bring a declaratory judgment action against a licensor without first repudiating the license. Additionally, in dicta, the Court obliterated the standard for bringing a declaratory judgment action in patent law cases.9Subsequent cases have interpreted the MedImmune decision broadly, effectively altering the negotiating stances for both sides of a licensing arrangement, and making it easier for a prospective licensee/accused infringer to bring a declaratory judgment action seeking a statement of noninfringement, invalidity, or unenforceability. This line of cases has left patent law and subsequently patent valuation in flux.
Part I of this paper will address relevant background information, including a brief discussion of the statutory requirements of patent law and the declaratory judgment act. Part II will discuss the MedImmune decision in detail. Part III will discuss the progeny of the MedImmune decision, highlighting six cases. Part IV will discuss how potential licensing relationships have been altered in light of MedImmune and its progeny. Finally, Part V is a brief conclusion.