MedImmune v. Genentech, Part 3
The Federal Circuit’s reasonable-apprehension-of-suit test for declaratory judgment jurisdiction is no more. The Supreme Court’s MedImmune decision - especially footnote 11 - wipes it out.
The repercussions will be felt far beyond the “patent challenge by a non-repudiating licensee” context. For example, the complex regime for patent challenges and market entry by generic drug makers depends, in part, on the generic drug maker’s ability to get to court to challenge the validity/enforceability of one or more patents listed by the name drug maker in the FDA’s “Orange Book.” In January 2005, using the reasonable-apprehension-of-suit test, the Federal Circuit held that a generic drug maker could not bring a declaratory judgment action against the name brand drug maker - even after the generic drug maker had filed a certification with the FDA asserting the patent’s invalidity/unenforceability - once the name brand drug maker decided not to sue the generic during the 45-day window the statutory regime provides to the name for that purpose. According to the Federal Circuit, “[i]n order for this case to be one fit for judicial review, [the generic drug maker] Teva must be able to demonstrate that it has a reasonable apprehension of imminent suit.” Teva Pharmaceuticals USA, Inc. v. Pfizer, Inc., 395 F.3d 1324, 1333 (Fed. Cir. 2005) (emphasis in original). (Pfizer had, up to that point, used some fancy footwork to pit different generic drug makers against one another, thereby blocking any generic entry at all.)
One of the Federal Circuit cases the Supreme Court’s MedImmune opinion calls out for rejection, in footnote 11, is … you guessed it … this Teva v. Pfizer case.
What we now have, according to MedImmune, is this:
In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U. S. 270, 273 (1941), we summarized as follows: “Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
The Federal Circuit will be working this out, in the patent law context, for a number of years. Perhaps one benefit, from an incentives perspective, is that there now appears to be greater coincidence between the moment when potential willful infringement liability will have attached and the moment when declaratory judgment jurisdiction will lie.
Hi Joe:
I’m curious as to your thoughts on how the severity of the injunction faced by the licensee plays in the calculus of whether there is a case or controversy under the SCT’s standard announced in Medimmune. It seemed to me that the Court heavily relied on the fact that the not only did the licensee face the potiental for treble damages, but it also faced a “fatal injunction” (an injunction that the court described as taking away 80% of the licensee’s overall business and at one point in the opinion described as being “fatal”). Towards the end of fn 12, Scalia expressly relies on both of these factors as setting a boundary on how far the case or controversy scope extends. It seems to me that whether or not the potiental of an injunction will be deemed “fatal” to a licensee’s overall business or of sufficient severity to yield a case or controversy will be licensee dependent. Hence, we may now have an amorphous standard, and one that may, perhaps, favor small licensees that only have one product line.
I expect that with careful drafting in future license agreements, patentees can avoid the effect of Medimmune. BUt it does seem the the SCT changed the game and has upset long-settled practice in contravention of Justice Ginsburg’s caution in Warner-Jenkinson that the Court should tread carefully before doing so.
I also thought the coersion argument was intriguing given that when a party is faced with a discovery order from a court, it generally must either comply with the order or not comply and face a contempt sanction, and generally, can’t get an interlocutory appeal. I wonder whether the rationale of Medimmune will impact this long standing appeallate practice.
best regards,
Bob Matthews.
Comment by Bob Matthews — January 10, 2007 @ 7:42 am
Bob,
These are great questions about the nature and severity of the “coercion” the Court perceived here, and perceived retrospectively as having been at play in the Altvater case.
Like you, I’ll be keeping an eye on how the Court, and the lower courts, approach these questions. Lear no doubt looms, like a brooding omnipresence, over all these issues.
Joe
Comment by Joe — January 10, 2007 @ 9:13 am
Bob,
Another thought: The analogy of the MedImmune facts, including the risk of liability, to the Altvater case, suggests to me (although I admittedly have a pro-Lear outlook) a looser approach to “sufficient coercion” is the right one.
Joe
Comment by Joe — January 10, 2007 @ 9:19 am
[…] It was bound to happen. A federal trial court has held that the Supreme Court’s decision in MedImmune, especially footnote 11 thereof, abrogates the Federal Circuit’s longstanding, two-part “reasonable apprehension” test for declaratory judgment jurisdiction over patent infringement cases. (I stated the same conclusion the day after MedImmune issued.) […]
Pingback by The Fire of Genius » Hitting the MedImmune Highway — March 10, 2007 @ 10:00 am
[…] As predicted by The Fire of Genius and others, MedImmune did in fact throw out the Federal Circuit Court of Appeals ‘reasonable-apprehension-of-suit’ test for determining subject matter jurisdiction in actions for declaratory judgment. U.S. District Chief Judge Linda Reade left no doubt, stating: In MedImmune, Inc. v. Genentech, Inc., 127 S.Ct. 764 (2007), the Supreme Court abrogated the Federal Circuit Court of Appeals’ reasonable-apprehension test. See, e.g., MedImmune, 127 S.Ct. at 774 n. 11 (explaining how the reasonable-apprehension test runs afoul of numerous Supreme Court precedents).[T]he phrase ‘case of actual controversy’ in the [Declaratory Judgment] Act refers to the type of ‘Cases’ and ‘Controversies’ that are justiciable under Article III†of the Constitution. MedImmune, Inc. v. Genentech, Inc., 127 S.Ct. 764, 771 (2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937) […]
Pingback by Tech LawForum » MedImmune: ‘Substantial Controversy’ is the new ‘Reasonable Apprehension’ — March 12, 2007 @ 7:36 am
[…] Earlier today, the Federal Circuit took formal note of the fact that the Supreme Court’s January 2007 decision in MedImmune v. Genentech eliminated the Federal Circuit’s “reasonable apprehension of suit” test for declaratory judgment jurisdiction in a patent infringement case. (I blogged this point about MedImmune the day after the decision, here.) […]
Pingback by The Fire of Genius » Broken Arrowhead (or, a MedImmune follow-up) — March 26, 2007 @ 10:49 am