http://www.thefireofgenius.com/2007/01/10/medimmune-v-genentech-part-5/ Academic commentary about patent law, i.p. law, creativity, and more Mon, 06 Oct 2008 19:35:08 +0000 http://wordpress.org/?v=2.5 http://www.thefireofgenius.com/2007/01/10/medimmune-v-genentech-part-5/#comment-18072 Bryan Wed, 10 Jan 2007 18:44:25 +0000 http://www.thefireofgenius.com/2007/01/10/medimmune-v-genentech-part-5/#comment-18072 Aside from the legal arguments against such a clause, I wonder about the practical limitations on gaining agreement to such a clause. Isn't there some sort of economic theory of IP that would apply? :-) If a patentee tried to put such a clause into the agreement, what licensee would wholeheartedly agree? The licensing "cost" would seem to be so high that only a licensee who was absoutely, positively convinced of the validity of the patent would agree to it. Since that's so unlikely, it seems that it would be cheaper for the licensee to challenge the patent immediately, in the face of such a license term, rather than agree to the contract (unless the license terms were otherwise quite financially favorable). And what patentee will push the issue that far? Much better to leave the term out and hope for the best (i.e. a long-term, stable agreement with no challenge to the patent). On the other hand, why wouldn't a patentee push the issue? If there's no agreement, the potential licensee can challenge the patent and then produce the product (if the patent is invalidated). If there is an agreement (without the term), the licensee can now challenge the patent under MedImmune. I'm still thinking about the decision, but it has a definite "public policy" feel to it, where the Court is opening the door to weeding out weak patents because of the social cost of leaving them in place. Aside from the legal arguments against such a clause, I wonder about the practical limitations on gaining agreement to such a clause. Isn’t there some sort of economic theory of IP that would apply? If a patentee tried to put such a clause into the agreement, what licensee would wholeheartedly agree? The licensing “cost” would seem to be so high that only a licensee who was absoutely, positively convinced of the validity of the patent would agree to it. Since that’s so unlikely, it seems that it would be cheaper for the licensee to challenge the patent immediately, in the face of such a license term, rather than agree to the contract (unless the license terms were otherwise quite financially favorable). And what patentee will push the issue that far? Much better to leave the term out and hope for the best (i.e. a long-term, stable agreement with no challenge to the patent).
On the other hand, why wouldn’t a patentee push the issue? If there’s no agreement, the potential licensee can challenge the patent and then produce the product (if the patent is invalidated). If there is an agreement (without the term), the licensee can now challenge the patent under MedImmune.
I’m still thinking about the decision, but it has a definite “public policy” feel to it, where the Court is opening the door to weeding out weak patents because of the social cost of leaving them in place.

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