The U.S. Supreme Court agreed yesterday to hear a case that will decide whether MedImmune Inc. has the right to sue a California competitor over a multimillion-dollar patent that the Gaithersburg drugmaker claims is illegal.
In addition to MedImmune's bottom line, the outcome could affect how the biotechnology industry operates as well as determine how intellectual property is protected in America.
"It's an important case because it will potentially broaden the number of licensees who can sue," said Robin L. Teskin, a Washington patent attorney who has followed the case since it began. "That's why the Supreme Court is deciding it, because they want to resolve issues in patent law ... that have broader importance, and this case does."
The Supreme Court only takes cases like this one if it "believes a substantial federal issue is raised," according to its public information office. About 8,000 such requests are filed every year, though the justices agree to hear only about 100 of them. MedImmune also is awaiting word from the Supreme Court on another of its appeals. This one involves a similar case involving Johnson & Johnson's Centocor subsidiary.
As the country continues its move away from manufacturing toward a knowledge-based economy, more attention is being paid to intellectual property.
And patent infringement cases - such as the one involving the wireless e-mail technology behind the BlackBerry - have been grabbing headlines.
At issue in the MedImmune case is a molecule-making method considered fundamental to the development of scores of drugs, including the company's billion-dollar Synagis respiratory treatment for infants.
Genentech Inc. holds the patent on the technology, and MedImmune wants to use it without having to pay a fee, as it does now.
Last year, the San Francisco company collected about $70 million in royalties for allowing companies to use its technique.
In 2003, MedImmune filed a lawsuit contending that the patent - known as "Cabilly II" - was obtained through "improper collusion" with a British business that held a similar patent, violating antitrust laws.
The suit also said the patent's 2018 expiration date amounted to an illegal 12-year extension of an earlier version, Cabilly I.
The patent on the first version was granted in 1989 and would have expired this year, allowing everyone access to the technology for free.
But earlier court rulings found no antitrust violation.
An opinion filed in October by the U.S. Court of Appeals for the Federal Circuit in Washington also found no basis for MedImmune to sue. That ruling cited a legal requirement that says "actual controversy" in the form of a breached agreement is needed to file suit.
Under that scenario, companies have no grounds to sue a patent holder if they are complying with the terms of the contract.
"If the Federal Circuit court's decision is allowed to stand, then companies like MedImmune face the difficult decision of either putting themselves in breach of a license agreement by refusing to pay royalties" or giving up their right to challenge "invalid or overreaching patent claims," said MedImmune spokeswoman Jamie P. Lacey.
Genentech, careful to point out that the patent's validity will not be determined by the high court, said it is "confident in our position that MedImmune, as a current licensee that is paying royalties, lacks standing to challenge the validity of the Cabilly patent in federal court."
Some biotechnology and pharmaceutical companies working with Genentech's molecule - called a monoclonal antibody - would prefer access to the technology without having to pay for it.
But they still want to know that their own patents will stand up to such challenges.
"One of the interesting things about patent law is many companies, depending on the day of the week, have different points of view on these issues," said Charles S. Barquist, a California attorney who represented the British company, Celltech R&D; Ltd., that was already cleared of collusion with Genentech.
If the high court decides MedImmune - and therefore others - should be able to sue over faulty patents, the case will be returned to trial court, which will again wrestle with the issue of this particular patent's validity.
But even if it's found legitimate, MedImmune has a backup plan: The company also claims its products do not infringe on the patent in the first place.
"It's an important case," MedImmune's New York attorney, Harvey Kurzweil, said.
"We're in a position where we've been paying royalties on a patent, which we believe we don't infringe [upon] and we believe is not valid. That's what's at stake."
The second Cabilly patent was rejected by the U.S. Patent and Trademark Office last fall. It's now the subject of a lengthy appeal.