## Facts

- MedImmune, Inc., a biotechnology company, licensed certain Genentech/City of Hope patent rights under a 1997 agreement requiring royalties on “Licensed Products” that would infringe absent the license.
- The license covered an existing patent and a pending patent application concerning coexpression of immunoglobulin chains in recombinant host cells.
- In 2001, the pending application issued as the “Cabilly II” patent, and Genentech asserted that MedImmune’s product Synagis was covered and that royalties were due.
- MedImmune believed Cabilly II was invalid and unenforceable and that Synagis did not infringe; it viewed Genentech’s demand as a threat to enforce the patent and terminate the license if royalties were not paid.
- Because Synagis generated the majority of MedImmune’s revenue, MedImmune feared that a license termination and infringement suit could expose it to injunctive relief, treble damages, and attorney’s fees.
- MedImmune continued paying royalties under protest and filed suit seeking declaratory and related relief concerning patent validity, enforceability, noninfringement, and royalty obligations.
- The district court dismissed for lack of subject-matter jurisdiction, and the Federal Circuit affirmed, relying on precedent treating a licensee “in good standing” as unable to satisfy Article III’s case-or-controversy requirement.
- The Supreme Court granted certiorari to decide whether Article III permits declaratory relief without the licensee first breaching or terminating the license.

## Issues

1. Whether Article III and the Declaratory Judgment Act require a patent licensee to breach or terminate a license before seeking a declaratory judgment that the licensed patent is invalid, unenforceable, or not infringed.
2. Whether MedImmune preserved a contract-based claim that no royalties were owed because of invalidity, unenforceability, or noninfringement.
3. Whether the dispute presented a “substantial controversy” of sufficient immediacy and reality despite MedImmune’s continued royalty payments.

## Decision

- The Supreme Court reversed and remanded in an 8–1 decision authored by Justice Scalia.
- The Court held MedImmune preserved a contract claim that no royalties were owed due to invalidity, unenforceability, and noninfringement, not merely a freestanding patent-invalidity claim.
- The Court held Article III jurisdiction existed: a licensee need not repudiate the license or stop paying royalties to establish an “actual controversy.”
- Applying the traditional declaratory-judgment standard, the Court found adverse legal interests and sufficient immediacy and reality because nonpayment would likely trigger license termination and an infringement action with serious exposure.
- The Court emphasized that district courts retain discretion whether to grant declaratory relief even when jurisdiction exists; it decided only the jurisdictional question and left merits and discretionary questions for remand.

## Legal Principles

- Declaratory judgment jurisdiction turns on whether, under all the circumstances, there is a substantial controversy between parties with adverse legal interests of sufficient immediacy and reality to warrant declaratory relief.
- The case-or-controversy inquiry is not more demanding in patent declaratory judgment actions than in other fields.
- A plaintiff need not expose itself to infringement liability to challenge the basis for a credible enforcement threat; conduct taken to avoid threatened injury can be treated as coerced rather than voluntary for justiciability purposes.
- A patent licensee’s continued royalty payments under protest do not categorically eliminate an Article III controversy over patent validity, enforceability, scope, infringement, or resulting royalty obligations.
- Even when Article III is satisfied, declaratory relief is discretionary; a court may, but is not required to, issue a declaration of rights.

## Conclusion

The Court held that a patent licensee may seek declaratory relief on invalidity, unenforceability, or noninfringement while continuing to comply with and pay royalties under a license, because a credible threat of enforcement can create an Article III controversy without requiring the licensee to breach or terminate the agreement.


MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007)