MedImmune and Genentech have announced that they reached a settlement regarding their patent lawsuit over MedImmune’s best-selling drug Synagis®, which is used to prevent respiratory infections in infants.  “The parties advise the court that they have reached a settlement,” according to a telephone conference recorded on the docket in the U.S. District Court for the Central District of California.

Lawyers had wanted to see this fight continue in light of the interesting legal questions raised — and the pure amusement value — but litigants tend to not want to continue suits just to please lawyers.

The settlement follows a Supreme Court decision last year that allowed MedImmune to sue in an attempt to overturn a Genentech patent while MedImmune continued to pay royalties to use it. Medimmune, Inc. v. Genentech, Inc., et al. (S.Ct. No. 05–608).  The patent, U.S. Patent No. 6,331,415, covers a technology that uses cell cultures to manufacture human antibodies. MedImmune said Genentech had illegally obtained the patent by conspiring with a British biotech company.

Earlier, the Supreme Court ruled that licensees would have a chance to get out of bad license deals by challenging the validity of the underlying patents.  The case is about whether a company must stop paying royalties on a patent license to challenge the validity of the patent. MedImmune is paying licensing fees to Genentech for an antibody technology used in Synagis, while at the same time challenging Genentech’s patent in court.

In an 8-to-1 decision, the Supreme Court ruled that MedImmune could sue Genentech for patent infringement even though MedImmune continues to pay fees to Genentech to use the disputed technology to develop the drug Synagis.

Genentech argued that MedImmune had no case since it was not seeking an interpretation of its present contractual obligations since (1) there is no dispute that Synagis infringes the Cabilly II patent, thereby making royalties payable; and (2) because while there is a dispute over patent validity, the contract calls for royalties on an infringing product whether or not the underlying patent is valid.

The Court didn’t buy this since MedImmune “disputes its obligation to make payments under the 1997 License Agreement because [petitioner’s] sale of its Synagis product does not infringe any valid claim of the [Cabilly II] Patent.” App. 136. The Court also felt that the phrase “does not infringe any valid claim” (emphasis added) cannot be thought to be no more than a challenge to the patent’s validity, since elsewhere the amended complaint states with unmistakable clarity that “the patent is . . . not infringed by [petitioner’s] Synagis product and that [petitioner] owes no payments under license agreements with [respondents].”

MedImmune had said it would vigorously pursue its case in the lower court and Genentech said it remains confident in the validity of the patent.  They must have received their lawyers’ bills in the meantime.

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