The following is not meant to be legal advice, and is provided for information only.
In MedImmune v. Genentech, Genentech asserted that a respiratory drug product from MedImmune infringed on its patent. MedImmune agreed to take a license from Genentech, although it denied liability. MedImmune continued to pay royalties pursuant to its license agreement despite later filing a declaratory judgment action arguing that Genentech was not entitled to royalties because the patent was invalid, unenforceable, or not infringed.
Justice Scalia wrote for the majority. He emphasized that the actual controversy is the contractual dispute regarding MedImmune's obligations under the licensing agreement. MedImmune owed no royalties under the license agreement unless the underlying patent was valid and covered MedImmune's drug. While MedImmune contractually agreed to pay the royalties regardless of the patent's validity, agreeing to pay a royalty "until a patent claim has been held invalid by a competent body" does not prevent a licensee from questioning the patent's validity.
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