In what is widely being heralded as a crucial test case for biotech companies, the U.S. Supreme Court has overturned an appeals court ruling that forbid MedImmune from suing over a patent as long as it was paying user fees to the patent holder. Other courts held that licensing agreements--an increasingly common strategy employed in biotechnology--created a covenant against suing. But the Supreme Court ruled 8-1 that no such covenant exists, allowing the company that licensed the patent to sue to have that same patent overturned. "Promising to pay royalties on patents that have not been held invalid does not amount to a promise not to seek a holding of their invalidity," Justice Antonin Scalia wrote on behalf of the majority.
Some experts warned that the decision is likely to prompt all companies engaged in licensing to scrutinize their partners far more closely than they have in the past, possibly adding new costs to the licensing process.
- read the report on the decision from The Baltimore Sun
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