From a decision of the Supreme Court today, in MedImmune v. Genentech:
The rule that a plaintiff must destroy a large building, bet the farm, or (as here) risk treble damages and the loss of 80 percent of its business, before seeking a declaration of its actively contested legal rights finds no support in Article III.
There really is a context in which that makes perfect sense, and no, the plaintiffs are not (AFAIK) a barbarian horde.
Yonatan Zunger’s Blog 
Is “bet the farm” a legal term I’m unfamiliar with, or was it being used in its usual sense here? Seems like odd language for a Supreme Court justice. But perhaps they get bored writing such long decisions and feel the need to spice it up a bit.
Is “bet the farm” a legal term I’m unfamiliar with, or was it being used in its usual sense here? Seems like odd language for a Supreme Court justice. But perhaps they get bored writing such long decisions and feel the need to spice it up a bit.
Actually, it was meant literally. The case was where someone wanted to challenge the validity of some aspect of a contract, and the court ruled that he did not have to actually violate the contract (and be subject to the risk of the penalty for that if the courts held against him) before he had a ripe enough matter for a court to have jurisdiction. And had he violated the contract and lost, he would have in fact lost his farm.
Actually, it was meant literally. The case was where someone wanted to challenge the validity of some aspect of a contract, and the court ruled that he did not have to actually violate the contract (and be subject to the risk of the penalty for that if the courts held against him) before he had a ripe enough matter for a court to have jurisdiction. And had he violated the contract and lost, he would have in fact lost his farm.
(The first one, incidentally, is a similar case where the matter in dispute was whether someone’s lease allowed them to demolish an old stadium on the land… so really, no Mongol hordes)
(The first one, incidentally, is a similar case where the matter in dispute was whether someone’s lease allowed them to demolish an old stadium on the land… so really, no Mongol hordes)
Since this involves Genentech, I assume this case was IP related?
Since this involves Genentech, I assume this case was IP related?
Yup. MedImmune was licensing various patents from Genentech; they started a new product which Genentech claimed infringed on one of their patents, and pursuant to their existing agreement demanded royalties. MedImmune claimed that (a) no it didn’t infringe and (b) the patent in question isn’t valid anyway, and so challenged the patent in court. MedImmune did pay the royalties in question under protest, though, because if they didn’t Genentech threatened to cut off all of their other patent licenses, and basically shut down their business. This case answered the specific question of whether MedImmune has the right to challenge the validity of the patent, even though they are under a patent licensing agreement and paying royalties. Prior to this there was sort of an unofficial practice of no, where a licensing agreement was treated like a covenant not to sue, and there is a standing principle of common law that you can’t simultaneously enjoy the benefits of a contract while challenging its legality.
Here the court said that they could, in fact, sue. The covenant not to sue isn’t written in any contract and they couldn’t find any basis for it other than “other people didn’t sue.” The common-law part isn’t relevant; MedImmune isn’t challenging the legitimacy of the contract, they’re challenging the validity of a patent. (And thus, whether it’s covered by the terms of that contract) It came off to me as sort of a no-brainer, with most of the opinion full of footnotes explaining why the dissenting opinion (Justice Thomas alone) is nonsense. But apparently it’s big news in the IP law world, where a lot of people were making licensing agreements with some sort of implicit thought that doing so would be the right way to avoid all possible suits over patents.
Yup. MedImmune was licensing various patents from Genentech; they started a new product which Genentech claimed infringed on one of their patents, and pursuant to their existing agreement demanded royalties. MedImmune claimed that (a) no it didn’t infringe and (b) the patent in question isn’t valid anyway, and so challenged the patent in court. MedImmune did pay the royalties in question under protest, though, because if they didn’t Genentech threatened to cut off all of their other patent licenses, and basically shut down their business. This case answered the specific question of whether MedImmune has the right to challenge the validity of the patent, even though they are under a patent licensing agreement and paying royalties. Prior to this there was sort of an unofficial practice of no, where a licensing agreement was treated like a covenant not to sue, and there is a standing principle of common law that you can’t simultaneously enjoy the benefits of a contract while challenging its legality.
Here the court said that they could, in fact, sue. The covenant not to sue isn’t written in any contract and they couldn’t find any basis for it other than “other people didn’t sue.” The common-law part isn’t relevant; MedImmune isn’t challenging the legitimacy of the contract, they’re challenging the validity of a patent. (And thus, whether it’s covered by the terms of that contract) It came off to me as sort of a no-brainer, with most of the opinion full of footnotes explaining why the dissenting opinion (Justice Thomas alone) is nonsense. But apparently it’s big news in the IP law world, where a lot of people were making licensing agreements with some sort of implicit thought that doing so would be the right way to avoid all possible suits over patents.
Although I suppose this ruling would apply in the case of Mongol hordes as well. You wouldn’t have to wait until your fiefdom was pillaged and the king declared war before seeking permission to build a castle.
Although I suppose this ruling would apply in the case of Mongol hordes as well. You wouldn’t have to wait until your fiefdom was pillaged and the king declared war before seeking permission to build a castle.
Good point…
Good point…
Thanks.
How bad patents are dealt with is something that I try to keep an eye out for. I’ve seen enough bad software patents I’m wondering if it’s possible to write software any more that doesn’t fall under some crazy, ambiguous, awful patent.
It’s definitely fun when patent lawyers (that didn’t write it) can’t figure out what the patent is actually for.
Thanks.
How bad patents are dealt with is something that I try to keep an eye out for. I’ve seen enough bad software patents I’m wondering if it’s possible to write software any more that doesn’t fall under some crazy, ambiguous, awful patent.
It’s definitely fun when patent lawyers (that didn’t write it) can’t figure out what the patent is actually for.
…and surprise surprise, Thomas is a gigantic tool in this case, as with so many others. I wish Scalia were more consistent in his legal views, depending on whether they play into conservative interests or not; his opinions (as this one is) tend to be pretty good (and funny) when they’re not weighted down by baggage.
…and surprise surprise, Thomas is a gigantic tool in this case, as with so many others. I wish Scalia were more consistent in his legal views, depending on whether they play into conservative interests or not; his opinions (as this one is) tend to be pretty good (and funny) when they’re not weighted down by baggage.