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Court Rules for MedImmune in Patent Case

The Supreme Court Tuesday sent a patent dispute involving pharmaceutical developer MedImmune Inc. and Johnson & Johnson subsidiary Centocor Inc. back to a lower federal court, a step that will likely allow MedImmune to challenge a Centocor patent while continuing to pay royalties on it.

The court's ruling was expected, as the case presents the same issues as a dispute between MedImmune and Genetech Inc. that the Supreme Court resolved in MedImmune's favor Jan. 9. At issue in both cases is whether a company licensing a patent from another company must take the risk of violating the license contract in order to challenge the validity of the patent.

Companies such as MedImmune are generally reluctant to break a patent license, even if they consider the patent invalid, because they can be subject to injunctions barring the sale of the licensed product. In MedImmune's case, it licensed patents from Genentech and Centocor for its top-selling child respiratory drug Synagis, which has accounted for 80 percent of its sales in recent years.

Nevertheless, the Court of Appeals for the Federal Circuit has previously held that a company licensing a patent had to risk infringing the patent in order to challenge it in court. The Supreme Court returned the Centocor case to that court to be resolved consistent with the Supreme Court's ruling in the Genentech case.

Harvery Kurzweil, an attorney for MedImmune, said the appeals court would likely allow its challenge to Centocor's patent to proceed in district court.

The case is MedImmune Inc. v. Centocor Inc., 05-656.

MedImmune's shares dropped 21 cents to $35.16 in afternoon trading on the Nasdaq Stock Market, while Johnson & Johnson shares fell 10 cents to $66.54 on the New York Stock Exchange and Genentech shares rose $1.16 to $87.99 on the NYSE.