Interference Settlement Not Antitrust Violation

In Medimmune, Inc. v. Genentech, Inc., et al. (Fed. Cir. October 18, 2005), the court held that the settlement of disputes such as priority in patent interferences is not a presumptive violation of antitrust law:

[S]uch violation requires a showing of market power and other antitrust predicates. The antitrust posture that MedImmune urges for patent interferences can discourage if not prevent settlements, placing unnecessary burdens on the courts and the PTO. Priority determinations may raise complex questions of law and scientific fact, and the delays in their resolution by the PTO are notorious; settlement can, as here, expedite resolution of difficult issues. The per se or presumptive illegality urged by MedImmune for interference settlements is contrary to both precedent and policy, as recorded in the Antitrust Guidelines for the Licensing of Intellectual Property, 4 Trade. Reg. Rep. (CCH) ¶13,132, §2.2 (1995).

In this case, the United States Patent and Trademark Office (PTO) had declared an interference between Celltech's "Boss" patent and Genentech's "Cabilly II" application. After seven and a half years, the Board of Patent Appeals and Interferences decided priority in favor of the senior party Boss, holding that Cabilly had not established an actual reduction to practice before the Boss patent's British priority date. However, Genentech then filed a civil action in the United States District Court for the Northern District of California, in accordance with 35 U.S.C. §146.

During the subsequent litigation, a settlement agreement was reached whereby Genentech and Celltech agreed that the Cabilly II application was entitled to priority over the Boss patent, based in part on new evidence of the content of a draft patent application during the period leading to filing of the Genentech application. Genentech and Celltech also entered into a cross-license agreement that included a formula for sharing of royalties. The district court entered judgment on the parties' resolution of the issue of priority, and then directed the PTO to vacate its prior decision, revoke the Boss patent, and issue a patent on the Cabilly II application.

MedImmune unsucessfully argued that the interference settlement between Genentech and Celltech was collusive and fraudulent, and that this provided an independent basis for standing to attack the Cabilly II patent in a Declaratory Judgment Action.