Declaratory Judgment — Ripeness

The Supreme Court's decision yesterday in Medimmune, Inc. v. Genentech, Inc., No. 05-608 (U.S. Jan. 9, 2007), took a surprisingly liberal view of the ripeness of a dispute for case and controversy purposes. The case might be read as standing for the proposition that a party to a contract who is fully performing, but doesn't want to, can sue for a declaratory judgment that it need not perform further simply because, if it did stop performing, it could be sued by the other party. Petitioner Medimmune did not think royalties were owing under its agreement with Genentech. Nevertheless, even though it objected to doing so, it continued paying. It considered a letter from Genetech to be a threat to enforce the patent at issue, to terminate the license agreement, and to sue for patent infringement if royalty payments were not made as demanded. In other words, a typical contract situation. Medimmune made the payments and filed a declaratory judgment action that it really did not need to do so. The Court held that the dispute was ripe. It observed that "where threatened action by government is concerned, we do not require a plaintiff to expose himself to liability before bringing suit to challenge the basis for the threat." Of course, in that circumstance, personal liberty and all of the other trappings and sequelae of governmental action raise the stakes a bit. The Court reasoned that the same threat analysis was transferable to private civil actions. The Court ruled "that petitioner was not required, insofar as Article III is concerned, to break or terminate its 1997 license agreement before seeking a declaratory judgment in federal court that the underlying patent is invalid, unenforceable, or not infringed."

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