Justice SCALIA delivered the opinion of the Court.
We must decide whether Article III's limitation of federal courts' jurisdiction to "Cases" and "Controversies," reflected in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a), requires a patent license to terminate or be in breach of its license agreement before it can seek a declaratory judgment that the underlying patent is invalid, unenforceable, or not infringed.
Because the declaratory-judgment claims in this case were disposed of at the motion-to-dismiss stage, we take the following facts from the allegations in petitioner's amended complaint and the unopposed declarations that petitioner submitted in response to the motion to dismiss. Petitioner MedImmune, Inc., manufactures Synagis, a drug used to prevent respiratory tract disease in infants and young children. In 1997, petitioner entered into a patent license agreement with respondent Genentech, Inc.
In December 2001, the "coexpression" application covered by the 1997 license agreement matured into the "Cabilly II" patent. Soon thereafter, respondent Genentech delivered petitioner a letter expressing its belief that Synagis was covered by the Cabilly II patent and its expectation that petitioner would pay royalties beginning March 1, 2002. Petitioner did not think royalties were owing, believing that the Cabilly II patent was invalid and unenforceable,
Petitioner sought the declaratory relief discussed in detail in Part II below. Petitioner also requested damages and an injunction with respect to other federal and state claims not relevant here. The District Court granted respondents' motion to dismiss the declaratory-judgment claims for lack of subject-matter jurisdiction, relying on the decision of the United States Court of Appeals for the Federal Circuit in Gen-Probe Inc. v. Vysis, Inc., 359 F.3d 1376 (2004). Gen-Probe had held that a patent licensee in good standing cannot establish an Article III case or controversy with regard to validity, enforceability, or scope of the patent because the license agreement "obliterate[s] any reasonable apprehension" that the licensee will be sued for infringement. Id., at 1381. The Federal Circuit affirmed the District Court, also relying on Gen-Probe. 427 F.3d 958 (2005). We granted certiorari. 546 U.S. 1169, 126 S.Ct. 1329, 164 L.Ed.2d 46 (2006).
At the outset, we address a disagreement concerning the nature of the dispute at issue here — whether it involves only a freestanding claim of patent invalidity or rather a claim that, both because of
Respondents contend that petitioner "is not seeking an interpretation of its present contractual obligations." Brief for Respondent Genentech 37; see also Brief for Respondent City of Hope 48-49. They claim this for two reasons: (1) because there is no dispute that Synagis infringes the Cabilly II patent, thereby making royalties payable; and (2) because while there is a dispute over patent validity, the contract calls for royalties on an infringing product whether or not the underlying patent is valid. See Brief for Respondent Genentech 7, 37. The first point simply does not comport with the allegations of petitioner's amended complaint. The very first count requested a "DECLARATORY JUDGMENT ON CONTRACTUAL RIGHTS AND OBLIGATIONS," and stated that petitioner "disputes its obligation to make payments under the 1997 License Agreement because [petitioner's] sale of its Synagis® product does not infringe any valid claim of the [Cabilly II] Patent." App. 136. These contentions were repeated throughout the complaint. Id., at 104, 105, 108, 147.
As to the second point, petitioner assuredly did contend that it had no obligation under the license to pay royalties on an invalid patent. Id., at 104, 136, 147. Nor is that contention frivolous. True, the license requires petitioner to pay royalties until a patent claim has been held invalid by a competent body, and the Cabilly II patent has not. But the license at issue in Lear, Inc. v. Adkins, 395 U.S. 653, 673, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969), similarly provided that "royalties are to be paid until such time as the `patent ... is held invalid,'" and we rejected the argument that a repudiating licensee must comply with its contract and pay royalties until its claim is vindicated in court. We express no opinion on whether a nonrepudiating
Respondents further argue that petitioner waived its contract claim by failing to argue it below. Brief for Respondent Genentech 10-11; Tr. of Oral Arg. 30-31. The record reveals, however, that petitioner raised the contract point before the Federal Circuit. See Brief for Plaintiff-Appellant MedImmune, Inc., in Nos. 04-1300, 04-1384 (CA Fed.), p. 38 ("Here, MedImmune is seeking to define its rights and obligations under its contract with Genentech — precisely the type of action the Declaratory Judgment Act contemplates"). That petitioner limited its contract argument to a few pages of its appellate brief does not suggest a waiver; it merely reflects counsel's sound assessment that the argument would be futile. The Federal Circuit's Gen-Probe precedent precluded jurisdiction over petitioner's contract claims, and the panel below had no authority to overrule Gen-Probe.
The Declaratory Judgment Act provides that, "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought."
Aetna and the cases following it do not draw the brightest of lines between those declaratory-judgment actions that satisfy the case-or-controversy requirement and those that do not. Our decisions have required that the dispute be "definite and concrete, touching the legal relations of parties having adverse legal interests"; and that it be "real and substantial" and "admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Id., at 240-241, 57 S.Ct. 461. In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 S.Ct. 826 (1941), we summarized as follows: "Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."
There is no dispute that these standards would have been satisfied if petitioner had taken the final step of refusing to make royalty payments under the 1997
Our analysis must begin with the recognition 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 — for example, the constitutionality of a law threatened to be enforced. The plaintiff's own action (or inaction) in failing to violate the law eliminates the imminent threat of prosecution, but nonetheless does not eliminate Article III jurisdiction. For example, in Terrace v. Thompson, 263 U.S. 197, 44 S.Ct. 15, 68 S.Ct. 255 (1923), the State threatened the plaintiff with forfeiture of his farm, fines, and penalties if he entered into a lease with an alien in violation of the State's anti-alien land law. Given this genuine threat of enforcement, we did not require, as a prerequisite to testing the validity of the law in a suit for injunction, that the plaintiff bet the farm, so to speak, by taking the violative action. Id., at 216, 44 S.Ct. 15. See also, e.g., Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 S.Ct. 303 (1926); Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 S.Ct. 714 (1908). Likewise, in Steffel v. Thompson, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974), we did not require the plaintiff to proceed to distribute handbills and risk actual prosecution before he could seek a declaratory judgment regarding the constitutionality of a state statute prohibiting such distribution. Id., at 458-460, 94 S.Ct. 1209. As then-Justice Rehnquist put it in his concurrence, "the declaratory judgment procedure is an alternative to pursuit of the arguably illegal activity." Id., at 480, 94 S.Ct. 1209. In each of these cases, the plaintiff had eliminated the imminent threat of harm by simply not doing what he claimed the right to do (enter into a lease, or distribute handbills at the shopping center). That did not preclude subject-matter jurisdiction because the threat-eliminating behavior was effectively coerced. See Terrace, supra, at 215-216,
Supreme Court jurisprudence is more rare regarding application of the Declaratory Judgment Act to situations in which the plaintiffs self-avoidance of imminent injury is coerced by threatened enforcement action of a private party rather than the government. Lower federal courts, however (and state courts interpreting declaratory-judgment acts requiring "actual controversy"), have long accepted jurisdiction in such cases. See, e.g., Keener Oil & Gas Co. v. Consolidated Gas Util. Corp., 190 F.2d 985, 989 (C.A.10 1951); American Machine & Metals, Inc. v. De Bothezat Impeller Co., 166 F.2d 535 (C.A.2 1948); Hess v. Country Club Park, 213 Cal. 613, 614, 2 P.2d 782, 783 (1931); Washington-Detroit Theater Co. v. Moore, 249 Mich. 673, 675, 229 N.W. 618, 618-619 (1930); see also Advisory Committee's Note on Fed. Rule Civ. Proc. 57, 28 U.S.C. App., p. 790.
The only Supreme Court decision in point is, fortuitously, close on its facts to the case before us. Altvater v. Freeman, 319 U.S. 359, 63 S.Ct. 1115, 87 S.Ct. 1450 (1943), held that a licensee's failure to cease its payment of royalties did not render nonjusticiable a dispute over the validity of the patent. In that litigation, several patentees had sued their licensees to enforce territorial restrictions in the license. The licensees filed a counterclaim for declaratory judgment that the underlying patents were invalid, in the meantime paying "under protest" royalties required by an injunction the patentees had obtained in an earlier case. The patentees argued that "so long as [licensees] continue to pay royalties, there is only an academic, not a real controversy, between the parties." Id., at 364, 63 S.Ct. 1115. We rejected that argument and held that the declaratory-judgment claim presented a justiciable case or controversy: "The fact that royalties were being paid did not make this a `difference or dispute of a hypothetical or abstract character.'" Ibid. (quoting Aetna, 300 U.S., at 240, 57 S.Ct. 461). The royalties "were being paid under protest and under the compulsion of an injunction decree," and "[u]nless the injunction decree were modified, the only other course [of action] was to defy it, and to risk not only actual but treble damages in infringement suits." 319 U.S., at 365, 63 S.Ct. 1115. We concluded that "the requirements of [a] case or controversy are met where payment of a claim is demanded as of right and where payment is made, but where the involuntary or coercive nature of the exaction preserves the right to recover the sums paid or to challenge the legality of the claim." Ibid.
Respondents assert that the parties in effect settled this dispute when they entered into the 1997 license agreement. When a licensee enters such an agreement, they contend, it essentially purchases an insurance policy, immunizing it from suits
Respondents appeal to the common-law rule that a party to a contract cannot at one and the same time challenge its validity and continue to reap its benefits, citing Commodity Credit Corp. v. Rosenberg Bros. & Co., 243 F.2d 504, 512 (C.A.9 1957), and Kingman & Co. v. Stoddard, 85 F. 740, 745 (C.A.7 1898). Lear, they contend, did not suspend that rule for patent licensing agreements, since the plaintiff in that case had already repudiated the contract. Even if Lear's repudiation of the doctrine of licensee estoppel was so limited (a point on which, as we have said earlier, we do not opine), it is hard to see how the common-law rule has any application here. Petitioner is not repudiating or impugning the contract while continuing to reap its benefits. Rather, it is asserting that the contract, properly interpreted, does not prevent it from challenging the patents, and does not require the payment of royalties because the patents do not cover its products and are invalid. Of course even if respondents were correct that the licensing agreement or the common-law rule precludes this suit, the consequence would be that respondents win this case on the merits — not that the very genuine contract dispute disappears, so that Article III jurisdiction is somehow defeated. In short, Article III jurisdiction has nothing to do with this "insurance-policy" contention.
Lastly, respondents urge us to affirm the dismissal of the declaratory-judgment claims on discretionary grounds. The Declaratory Judgment Act provides that a court "may declare the rights and other legal relations of any interested party," 28 U.S.C. § 2201(a) (emphasis added), not that it must do so. This text has long been understood "to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995); see also Cardinal Chemical Co. v. Morton Int'l, Inc., 508 U.S. 83, 95, n. 17, 113 S.Ct. 1967, 124 L.Ed.2d 1 (1993); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-496, 62 S.Ct. 1173, 86 S.Ct. 1620 (1942). We have found it "more consistent with the statute," however, "to vest district courts with discretion in the first instance, because facts bearing on the usefulness of the declaratory judgment remedy, and the fitness of the case for resolution, are peculiarly within their grasp." Wilton, supra, at 289, 115 S.Ct. 2137. The District Court here gave no consideration to discretionary dismissal, since, despite its "serious misgivings" about the Federal Circuit's rule, it considered
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We hold 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. The Court of Appeals erred in affirming the dismissal of this action for lack of subject-matter jurisdiction.
The judgment of the Court of Appeals is reversed, and the cause is remanded for proceedings consistent with this opinion.
It is so ordered.
Justice THOMAS, dissenting.
We granted certiorari in this case to determine whether a patent licensee in good standing must breach its license prior to challenging the validity of the underlying patent pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. 546 U.S. 1169, 126 S.Ct. 1329, 164 L.Ed.2d 46 (2006). The answer to that question is yes. We have consistently held that parties do not have standing to obtain rulings on matters that remain hypothetical or conjectural. We have also held that the declaratory judgment procedure cannot be used to obtain advanced rulings on matters that would be addressed in a future case of actual controversy. MedImmune has sought a declaratory judgment for precisely that purpose, and I would therefore affirm the Court of Appeals' holding that there is no Article III jurisdiction over MedImmune's claim. The Court reaches the opposite result by extending the holding of Steffel v. Thompson, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974), to private contractual obligations. I respectfully dissent.
Article III of the Constitution limits the judicial power to the adjudication of "Cases" or "Controversies." § 2. We have held that the Declaratory Judgment Act extends "to controversies which are such in the constitutional sense." Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 S.Ct. 617 (1937). In the context of declaratory judgment actions, this Court's cases have provided a uniform framework for assessing whether an Article III case or controversy exists. In the constitutional sense, a "Controversy" is "distinguished from a difference or dispute of a hypothetical or abstract character; from one that is academic or moot." Ibid. (citing United States v. Alaska S.S. Co., 253 U.S. 113, 116, 40 S.Ct. 448, 64 S.Ct. 808 (1920)). "The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests." 300 U.S., at 240-241, 57 S.Ct. 461. Finally, "[i]t must be a real and substantial controversy ..., as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Id., at 241, 57 S.Ct. 461.
We have also held that no controversy exists when a declaratory judgment plaintiff attempts to obtain a premature ruling on potential defenses that would typically be adjudicated in a later actual controversy. In Coffman v. Breeze Corps., 323 U.S. 316, 65 S.Ct. 298, 89 S.Ct. 264 (1945), a patent owner brought a declaratory judgment action against his licensees seeking to have the Royalty Adjustment Act of 1942 declared unconstitutional and to enjoin his licensees from paying accrued royalties to the Government. This Court held that no case or controversy existed because the validity of the Royalty Adjustment Act would properly arise only as a defense in a suit by the patent holder against the licensees to recover royalties. Id., at 323-324, 65 S.Ct. 298. Accordingly, the complaint at issue was "but a request for an advisory opinion as to the validity of a defense to a suit for recovery of the royalties." Id., at 324, 65 S.Ct. 298. And the Court noted that "[t]he declaratory judgment procedure ... may not be made the medium for securing an advisory opinion in a controversy which has not arisen." Ibid.; see also Calderon v. Ashmus, 523 U.S. 740, 747, 118 S.Ct. 1694, 140 L.Ed.2d 970 (1998) (holding that a prisoner may not use a declaratory judgment action to determine the validity of a defense that a State might raise in a future habeas proceeding).
These principles apply with equal force in the patent licensing context. In Altvater v. Freeman, 319 U.S. 359, 365-366, 63 S.Ct. 1115, 87 S.Ct. 1450 (1943), the Court, quite unremarkably, held that a "licensee" had standing to bring a declaratory judgment counterclaim asserting the affirmative defense of patent invalidity in response to a patent infringement suit. But not to be mistaken, the Altvater Court expressly stated that "[t]o hold a patent valid if it is not infringed is to decide a hypothetical case." Id., at 363, 63 S.Ct. 1115. So too, in Cardinal Chemical Co. v. Morton Int'l, Inc., 508 U.S. 83, 86, 113 S.Ct. 1967, 124 L.Ed.2d 1 (1993), the affirmative defense of patent invalidity was raised as a counterclaim to a patent infringement suit. Although we held that a finding of noninfringement on appeal did not moot a counterclaim alleging invalidity, id., at 102-103, 113 S.Ct. 1967, we stated that our holding was limited to the jurisdiction of an appellate court and reiterated that "[i]n the trial court, of course, a party
Against the foregoing background, the case before us is not a justiciable case or controversy under Article III.
As a threshold matter, I disagree with the Court's characterization of this case as including a "contractual dispute." Ante, at 779. To substantiate this characterization, the Court points to a three-paragraph count in MedImmune's complaint entitled "`DECLARATORY JUDGMENT ON CONTRACTUAL RIGHTS AND OBLIGATIONS'" and to MedImmune's broad allegations that "`its Synagis® product does not infringe any valid claim of the [Cabilly II] Patent.'" Ante, at 779. Nowhere in its complaint did MedImmune state why "sale[s] of its Synagis® product d[o] not infringe any valid claim of the [Cabilly II] Patent." App. 136.
Probably for this reason, MedImmune has not pursued a contract claim at any level of the litigation. The District Court stated that the product that was the subject of the license, Synagis, was "covered by the patents at issue," App. 349-350, and MedImmune has never challenged that characterization. The Federal Circuit decided this case on the sole ground that a licensee in good standing may not bring a declaratory judgment action to challenge the validity of the underlying patent without some threat or apprehension of a patent infringement suit. See 427 F.3d 958, 965 (2005). The question MedImmune presented in its petition for certiorari, which we accepted without alteration, says nothing about a contract claim. Neither does MedImmune's opening brief allege a contractual dispute. Even at oral argument, it was not MedImmune, but an amicus, that alleged there was a contract dispute at issue in this case. Tr. of Oral Arg. 21-22.
In short, MedImmune did not "rais[e] and preserv[e] a contract claim." Ante, at 780. In reaching a contrary conclusion, the Court states that its identification of a contract claim "probably makes no difference to the ultimate" outcome of this case. Ante, at 778. This may very well be true, if only because of the broad scope of the Court's holding.
The facts before us present no case or controversy under Article III. When MedImmune filed this declaratory judgment action challenging the validity of the Cabilly II patent, it was under no threat of being sued by Genentech for patent infringement. This was so because MedImmune was a licensee in good standing that had made all necessary royalty payments. Thus, by voluntarily entering into and abiding by a license agreement with Genentech, MedImmune removed any threat of suit. See ante, at 772 (stating the threat of suit was "remote, if not nonexistent"). MedImmune's actions in entering into and continuing to comply with the license agreement deprived Genentech of any cause of action against MedImmune. Additionally, MedImmune had no cause of action against Genentech. Patent invalidity is an affirmative defense to patent infringement, not a freestanding cause of action. See 35 U.S.C. §§ 282(2)-(3). Therefore, here, the Declaratory Judgment Act must be something more than an alternative procedure for bringing an otherwise actual case or controversy before a federal court. But see Aetna Life Ins., 300 U.S., at 240, 57 S.Ct. 461 ("[T]he operation of the Declaratory Judgment Act is procedural only").
Because neither Genentech nor MedImmune had a cause of action, MedImmune's prayer for declaratory relief can be reasonably understood only as seeking an advisory opinion about an affirmative defense it might use in some future litigation. MedImmune wants to know whether, if it decides to breach its license agreement with Genentech, and if Genentech sues it for patent infringement, it will have a successful affirmative defense. Presumably, upon a favorable determination, MedImmune would then stop making royalty payments, knowing in advance that the federal courts stand behind its decision. Yet as demonstrated above, the Declaratory Judgment Act does not allow federal courts to give advisory rulings on the potential success of an affirmative defense before a cause of action has even accrued. Calderon, 523 U.S., at 747, 118 S.Ct. 1694 (dismissing a suit that "attempt[ed] to gain a litigation advantage by obtaining an advance ruling on an affirmative defense"); see also Coffman, 323 U.S., at 324, 65 S.Ct. 298 (rejecting use of the Declaratory Judgment Act as a "medium for securing an advisory opinion in a controversy which has not arisen"). MedImmune has therefore asked the courts to render "an opinion advising what the law would be upon a hypothetical state of facts." Aetna Life Ins., supra, at 241, 57 S.Ct. 461; see also Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 244, 73 S.Ct. 236, 97 S.Ct. 291 (1952) ("The disagreement must not be nebulous or contingent but must have taken on fixed and final shape ..."). A federal court cannot, consistent with Article III, provide MedImmune with such an opinion.
Finally, as this Court has plainly stated in the context of a counterclaim declaratory judgment action challenging the validity of a patent, "[t]o hold a patent valid if it is not infringed is to decide a hypothetical case." Altvater, 319 U.S., at 363, 63 S.Ct. 1115. Of course, MedImmune presents exactly that case. Based on a clear reading of our precedent, I would hold that this case presents no actual case or controversy.
To reach today's result, the Court misreads our precedent and expands the concept of coercion from Steffel, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505, to reach voluntarily accepted contractual obligations between private parties.
The Court inappropriately relies on Altvater, which is inapplicable to this case for three reasons. First, in Altvater, the affirmative defense of patent invalidity arose in a declaratory judgment motion filed as a counterclaim to a patent infringement suit. See 319 U.S., at 360, 63 S.Ct. 1115. Second, the opinion in Altvater proceeds on the understanding that no license existed. Both the District Court and the Court of Appeals had already held that the underlying license had been terminated prior to the filing of the case. Id., at 365, 63 S.Ct. 1115 ("Royalties were being demanded and royalties were being paid. But they were being paid ... under the compulsion of an injunction decree"). Third, and related, though the one-time licensee continued to pay royalties, it did so under the compulsion of an injunction that had been entered in a prior case. Ibid. Altvater simply held that under the unique facts of that case, the Court of Appeals erred in considering the declaratory judgment counterclaim moot because the "involuntary or coercive nature of the exaction preserve[d] the right to recover the sums paid or to challenge the legality of the claim." Ibid.
Cardinal Chemical Co., 508 U.S. 83, 113 S.Ct. 1967, 124 L.Ed.2d 1, is similarly inapt here. In that case, as in Altvater, the defendant raised the affirmative defense of patent invalidity in a counterclaim to a patent infringement suit. 508 U.S., at 86, 113 S.Ct. 1967. We specifically held that a finding of noninfringement on appeal did not moot a counterclaim alleging invalidity. Id., at 102-103, 113 S.Ct. 1967. But we stressed:
We went on to offer a hypothetical that showed a party could seek a declaratory judgment "[i]n patent litigation ... even if the patentee has not filed an infringement action." Ibid. However, that hypothetical involved a patent holder that threatened an infringement suit against a competitor (not a licensee) that continued to sell the allegedly infringing product and faced growing liability. In doing so, we hypothesized a situation that paralleled the facts in Aetna Life Ins.: The patentee had a cause of action against an alleged infringer and could have brought suit at any moment, and the declaratory judgment procedure simply offered the alleged infringer a different method of bringing an otherwise justiciable case or controversy into court.
The Court's more serious error is its extension of Steffel, supra, to apply to voluntarily accepted contractual obligations between private parties. No court has ever taken such a broad view of Steffel.
In Steffel, the Court held that in certain limited circumstances, a party's anticipatory cause of action qualified as a case or controversy under Article III. Based expressly on the coercive nature of governmental power, the Court found that "it is
The majority not only extends Steffel to cases that do not involve governmental coercion, but also extends Steffel's rationale. If "coercion" were understood as the Court used that term in Steffel, it would apply only if Genentech had threatened MedImmune with a patent infringement suit in the absence of a license agreement. At that point, MedImmune would have had a choice, as did the declaratory plaintiff in Steffel, either to cease the otherwise protected activity (here, selling Synagis) or to continue in that activity and face the threat of a lawsuit. But MedImmune faced no such choice. Here, MedImmune could continue selling its product without threat of suit because it had eliminated any risk of suit by entering into a license agreement. By holding that the voluntary choice to enter an agreement to avoid some other coerced choice is itself coerced, the Court goes far beyond Steffel.
The majority explains that the "coercive nature of the exaction preserves the right... to challenge the legality of the claim." Ante, at 773 (internal quotation marks omitted). The coercive nature of what "exaction"? The answer has to be the voluntarily made license payments because there was no threat of suit here. By holding that contractual obligations are sufficiently coercive to allow a party to bring a declaratory judgment action, the majority has given every patent licensee a cause of action and a free pass around Article III's requirements for challenging the validity of licensed patents. But the reasoning of today's opinion applies not just to patent validity suits. Indeed, today's opinion contains no limiting principle whatsoever, casting aside Justice Stewart's understanding that Steffel's use would "be exceedingly rare." 415 U.S., at 476, 94 S.Ct. 1209 (concurring opinion).
For the foregoing reasons, I respectfully dissent.
The dissent also asserts that the validity of the contract claim "hinges entirely upon a determination of the patent's validity," since "`the license requires [MedImmune] to pay royalties until a patent claim has been held invalid by a competent body,'" post, at 779, quoting supra, at 769-770. This would be true only if the license required royalties on all products under the sun, and not just those that practice the patent. Of course it does not.
Coffman v. Breeze Corps., 323 U.S. 316, 323-324, 65 S.Ct. 298, 89 S.Ct. 264 (1945), cited post, at 778, does not support the dissent's view (which is why none of the parties cited it). There, a patent owner sued to enjoin his licensee from paying accrued royalties to the Government under the Royalty Adjustment Act of 1942, and sought to attack the constitutionality of the Act. The Court held the request for declaratory judgment and injunction nonjusticiable because the patent owner asserted no right to recover the royalties and there was no indication that the licensee would even raise the Act as a defense to suit for the royalties. The other case the dissent cites for the point, Calderon v. Ashmus, 523 U.S. 740, 749, 118 S.Ct. 1694, 140 L.Ed.2d 970 (1998), simply holds that a litigant may not use a declaratory-judgment action to obtain piecemeal adjudication of defenses that would not finally and conclusively resolve the underlying controversy. That is, of course, not the case here.
"The District Court [in Electrical Fittings] adjudged a claim of a patent valid although it dismissed the bill for failure to prove infringement. We held that the finding of validity was immaterial to the disposition of the cause and that the winning party might appeal to obtain a reformation of the decree. To hold a patent valid if it is not infringed is to decide a hypothetical case. But the situation in the present case is quite different. We have here not only bill and answer but a counterclaim. Though the decision of non-infringement disposes of the bill and answer, it does not dispose of the counterclaim which raises the question of validity." Altvater, supra, at 363, 63 S.Ct. 1115 (footnote omitted).
As the full quotation makes clear, the snippet quoted by the dissent has nothing to do with whether infringement must be actual or merely threatened. Indeed, it makes clear that in appropriate cases to hold a noninfringed patent valid is not to decide a hypothetical case.
Though the dissent acknowledges the central lesson of Altvater, post, at 781 — that payment of royalties under "coercive" circumstances does not eliminate jurisdiction — it attempts to limit that rationale to the particular facts of Altvater. But none of Altvater's "unique facts," post, at 781, suggests that a different test applies to the royalty payments here. Other than a conclusory assertion that the payments here were "voluntarily made," post, at 782, the dissent never explains why the threat of treble damages and the loss of 80 percent of petitioner's business does not fall within Altvater's coercion rationale.
The dissent accuses the Court of misapplying Steffel's rationale. Post, at 782. It contends that Steffel would apply here only if respondents had threatened petitioner with a patent infringement suit in the absence of a license agreement, because only then would petitioner be put to the choice of selling its product or facing suit. Post, at 782. Here, the dissent argues, the license payments are "voluntarily made." Ibid. If one uses the word "voluntarily" so loosely, it could be applied with equal justification (or lack thereof) to the Steffel plaintiff's "voluntary" refusal to distribute handbills. We find the threat of treble damages and loss of 80 percent of petitioner's business every bit as coercive as the modest penalties for misdemeanor trespass threatened in Steffel. Only by ignoring the consequences of the threatened action in this case can the dissent claim that today's opinion "contains no limiting principle whatsoever," post, at 782.