Key patent appeal denied

Millions at stake in MedImmune challenge on rival's fee rights

November 04, 2005|By TRICIA BISHOP | TRICIA BISHOP,SUN REPORTER

In a decision that could have far-reaching effects on the biotechnology industry and patent enforcement, a federal court has denied an appeal by MedImmune Inc. of Gaithersburg requesting that a competitor's patent be declared "invalid and unenforceable" because it allegedly violates state and national antitrust laws.

MedImmune contends that a patent, known as "Cabilly II" and held by Genentech Inc. of San Francisco, was obtained through improper collusion with British biotechnology company Celltech R&D Ltd. and amounts to an illegal 11-year extension of an earlier patent. The deal "profoundly and fundamentally altered the competitive landscape in the biotechnology industry," MedImmune argued.

But a California district court disagreed, saying the patent was legal and that MedImmune did not meet the requirements necessary to file a lawsuit. That decision was upheld by the U.S. Court of Appeals for the Federal Circuit in Washington in an opinion filed Oct. 18.

FOR THE RECORD - An article and accompanying timelines about scientific patents held by Genentech Inc. in yesterday's editions reported incorrect dates. The original patent was granted in 1989 and is to expire in 2006. The second patent was granted in 2001 and is set to expire in 2018 - 12 years after the expiration date of the first patent.

Celltech and Genentech have said the patent was obtained through normal means and approved by the patent office.

"There was no collusion or motive to collude," said Charles Barquist, a California attorney who represented Celltech in the case. He also questioned MedImmune's motivation. The company has filed several patent violation lawsuits against businesses it has had licensing deals with.

MedImmune's loss means it and potentially dozens of other companies will have to pay millions of dollars in licensing fees through the year 2018 for access to what Genentech describes as "the fundamental technology required for artificial synthesis of antibody molecules" - a scientific area that makes up the basis of many developing drugs.

More importantly for Genentech, which expects to earn $80 million from Cabilly royalties this year, the company will be able to control who has access to its technology. "They have the ability to control the marketplace, basically," said Robin L. Teskin, a Washington patent attorney who has clients watching the case.

"I'm not saying they're doing that ... but they would have very little incentive to give a license to somebody to making an antibody [that competes with their drugs]. I can't envision them doing that."

If the Cabilly II patent had not been upheld by the courts, the technology would have passed into the public domain next year and been accessible and free to all.

Cathleen Davies, who runs a biotechnology education company with offices in Baltimore and California, said companies have a right to file for patent protection for their intellectual property.

`That's capitalism'

"Why would you develop it if you can't [protect it]?" she said. "That's capitalism, right?"

The antibody market is one of the fastest-growing segments of the drug industry, increasing 48 percent between 2003 and 2004, according to an April 2005 report by industry analyst Datamonitor. It predicts the market will triple to $30 billion during the next five years. Last year, 17 companies had antibody products on the market, it said, but that number is expected to double by 2010 as developing products are approved.

Drugs developed from antibodies are considered especially promising because they can better target specific diseased cells and are proteins found naturally in the body and, thus, less likely to cause adverse reactions. The ability to manufacture them is "one of the really important processes in biotechnology," said Genentech spokeswoman Robin Snyder.

Genentech's first antibody product, the eight-year-old cancer treatment Rituxan, brought the company $1.6 billion in U.S. sales last year alone.

MedImmune's most popular product - Synagis, a respiratory treatment for infants - is antibody-based, requiring the company to pay licensing fees to Genentech. Synagis sales last year were about $942 million worldwide.

MedImmune has said it is exploring its options in continuing the litigation, which include petitioning the U.S. Supreme Court to hear the case.

But it may not have to. An unnamed third party has filed a request with the U.S. Patent and Trademark Office for re-examination of the Cabilly II patent, which could result in its termination or a reinstatement of the original 2006 expiration date.

"It's a big difference in royalty payments whether you have to pay through March of next year, or a lot longer," through March of 2018, said Lisa V. Mueller, the Chicago attorney representing the third party, who she says wants to remain anonymous. Mueller confirmed, however, that her client was not MedImmune.

Based upon the re-examination request, the patent office initiated an investigation this summer and, in September, rejected Genentech's Cabilly II patent claims, suggesting that "the patent office has adopted the requester's arguments," said Duncan Greenhalgh, a Boston attorney who specializes in intellectual property.

Still in effect

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