Genentech Inc. (NYSE: DNA) and AstraZeneca plc (NYSE; LSE: AZN) subsidiary MedImmune Inc. (LSE: MDI) have settled the Cabilly II patent interference case. The patent was named after Prof. Shmuel Cabilly. The case lasted several years at the US District Court for the Central District of California, and has now been resolved and dismissed.
The case involved both potential investors in the two companies, as well as technology companies in general, because it involved a key issue for the industry: is it possible to sue a company for non-validity of a patent even while paying for rights to that patent?
Cabilly invented for Genentech one of the pioneering methods for the genetic engineering of antibodies. A number of major drugs have been developed with this method, including the breast cancer treatment, Herceptin. Genentech earns $300 million in patent royalties a year through the patent.
The original Cabilly patent was due to expire in 2006, but Genentech registered a patent upgrade, known as the "Cabilly II" patent, which extended the patents through 2018. The move infuriated companies that had purchased patent license rights from Genentech, including MedImmune, but were still forced to buy the patent rights because their businesses depended on them. Legally at the time in the US, it was not possible to challenge a patent while simultaneously buying the right to use it.
The Cabilly patent case made history in January 2007, when, for the first time, the US Supreme Court allowed a company to challenge a patent that it was using. As a result of this decision, biomedical companies were exposed for the first time to claims from companies that were buying patent rights to the products. MedImmune, which challenged Genentech, was itself being challenged.
In February 2007, the US Patent Office announced that a series of Genentech's patents were invalid. The company said that it would appeal the decision, which led to the case that it has now settled. Genentech will continue to receive patent royalties under the settlement.
Published by Globes [online], Israel business news - www.globes-online.com - on June 17, 2008
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