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U.S. Supreme Court hears biotech case that could expand patent lawsuits

U.S. Supreme Court hears biotech case that could expand patent lawsuits

The U.S. Supreme Court on Wednesday heard drug maker MedImmune's patent dispute with biotechnology company Genentech, a case that could help determine the ability companies have to challenge patents in court.
The companies are fighting over a Genentech patent that MedImmune licenses for one of its top sellers _ Synagis, a children's respiratory drug with more than $1 billion (euro790 million) in sales last year.
The original patent was set to expire this year, making it available for free. But Genentech Inc. of California acquired another patent in 2001 through a deal with another drug company holding a similar patent, extending it to 2018.
The case before the court Wednesday didn't deal with the merits of the case, focusing instead on whether MedImmune had a right to dispute the new patent in court under federal laws.
MedImmune Inc. of Gaithersburg, Maryland, filed a lawsuit in 2003, claiming the deal between Genentech and British biotechnology company Celltech R&D Ltd. violated antitrust laws. But it was thrown out by the federal courts, which ruled MedImmune didn't have the right to sue because it continued to pay royalties on the patent even as it claimed in court the patent was unfair.
MedImmune was using a "pay and sue" strategy under patent law because it didn't want to stop royalty payments and be liable for violating the terms of the license on the Cabilly patent. Named for the researcher that discovered it, the Cabilly patent is used by MedImmune to make Synagis.
MedImmune pays a set percentage of its Synagis sales to Genentech under the licensing deal. MedImmune spokeswoman Jamie Lacey would not reveal that percentage, but said each percentage point is worth $10 million (euro7.9 million).
In court filings, MedImmune contended it would be put at great risk of large financial penalties if it were forced to break a patent agreement to challenge what it thought was a bad patent. It was backed by the Justice Department, which said the dispute between the two warranted resolution in court.
Genentech countered that federal law does not allow companies to challenge patents without shouldering the risk of violating the deals.
"The reason they entered into this agreement was to avoid the costs and risks of litigation," Genentech attorney Maureen Mahoney said Wednesday of MedImmune's patent with Genentech.
Chief Justice John Roberts appeared to be concerned that companies could make continuous patent challenges if they were allowed to file lawsuits but not face stiff penalties for breaking license agreements by stopping royalty payments.
"How do you ever end these things? Let's say they have this dispute, they bring it to litigation, and they settle it," he said. "Instead of paying a license fee of 50 cents, it's going to be 40 cents, and we'll go on. Then they can sue again, I take it."
Patent attorneys said if the case is decided in MedImmune's favor, it could lead to a flood of patent lawsuits because companies could challenge patents without risking legal penalties. But Washington attorney Harold C. Wegner, who watched Wednesday's arguments, said Roberts did not seem convinced by MedImmune's case.
Along with legal action, the validity of the second Cabilly patent is still under review by the U.S. Patent and Trademark office. The office initially rejected the patent, but agreed to re-examine its decision.


Updated : 2020-12-03 22:14 GMT+08:00