By Michael Barbaro
Washington Post Staff Writer
Thursday, July 10, 2003; 3:25 PM

The day after it canceled a license agreement with Roche Holdings, Ltd. for a lucrative blood-testing technology, Igen International Inc. said it filed a patent infringement lawsuit against Roche to block future sales of the tests.

Igen, a Gaithersburg biotechnology company, said it had filed two suits yesterday, one in Maryland and the other in Germany, to prevent Roche from marketing the widely-used tests, which are sold to hospitals, blood banks and clinical laboratories worldwide.

The U.S. Court of Appeals for the 4th Circuit yesterday granted Igen the right to terminate the Roche agreement after a six-year legal battle over the blood-testing technology, which Igen licensed it to Roche in 1992.

The ruling frees Igen to license the technology to the highest bidder and is likely to increase the technology's value to shareholders, the company said. "Termination is priceless," Igen Chief Executive Samuel Wohlstadter said in a conference call. "This is what we have been fighting for."

Investors did not immediately cheer the move. Igen's stock fell $3.70, or about 11 percent in late-day trading today, to $29.23.

Last year a federal jury found that Roche, the world's biggest diagnostics maker, consistently underpaid license fees to Igen, breaching a license agreement that granted it broad sales rights over the tests. At the time, the court awarded Igen $505 million in damages.

Yesterday, the court reversed much of that award, tossing out $400 million in punitive damages and $86.8 million in compensatory damages against Roche for unfair competition. But the court also ruled that Roche had breached its contract, forcing it to pay $18.6 million.

Roche said it was pleased by the court's reversal of the damages, but its biggest problems may lie ahead. Igen's termination of the license immediately imperils a major money-maker for Roche Diagnostics GmBh, a division of Roche Holdings, which sells about $500 million worth of Igen-based testing instruments a year. The rapid-response tests are used to detect dozens of diseases, from osteoporosis to anemia.

A Roche Diagnostics spokesman, Joel Reuter, said the company did not have enough information about Igen's patent infringement suit to comment on its impact this morning. Reuter said Roche has 14 days to seek a court review of the appellate court decision, announced yesterday.

For Igen, the ruling is bittersweet. The company has lost a $486 million award, but won back a potential cash cow. Igen is exepected to fetch a high-price for a future license agreement covering the testing technology, which Roche had invested some $350 million in since 1992.

In a statement yesterday, Heino von Prondzynski, the head of Roche Diagnostics, appeared to reach out to Igen in conciliatory terms. "We believe it is in the interest of both parties to continue the collaboration that started 12 years ago," he said.

But it remains unclear whether Igen will pursue a new license agreement with Roche. Wohlstadter said Igen is considering a number of potential partners for the technology and "Roche may or may not be one of them."