By Ben White
Washington Post Staff Writer
Wednesday, February 22, 2006; D04
The Supreme Court agreed yesterday to consider allowing a lawsuit by drugmaker MedImmune Inc. that seeks to end royalties the company pays on its blockbuster drug Synagis to go forward.
The high court said it would review whether lower courts erred in rejecting the case. Gaithersburg-based MedImmune was paying royalties to biotechnology firm Genentech Inc. under a patent licensing agreement for using its antibody technology. But MedImmune claimed in its lawsuit that Genentech illegally obtained a patent on an antibody synthesis technology used in the production of Synagis, a MedImmune drug that prevents certain respiratory infections in babies.
MedImmune claims that Genentech violated antitrust law by colluding with a British biotechnology company in obtaining an extension on the antibody production patent, and MedImmune is seeking to have Genentech's patent declared invalid.
In 2003, a federal district judge in California rejected MedImmune's lawsuit, saying Genentech's patent was legal. A federal appeals panel last year upheld that decision. Genentech's patent, known as the "Cabilly" patent after its lead inventor, Shmuel Cabilly, runs through 2018. Genentech's first Cabilly patent was set to expire this year, but in 2001, the company obtained an extension. The Supreme Court will hear arguments in the case in its 2006-07 term, which begins in October.
MedImmune spokeswoman Jamie Lacey said: "We are pleased that the U.S. Supreme Court has agreed to consider MedImmune's case since we believe the federal district court's decision was erroneous."
"Genentech is confident in our position that MedImmune, as a current licensee that is paying royalties, lacks standing to challenge the validity of the Cabilly patent in federal court," said Caroline Pecquet, a Genentech spokeswoman. "The Supreme Court will only be considering this threshold standing issue and will not be reviewing the validity of the Cabilly patent."
Synagis is by far MedImmune's best-selling drug. In 2005, worldwide Synagis sales exceeded $1 billion for the first time, providing nearly all of MedImmune's $1.22 billion in revenue for the year. Despite the strong sales, the company reported a net loss of $16.6 million for 2005 on worse-than-anticipated sales of its inhaled flu vaccine, FluMist. Because of a confidentiality agreement with Genentech, MedImmune does not disclose how much it pays in royalties on Synagis.
The U.S. Patent and Trademark Office is also reviewing Genentech's Cabilly patent. In October, the office rejected the patent but agreed to review its decision. Genentech has said it expects that review to last as long as several years. The Cabilly patent has been closely watched across the biotechnology industry because several other firms also pay royalties to Genentech for use of the antibody technology.
