Reuters
Tuesday, December 26, 2006; 2:36 PM

WASHINGTON (Reuters) - A U.S. appeals court on Tuesday affirmed the validity of a patent on Eli Lilly and Co.'s (LLY.N) top-selling schizophrenia drug Zyprexa, upholding a 2005 ruling by a federal judge.

The U.S. Court of Appeals for the Federal Circuit said it had found no reversible error in the April 2005 ruling by U.S. District Court Judge Richard Young, which handed Eli Lilly a major victory in its efforts to fend off generic competition.

The patent at issue in the case runs through April of 2011 and had been contested by Israel's Teva Pharmaceuticals (TEVA.TA)(TEVA.O) and Indian drugmaker Dr. Reddy's Laboratories

(REDY.BO)(RDY.N).

Representatives for Teva and Dr. Reddy's could not immediately reached for comment.

In 2005, Zyprexa made up 29 percent of Eli Lilly's $2.6 billion sales. Shares of the drugmaker were up 1.2 percent to $51.96 in afternoon trading on the New York Stock Exchange.

Eli Lilly said the appeals court ruling was a victory for all brand name drug makers.

"Today's appeals court ruling not only affirms the validity of our patent, but upholds patent law that helps enable the significant investments required to develop the next generation of revolutionary medicines for the patients who need them," Lilly chairman Sidney Taurel said in a statement.

In the ruling issued on Tuesday, the appeals court rejected a series of arguments by the generic challengers aimed at overturning the earlier ruling.

The generic companies contended the Zyprexa patent was invalid because it was too similar to a previous patent held by Lilly, and that a form of the drug was in public use before Lilly received its patents.