Monday, September 9, 1996
Invention sometimes may be the work of lone genius, but there are moments in time ripe for simultaneous discovery. The current era of biotechnology is one of them. With so many companies and researchers focused on the body and its diseases, it is inevitable that the same molecules will be discovered and patented more than once.
Overlapping intellectual property issues will become even more acute as more patents issue and more products near the marketplace. The basic choice for companies is clear-cut: cross-license or litigate. But making the best choice may not be so easy, especially for emerging companies with limited experience in patent law.
For a closer look at how companies assess their options and make decisions, BioCentury talked to several companies that have traveled one or both thorny paths: sharing intellectual property and/or going to court. While companies may engage in more or less rigorous risk-benefit analysis, the resounding message is that litigation isn't worthwhile unless a patent position is clear and exceptionally strong. In those cases, the upside can be tremendous.
The problem with litigation isn't the expense. In fact, compared to the cost of drug development, it's relatively cheap: about $1 million a year, with cases typically taking three to five years. The downside includes the diversion of management time and attention and the risk of losing all rights to a product, as well as the possibility of one or both sides ending up with a diminished patent estate, especially if the court narrows claims in a way that allows other players to enter a market.
Among the most experienced companies in cross-licensing and the loss of a product to litigation is Genetics Institute Inc. GENIZ (Cambridge, Mass.) cross-licensed Factor VIII with Genentech Inc. (GNE, South San Francisco, Calif.) and Miles in 1989, and interleukin-12 with Roche in 1993. In 1991, the company also lost a long-running patent suit over recombinant erythropoietin to rival Amgen Inc. (AMGN, Thousand Oaks, Calif.).
The EPO case, one of the best-known litigation sagas in biotech, illustrates just how long patent disputes can drag on and offers a cautionary tale of how everything can be lost or won in court - and how difficult it can be to predict outcomes. Decisions made at one level of the court system are reversed at another, while cases won in one country are lost in another.
GENIZ and AMGN each filed suit against the other and its partners in the fall of 1987, charging infringement of their EPO patents. In February 1988, a U.S. District Court ruled in favor of GENIZ. However, in March 1991, the Court of Appeals for the Federal Circuit reversed the original decision and held that GENIZ's claims were invalid and upheld AMGN's claims. As a result, GENIZ was blocked from the U.S. market.
The companies settled their dispute in May 1993, resulting in a $14 million payment by GENIZ to AMGN. In June 1994, GENIZ was issued another EPO patent and sued Ortho Pharmaceutical Corp., an AMGN licensee, for infringement. In February 1995 GENIZ lost that suit as well, as a court granted AMGN's motion for a summary judgment that the patent was invalid and unenforceable against AMGN. GENIZ partners continue to sell EPO outside the U.S., but its licensee Boehringer Mannheim, and AMGN's licensee, Ortho, are still in litigation.