A fight is brewing.
A lawsuit over intellectual property that touches nearly every corner of today's biotech industry has been filed by Genzyme Corp., Biogen Inc. and Abbott Bioresearch Center against Columbia University in the U.S. District Court of Massachusetts, claiming that a new patent issued to the university in September 2002 that centered on cotransformation technology was "invalid and unenforceable."
The patent, No. 6,455,275, is the fourth in a string of patents - the three previous have expired - based on Columbia researchers' discovery in the late 1970s and is linked to gene splicing. The plaintiffs filed the suit in mid-June and join Genentech Inc., which filed a similar suit in April, in claiming the new patent is illegal and saying that Columbia's request for royalty payments through 2019 is an attempt to continue a profitable revenue stream that officially stopped in August 2000.
Columbia has licensed the technology out to more than 30 biotech companies, according to the suit. The technology behind the patent is "as elemental as it gets," as one patent lawyer told BioWorld Today, and is tied to billions of dollars in drug sales.
"We are asking the court to declare the patent is invalid for double patenting and inequitable conduct, and to have the court declare that we don't owe royalties under the [new] patent," said Tom DesRosier, senior vice president and general counsel at Genzyme.
The History Behind Patent No. '275
Gene splicing technology began with two researchers - one at Stanford University, the other at the University of California at San Francisco - in the '70s. While brilliant, the problem was discerning which cells had taken up the gene - a sea of eukaryotic cells was needed to ensure a decent number were producing the proteins scientists wanted.
The Columbia researchers found a way of inserting a biomarker into cells as well as the desired gene - a process called cotransformation. Those cells that took up the biomarker most likely took up the desired gene.
Columbia's first patent on the cotransformation technology - No. 4,399,216 - was issued in August 1983. The university followed that with applications for and the receipt of two other patents in the cotransformation area: 4,634,665 in 1987 and 5,179,017 in 1993.
Under the laws of the time, the original patent was due to expire in August 2000, 17 years after the patent's issuance. The "terminal disclaimer" clause in patent law stated that following patents issued on a technology had the same expiration date as the original, and thus the '665 and '017 patents were set to expire on the same date in 2000.
And they did, freeing Genentech, Biogen, Genzyme and scores of other biotech companies that had licensed the technology from paying royalties, the suit claims. However, patent laws were tweaked on June 8, 1995, making patents enforceable for a period of 20 years after the date of original application, not issuance. The day before that law went into effect, Columbia filed two continuation applications based on the original filing of 1980, the suit alleges, and subsequently received the '275 patent in September 2002. Columbia then asked for royalty payments from all cotransformation licensees through September 2019.
The other application is still pending at the patent office, according to the suit.
The Breadth Of A Patent
"I would say [the technology] is seminal to that part of the pharmaceutical industry," said Donald Rhoades, partner at Kramer Levin Naftalis & Frankel LLP in New York. "If Columbia wins, there are hundreds of millions of dollars in store, maybe a billion, I don't know."
The suit alleges Biogen, of Cambridge, Mass., and Genzyme, also of Cambridge, have paid Columbia $60 million themselves. Genentech, of South San Francisco, said it paid $70 million in royalties up through 2000. And that's fine - once, Genzyme said.
DesRosier said, "We have already paid once for this patent - $25 million, to be exact, from Genzyme - and we don't think it's fair to pay again."
DesRosier said the problem today is Columbia's attempts to wring another 17 years of royalty payments out of a discovery made more than 20 years ago.
"They tricked the [patent office] examiner into issuing the ['275] patent without a terminal disclaimer," he told BioWorld Today, adding that "patent laws certainly don't ever intend for someone to make an invention and collect royalties twice."
Columbia doesn't agree.
"The lawsuit filed by Biogen, Genzyme and Abbott is completely without merit," said Robert Kasdin, senior executive vice president of Columbia. "The U.S. Patent Office carefully considered all of the factors and concluded that the patent application contained different and distinct inventions. Columbia believes the patent office's conclusion was correct and should be respected."
To understand who's right, dig into the issue of multiple patents on a single technology, said Lynn Pasahow, chair of both the bioscience group and the litigation group at Fenwick & West LLP in Mountain View, Calif. And even then it might not be clear.
"As you go to get a second set of claims after you've gotten the first patent allowed, there will be a certain amount of overlap," he told BioWorld Today, adding that an approved second set of claims is "not particularly controversial."
"The question here is, when you get the [second patent], do you get a new 17 years?" he said. "That's what the principal fight is about in this case - whether the patent examiner was misled and because so, was talked out of requiring the terminal disclaimer."
Rhoads has seen the Genentech complaint. He said: "If you just compare the claims of the last three patents to issue and [the '275 patent], there is a credible claim of the double patenting. If you put the claims next to each other, there isn't much new in the new one - but I say that guardedly."
"When dealing with patents every word counts," he said. "But boy, they do look similar."
The Worth Of The Cotransformation Technology
Biogen's multiple sclerosis drug Avonex is based on the cotransformation technology - that product exceeded $1 billion in sales in 2002. So is Genzyme's Cerezyme, for Type I Gaucher's disease, which brought the company more than $600 million last year. Abbott's young product Humira, for rheumatoid arthritis, did $54 million in sales in 2003's second quarter. Add Amgen's blockbusters Epogen and Enbrel and Genentech's Herceptin to that cotransformation list and it still isn't complete.
"If you add up the sales of the people that have sued so far - Immunex, Abbott, Genentech, Genzyme [and others] - we probably collectively have $5 billion in sales affected by the patent on an annual basis," DesRosier said, adding that if Columbia "were to receive royalties on this patent, it would exceed $100 million a year, I'd think."
It might. A survey conducted by the Association of University Technology Managers Inc. shows that in 2001 (the last year available), Columbia University led all participating U.S. universities in adjusted gross license income received - fees, liquidated equity and running royalties - reporting about $130 million. Placing second was the Massachusetts Institute of Technology, with about $74 million. In 2000, Columbia recorded about $138.6 million, ranking behind only the University of California System, which reported about $261.5 million. Dartmouth College ranked third in 2000 with about $68.4 million. Columbia reported a similar figure in 1999 as it did in 2000.
Columbia's Kasdin was unable to confirm whether or not Columbia received royalty payments from biotechnology companies on the patents after August 2000, but he stressed the differences between the plaintiffs, with their blockbuster drugs, and universities.
"The proceeds from licensing received by Columbia are reinvested in research on drugs that help the ill and technology that strengthen the economy," Kasdin told BioWorld Today. "Biogen, Genzyme and Abbott have a whole set of motivations and needs that are different from pushing the frontiers of research."
Next Move Is The Court's
Few universities would happily say goodbye to millions of dollars of annual revenue, so Columbia's attempts at extensions and another 17 years of royalties are not particularly noteworthy, Pasahow said, except to those in line to pay.
"There is nothing extraordinary about this - your view of whether this is good or bad depends on what side you are on," he said. "Columbia's position is not a stupid one. The patent examiner clearly considered the position of the terminal disclaimer, and it was a source of discussion. [Columbia] was able to convince the examiner that their position was right."
The plaintiffs will prepare to show that the patent examiner got it wrong and aim for a fast resolution.
"Hopefully, we will get it to a judge quickly and we will file a summary judgment motion to get a judge to decide quickly that the patent is invalid," DesRosier said.
Justice, at times, is slow. Take Genentech's "win" over Chiron Corp. in September, freeing Genentech from paying up to $300 million in royalties on Herceptin sales. That suit was originally filed in 2000 and Chiron is still pursuing the matter through appeal. Court cases have a way of stretching out.
When asked if that might be the case here, DesRosier briefly paused.
"I certainly hope not," he said.