HAMBURG, Germany - The patent row between Europe's two leading antibody technology companies has entered a new round after each claimed that a ruling by the European Patent Office (EPO) last week was favorable.

The dispute between Cambridge Antibody Technology Group plc (CAT), of Melbourn, Cambridgeshire, UK, and MorphoSys AG, of Martinsried, Germany, relates to antibody libraries, an area of direct competition. CAT holds two main patent families, one covering antibody gene expression libraries ("Winter et al."), and a second covering a phage display technology of antibody fragments ("McCafferty et al."), granted in Europe in 1994 and 1996, respectively.

MorphoSys developed its Human Combinatorial Antibody Library (huCAL) technology in the mid 1990s and applied for a patent on this technology in 1995. In 1994, the German company lodged an opposition against the Winter patent in an attempt to narrow its scope. It asked for claims 1 to 31 of the patent to be modified and claim 32 deleted. This claim included "an expression library comprising a repertoire of nucleic acid sequences each encoding at least part of an immunoglobulin variable domain."

MorphoSys maintains its huCAL technology was developed independently and is distinct of CAT's method.

"In our opinion, the Winter patent did not reflect what was actually invented," Simon Moroney, CEO of MorphoSys, told BioWorld International, "and we wanted a clarification that our huCAL technology was not covered by this patent. Our technology is based on fully synthetic genes whose sequences were derived from an analysis of antibody databases. The genes have a number of built-in features which confer advantages on the resulting library. The technology described in the Winter patent however uses PCR to copy antibody DNA isolated from a donor, so the technologies are fundamentally different."

MorphoSys later filed an opposition against the McCafferty patent, too.

CAT took legal action against MorphoSys in the District Court of Munich, Germany, in September 1998, claiming MorphoSys was infringing both patents. This case was put on hold pending last week's ruling from the EPO.

Claims 1 to 31 of the Winter patent were unaltered by the proceedings, and the EPO accepted a modification of claim 32 as proposed by CAT.

"This is a favorable decision," Diane Mellett, vice president, legal affairs at CAT, told BioWorld International. "Contrary to what MorphoSys had asked, all claims remain unaltered except claim 32, and this claim is not deleted but modified according to a proposal by CAT."

CAT claims that MorphoSys' huCAL library is covered by the patent as upheld, and that MorphoSys still is infringing the Winter patent. Mellett said CAT was prepared to grant a license to MorphoSys, noting that CAT did not need access to any MorphoSys technology, "So there is no need for cross-licensing."

MorphoSys disagrees with CAT's interpretation. "We are very delighted, because claim 32 as the key claim of the patent is changed, and this significantly narrows the scope of protection," Moroney said. "We are more confident than ever that we will be able to continue to practice our technologies without restriction, and we intend to ramp up our commercialization activities on the back of this positive outcome. As our technology is superior and as we now have a rightful place in the market, the decision is a setback for CAT."

The decision can be appealed by either party, though this seems unlikely given the welcome both gave to the ruling. Mellett said that while CAT would now ask the Munich court to rule on infringement of the Winter patent, the case will probably be held up until the EPO comes to a decision on the McCafferty patent.

In addition, both companies are awaiting a decision in the U.S., on a complaint filed by MorphoSys in March 1999 against a U.S. patent granted to CAT. The patent includes broad claims directed to human antibody to human proteins isolated by phage display and methods to produce human antibodies. MorphoSys is seeking a declaration that it was not infringing a CAT U.S. patent, and that the patent was invalid.