By Mary Welch
A jury awarded Sibia Neurosciences Inc. $18 million in its patent infringement suit against Cadus Pharmaceutical Corp. The dispute centered on methods for identifying compounds that interact with cell surface proteins such as receptors and ion channels. The patented methods rely on a biological response through a reporter gene to detect compounds of interest.
The jury, in the U.S. District Court for the Southern District of California, awarded the full amount of the damages as requested by La Jolla, Calif.-based Sibia, which asserted 11 claims against Cadus, of Tarrytown, N.Y.
Stephen Keane, vice president of corporate development for Sibia, said jurors "acted diligently, did their research and came out with the right verdict. We are pleased."
In February, Cadus will file motions requesting that the verdict by overturned or a new trial granted. If those motions are not granted, it will appeal to the Federal Circuit Court, where a three-judge panel will hear the case.
Charles Woler, Cadus' president and CEO, said jurors were not "able to understand the science and the patent issue. There is a lot of evidence that the patent is invalid, and therefore we were not infringing on it. They were almost forced to make a decision, and we believe that, when we bring this case to appeal, the three judges will be better able to judge patent issues and the law and the technology. [Jurors] admitted they were overwhelmed."
Keane rejected the notion that the jury failed to comprehend the issues in the six-week trial.
"Both parties selected the jury members and both sides had almost 40 hours to provide background and educate the jury on the technology," he said. "We feel they made an informed decision."
On Jan. 15, Sibia said, it will seek an immediate permanent injunction against Cadus' continued use of its drug assays, as well as Cadus' efforts to contribute to or induce infringement by Bristol-Myers Squibb, of New York, and SmithKline Beecham plc, of London.
Woler said the verdict "does not address our core technology, which is our ability to couple human G protein-couple receptors to a biological response in yeast cells. The means of detecting such response, which is the subject of Sibia's patent, is secondary. If we have to stop using the technology then we will switch to a new method, but it won't affect us."
A ruling will also take place on whether the $18 million judgement can be reduced. "Even if we have to post bond for the whole $18 million, we could do that and still have enough cash on hand to last us two years. Not too bad," Woler said.
Cadus has sublicensed the disputed technology to SmithKline and Bristol-Myers. The jury found that these collaborators had directly infringed on the patent and that Cadus had induced and further contributed to the infringement, but neither collaborator faces monetary damages.
"They're totally out of the loop on this one," Woler said.
Keane said he intends to ask SmithKline and Bristol-Myers to take licenses on the technology.
Sibia's stock (NASDAQ:SIBI) closed Monday at $4.75, up $1.187. Cadus' shares (NASDAQ:KDUS) ended the day at $1.781, down $0.468 *