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Hybritech Settles Patent Suit for $2.25 Million, License Pact

July 03, 1987|CHRIS KRAUL | San Diego County Business Editor

SAN DIEGO — Ending a three-year legal battle, Hybritech Inc. has settled its patent infringement suit against Monoclonal Antibodies Inc. of Mountain View, accepting $2.25 million in past damages while granting MAI a one-year license to use Hybritech's patent to make products for diagnosing human health.

The settlement of the suit, which involved MAI's signing a consent decree acknowledging Hybritech's patent, was closely watched in the biotechnology industry. The agreement clears the stage for a still-pending and potentially larger patent infringement suit that Hybritech brought last December against Abbott Laboratories, a $3-billion health care company based in Chicago.

Both cases center on Hybritech's 1979 patent for monoclonal antibody "sandwich assay" technology that Hybritech, a San Diego-based unit of Eli Lilly & Co., insists is illegally incorporated in the products of several medical diagnostic companies.

Hybritech's patent so far has held up in court, but competitors, including Abbott, insist the technology is "obvious" and therefore nonproprietary.

Hybritech filed suit against MAI in 1984, alleging that MAI's pregnancy and ovulation tests infringed on Hybritech's patent. The MAI products that Hybritech said infringed on its patent accounted for 85% of MAI's $6.2 million fiscal 1987 revenues, MAI president Thomas Glaze said Thursday.

After a lower court ruled against Hybritech, the same U.S. Court of Appeals in Washington D.C. that will hear the Abbott case later this year upheld the validity of Hybritech's patent in a September, 1986, ruling.

For MAI, the final blow occurred in May when a federal judge in Northern California issued a preliminary injunction barring MAI from selling or manufacturing the infringing products. All that remained in the case was for the court to determine damages due to Hybritech.

Asked why Lilly, an Indianapolis-based pharmaceutical giant, decided to settle with MAI, a Lilly spokeswoman said only that the settlement was a "business decision." Hybritech will receive a 15% royalty on net sales of the six ovulation and pregnancy products falling under the patent.

'Spectacular News'

"This is spectacular news for us," Glaze said. "This has been a long and brutal battle, and I'm glad to have it behind us."

Glaze said MAI expects to have "alternative technology" ready to replace what it is licensing from Hybritech by the time the one-year agreement expires in June, 1988.

MAI stock closed up $1.75 to $5.375 per share in over-the-counter trading Thursday. Eli Lilly stock closed up $.875 at $94.25 per share on New York Stock Exchange trading Thursday.

In its suit against Abbott pending before the U.S. Court of Appeals, Hybritech alleged that Abbott uses its technology in six diagnostic products, including hepatitis, pregnancy, ovulation and cancer detection kits.

A U.S. District Court in Los Angeles issued a preliminary injunction in April barring most of the Abbott products but in June stayed the effects of the injunction until the U.S. appellate court makes its ruling. One analyst's "conservative" estimate Thursday was that the Abbott products in question account for $25 million to $50 million in annual sales.

"Abbott not only believes it is not infringing, but it denies the validity of Hybritech's patent," an Abbott spokesman Barry Cohen said Thursday.

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