MedImmune Inc. wins round in patent litigation

Daily Record, The (Baltimore), Jul 22, 2003 by Barbara Grzincic

Gaithersburg-based MedImmune Inc. has won a round in patent litigation involving its flagship product, Synagis, a drug used for the prevention of serious lower respiratory tract disease in children.

A federal judge in Greenbelt ruled last week that he had jurisdiction over the biotech's pre-emptive strike lawsuit against Malvern, Pa.-based Centocor Inc. -- and that the defendant bears the burden of proving patent infringement by MedImmune.

However, the decision is not an unalloyed win for MedImmune.

The judge found some of the allegations too vague and gave the company until next week to file an amended complaint with additional details -- but not, he added, with any additional grounds for relief.

"The Court will not allow MedImmune to continuously expand the basis for its invalidity claim," U.S. District Judge Alexander Williams Jr. ruled.

Centocor, which licenses the patent at issue from Stanford and Columbia universities, began crying foul about eight months after Synagis debuted in September 1998. Although MedImmune has always denied any infringement, eventually it agreed to pay Centocor royalties under a sublicensing agreement.

Later, however, MedImmune "came upon information that demonstrated that the patent was invalid and unenforceable because of, among other things, 'inequitable conduct'" by the inventors during the patent application process, Williams wrote.

On that point, however, MedImmune's current pleadings lack specificity, Williams ruled July 16.

The judge gave the company 10 days to file a second amended complaint, "stating with particularity" the basis for its allegation that the patent is invalid based on inequitable conduct.

The ruling favored MedImmune on another contested point: whether its attorney, Elliot Olstein of Roseland, N.J., should be allowed to view confidential and highly confidential materials during the litigation.

The university defendants requested a protective order on the grounds that Olstein, who has represented MedImmune for 12 years and prosecutes as well as defends its patents, is a "competitive decision maker" and "effectively 'in-house' counsel" for the company. (Due to confidentiality concerns, in-house counsel already are denied access to confidential materials in the case, the court noted.)

"The Court is extremely sensitive to the confidentiality concerns of a party litigating a case such as this one," Williams wrote. "Nevertheless, the Court concludes that the Universities' argument amounts to a per se prohibition on the use of litigation counsel who also prosecute patents."

The judge granted a protective order -- but used the wording offered by MedImmune and Olstein, under which some of his future patent prosecution work will be restricted.

Synagis, which relies on recombinant DNA technology, accounted for $392 million in sales for MedImmune in the first quarter of 2003 -- a 34 percent increase over the same quarter a year earlier. Second- quarter figures will be available this Thursday, according to the company, which earlier predicted a 20 percent increase in Synagis' sales this year.

The company made headlines last month when it gained FDA approval to market what it hopes will be another billion-dollar product: FluMist, an inhaled influenza vaccine for 18- to 49-year-olds. Earlier this month, MedImmune announced its intention to buy back $500 million in stock and issue that same amount in convertible senior notes due 2023.

The company's stock closed at $38.96 yesterday, down 47 cents a share.

Centocor, a wholly owned subsidiary of Johnson & Johnson, focuses on cardiovascular and immunologic diseases, with an emphasis on monoclonal antibodies, that is, antibodies derived from clones of a single cell.

Attorneys for both sides, including James L. Thompson for MedImmune and Martin S. Himeles for the defendant universities, were not available for comment yesterday. Centocor is represented in the litigation by John Caleb Dougherty, Hugh Marbury and Natalie Fern Zaidman of Piper Rudnick, according to court records.