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Ariad-Lilly Verdict Benefits MIT, Whitehead, Harvard; IP Battle Persists on Other Fronts

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Ariad Pharmaceuticals and co-plaintiffs Massachusetts Institute of Technology, the Whitehead Institute for Biomedical Research, and Harvard University last week announced that a federal judge has found that Eli Lilly had infringed on their US patent on methods for treating human disease by regulating NF-κB cell signaling activity.
 
As a result of the decision, MIT, Whitehead, and Harvard stand to split $16.3 million of the total $65.2 million awarded to the plaintiffs in back damages, and another $4.4 million per year, based on current sales of the infringing Lilly drugs, until the patent expires in 2019.
 
Ariad stands to pocket the remaining $48.3 million in back damages and $13.3 million per year in future royalties based on current sales of the infringing drugs.
 
The victory may be short-lived, however, as the United States Patent and Trademark Office in a separate ruling found that certain claims in the patent, including claims asserted in the lawsuit, were unpatentable. In addition, Ariad and the institutions remain embroiled in separate lawsuits related to the same patent with Amgen and Wyeth, the results of which have yet to be decided.
 
The patent in question, US No. 6,410,516, entitled “Nuclear factors associated with transcriptional regulation,” was issued to MIT, Whitehead, and Harvard in 2002. Ariad, based in Cambridge, Mass., had previously taken an exclusive license to the IP.
 
Upon the patent’s issuance in 2002, Ariad and the licensing institutions sued Lilly, claiming that the drugmaker’s osteoporosis drug Evista and septic shock drug Xigris infringed upon the patent.
 
In May 2006, a federal jury in US District Court for the District of Massachusetts found in favor of the plaintiffs and awarded damages of approximately $65.2 million, based on the jury’s determination of a reasonable royalty rate of 2.3 percent of US sales of Evista and Xigris between June 2002 and February 2006, Ariad said.
 
In addition, the jury awarded further damages on an ongoing basis, in an amount to be determined, equal to 2.3 percent of US sales of Evista and Xigris through 2019, when the ‘516 patent expires.
 
An Ariad spokesperson told BTW last week that Judge Rya Zobel of the US District Court for the District of Massachusetts heard a bench trial, in which the jury was not involved due to “specific undisclosed issues,” on the infringement case in August 2006.
 
The Ariad spokesperson told BTW that Zobel “prepared a lengthy and thorough decision,” which is why it was just announced last week that Zobel found in favor of Ariad and its co-plaintiffs, stating that the patent is indeed valid and enforceable and that judgment may be entered for the plaintiffs in accordance with the jury’s verdict.
 
As a result of their licensing deal with Ariad, co-plaintiffs MIT, Whitehead, and Harvard are entitled to 25 percent of royalties from therapeutics based on the ‘516 patent, while Ariad receives the remaining 75 percent. Thus, the three institutions stand to split a quarter of the $65.2 million in back damages, or $16.3 million.
 
Further, the institutions are in line to receive 25 percent of total future royalties equal to 2.3 percent of US sales of Evista and Xigris through 2019. According to Lilly’s 2006 annual report, US combined sales of Evista and Xigris last year totaled approximately $767 million, which translates to a payout of $17.7 million each year — $13.3 million of which would go to Ariad and $4.4 million of which would go to the institutions.
 
It is unclear what portion of the royalties MIT, Whitehead, and Harvard each receive in accordance with the licensing agreement. Calls to the tech-transfer offices of the institutions were not returned in time for this publication.
 
Lilly has the right to challenge Zobel’s verdict, but it is unclear whether it plans to do so. A company spokesperson did not return calls prior to publication.
 
USPTO Rejects Claims
 
The win by Ariad, MIT, Whitehead, and Harvard is only on one of several ongoing fronts. Ariad also disclosed last week that the USPTO has issued a final office action in its reexamination of the patent, initiated in 2005.
 
Specifically, the USPTO rejected the patentability of certain claims of the patent, including claims asserted by the plaintiffs in the Lilly lawsuit.
 
Ariad said in a statement that it plans to respond to this office action and, if necessary, appeal the decision “through all appropriate means of review within the patent office and the courts.”
 
An Ariad spokesperson added that the company has two months from the date of the office action to respond. “The PTO has no specific timeline after receiving Ariad’s response to issue an advisory action, after which there is an appeals process with several steps,” the spokesperson said. “The whole process could take two years or longer.” The NF-κB patent would remain valid and enforceable throughout this process.
 
The patent is coming under fire on other fronts, as well. In April 2006, Amgen and certain affiliated entities filed an action in the US District Court for the District of Delaware seeking a declaratory judgment that each of the claims contained in the ‘516 patent are invalid and that Amgen and its affiliates have not infringed any of its claims based on activities related to the Amgen anti-inflammatories Enbrel and Kineret.
 
The USPTO’s decision may hurt Ariad and the co-plaintiff institutions’ chances in this court battle since many of the specific claims have now been rejected by the USPTO. Ariad moved to have the Amgen lawsuit dismissed last year, but in September the US District Court for the District of Delaware denied the claim.
 
As a result, in April Ariad filed a countersuit in the US District Court for the District of Delaware against Amgen and Enbrel co-marketer Wyeth. The two universities and the Whitehead Institute are also co-plaintiffs on this suit.

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