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Abbott to Appeal $7M Award to Innogenetics in HCV Genotyping Patent Infringement Case

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Abbott said it will appeal a US District Court’s decision to award Gent, Belgium-based Innogenetics $7 million in damages for infringing its hepatitis C virus genotyping patent.
 
The pharmaceutical company also said it would appeal the court’s decision to issue a permanent injunction barring it from selling HCV genotyping products that infringe upon Innogenetics’ patent.
 
“We disagree with the court’s decision and intend to appeal the court’s ruling. Abbott continues to believe Innogenetics’ patent is invalid and that our product does not infringe,” an Abbott spokesman told Pharmacogenomics Reporter this week.
 
Abbott’s defense to date has been based on the claim that its HCV assays are based on realtime PCR, a technology that isn’t explicitly covered in the patent in question.
 
Innogenetics filed two separate cases on Sept. 29, 2005, against Third Wave and Abbott in the US District Court for the Western District of Wisconsin, alleging that the companies had each infringed on its HCV genotyping patent No. 5,846,704, which covers a process for typing HCV isolates [see PGx Reporter 10-20-05].
 
Since the suit was filed in 2005, several companies have signed license agreements with Innogenetics for the HCV genotyping technology, including Bayer Diagnostics (now part of Siemens), Roche Diagnostics, and Third Wave Technologies, Filip Goossens, Innogenetics’ business development and licensing manager, told Pharmacogenomics Reporter this week.
 
By granting Third Wave a non-exclusive license to sell its HCV genotyping products in the US, Innogenetics resolved its patent dispute with the company in February last year. Subsequently, Third Wave announced it was seeking the dismissal without prejudice of its lawsuits against Chiron and Bayer over patents related to HCV genotyping.
 
Innogenetics’ dispute with Abbott, however, was not resolved so amicably. In September, a federal jury found that Abbott had willfully infringed the patent and awarded Innogenetics $7 million in damages [see PGx Reporter 09-13-06].
 
In early January, the District Court denied Abbott’s motion for a new trial and upheld the $7 million verdict, although it disagreed with the jury’s determination of willfulness and declined to award enhanced damages.
 
After a Jan. 11 evidentiary hearing, District Judge Barbara Crabb issued a permanent injunction barring Abbott from selling the infringing products, noting that Innogenetics’ product complied with FDA requirements for labeling and that Innogenetics had “the ability to fill the HCV diagnostic market need if [Abbott] were precluded from selling its products.”
 
For its part, Innogenetics has not revealed whether it plans to appeal Crabb’s decision to overturn the jury’s verdict that Abbott willfully infringed its product.
 
“Plaintiff is entitled to an accounting and to prejudgment interest; it is not entitled to enhanced damages or attorney fees because defendant’s infringement was not willful and nothing about its litigation conduct makes this an exceptional case,” Crabb wrote in her Jan. 3 decision.
 
Abbott said it is “pleased that the court reversed the jury verdict of willful infringement … and denied Innogenetics’ request for enhanced damages and attorneys’ fees.”
 
Goossens said Innogenetics “is currently reviewing the case, but has to date not yet made any decision regarding a potential appeal.”
 
Crabb’s Rationale
 
Innogenetics’ ’704 patent, filed in 1994 and issued in December 1998, claims:
A method of genotyping HCV present in a biological sample comprising hybridizing nucleic acids in a biological sample with at least one probe and detecting a complex as formed with said probe and said nucleic acids of HCV, using a probe that specifically hybridizes to the domain extending from the nucleotides at positions -291 to -66 of the 5′ untranslated region [5’ UTR] of HCV.
According to the jury, although other researchers had developed methods for detecting HCV using the 5’UTR, Innogenetics discovered it was possible to distinguish between different types and subtypes of HCV in a sample – an ability protected by the ’704 patent.
 
Judge Crabb determined that Abbott had “no evidence to support a claim of obviousness.”
 
Abbott’s defense centered on the claim that it had not infringed Innogenetics’ ’704 patent because its HCV genotyping assays are based on real-time PCR, a technology that wasn’t covered by the ’704 patent.
 
However, Abbott showed “limited evidence” in its defense to show that it used RT-PCR to perform the genotyping process in the ’704 patent, causing Judge Crabb to “disagree with the defendant’s contention that its products did not infringe” Innogenetics’ IP.
 
Additionally, the judge cited several precedent-setting cases, which suggest that a patent’s scope is not necessarily circumscribed within the technologies available at the time of its filing.
 
Citing Bayer AG v. Biovail Corporation, Crabb noted that “although a court must consider what was known to one of ordinary skill in the art at the time of filing, the claims of the patent are not necessarily limited to technologies known at the time of filing.” Additionally, in SuperGuide Corporation v. DirecTV Enterprise it was found that “the law does not require that an applicant describe in his specification every conceivable and possible future embodiment of his invention.”
 

District Judge Barbara Crabb cited several precedent-setting cases, which suggest that a patent’s scope is not necessarily circumscribed within the technologies available at the time of its filing.

Furthermore, it came to light during the trial that Innogenetics had tried to resolve its patent dispute with Abbott repeatedly through licensing. Innogenetics sent two letters, in September 2003 and again in December 2004, proposing Abbott license its HCV genotyping technology.
 
Innogenetics decided to pursue the matter in court only after the presidents of the two companies met in March 2005 and failed to come to an agreement on the matter.
 
The rationale to award Innogenetics $7 million in damages factored in the amount Abbott would have paid to Innogenetics had they entered into a licensing agreement. The jury determined that Abbott owed Innogenetics $5 million as a lump sum payment for the license and $2 million as running royalty payments.
 
Innogenetics Wins for Small Dx Shops
 
Winning a seven-figure sum for damages and then garnering an injunction against one of the largest diagnostic firms in the world sends “a compelling signal,” Goossens said.
 
“The outcome of [the injunction] is important since it stresses once more the strength and commercial relevance of our IP in the field of HCV genotyping,” he said.
 
The end of the legal battle is also expected to have a positive impact on the company’s revenues. According to Innogenetics’ 2005 annual report, the infringement by Abbott and alleged infringement by Third Wave “resulted in a shortfall in royalties and licensing income” that led to a nearly 12-percent decline in 2005 diagnostic product sales to €40.3 million from €45.7 million in 2004.
 
But in its most recent earnings statement, for the third quarter of 2006, the company projected a rebound in full-year diagnostics product revenues to €45 million.
 
For the nine months ending Sept. 30, 2006, diagnostic product sales increased by approximately 15 percent to reach €33.5 million.
 
Legal expenses are expected to take a toll on the firm, however. Operating losses for the third quarter rose from €0.9 in 2005 million to €4.2 million in 2006, “most of which related to costs incurred for US litigation,” the company said.
 
Innogenetics said at the time that it “anticipates that its full-year bottom-line result may be impacted by the HCV genotyping patent suit.”
 
Outside of the patent dispute, Innogenetics continues to hold business affiliations with Abbott in several areas. According to Goossens, Abbott has access to Innogenetics’ IP in the field of HIV-O. The companies recently concluded a commercial agreement in the field of tissue typing and a license agreement in another area of HCV unrelated to the genotyping patent.
 
Ultimately, Goossens suggested, Innogenetics’ win may bolster the confidence of small, European companies, who may lack the resources or feel intimidated to aggressively protect their patents in unfamiliar soil against behemoth, global firms like Abbott.
 
“For small [to] medium-sized EU companies it is always a difficult, maybe a psychological step, to challenge a US company, more in particular if that party is a major league company with much more firepower,” Goossens said. “It is not always evident to take the step and file suit in the backyard of such company.”
 
 In addition, he noted, “filing suit in the US is an expensive procedure.”

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