A federal jury has awarded Innogenetics $7 million in damages after unanimously finding Abbott Laboratories willfully infringed an Innogenetics patent covering a method of genotyping the hepatitis C virus.
Innogenetics said that the judge in the case can increase the award by a factor of three because Abbott was found to have willfully infringed.
Innogenetics CEO Frank Morich called the verdict “a great event for the company.”
“We believe that we were sitting on a rather solid piece of intellectual property and it’s great to have that confirmed under the toughest of circumstances,” Morich told Pharmacogenomics Reporter. “It’s a great feeling because this particular piece of intellectual property is one of the cornerstones of this company.”
The patent at issue, US No. 5,846,704, “Process for typing of HCV isolates,” protects the use of probes targeting sequences from the 5' untranslated region of HCV for genotyping HCV isolates, as well as a process and kit for HCV genotyping.
The IP forms the basis for Innogenetics’ flagship product, the INNO-LiPA HCV genotyping test marketed by Bayer Healthcare under the Versant brand.
Gent, Belgium-based Innogenetics filed suit last September against Abbott and Third Wave Technologies in the US District Court for the Western District of Wisconsin for infringing the '704 patent [PGx Reporter 10-20-05].
In a statement at the time, Innogenetics said that Abbott and Third Wave “refused” to license the technology.
Third Wave settled in February [PGx Reporter 02-15-06], taking a non-exclusive license to sell Innogenetics' HCV genotyping products and the option to extend the license to the entire HCV patent estate.
Third Wave joined Roche Diagnostics as a licensee of the ‘704 patent. Roche and Innogenetics signed an agreement in 2003 under which Roche was granted a worldwide non-exclusive license to the HCV genotyping IP in exchange for an up-front license fee of €5 million ($6.3 million) and royalty payments on genotyping product sales.
Innogenetics, founded in 1985, is pursuing a two-pronged strategy of diagnostic and therapeutic development, but the bulk of its business comes from the diagnostic side. Led by the HCV genotyping test, the diagnostic division was responsible for €40.3 million of the firm’s total 2005 product sales of €42.3 million.
The firm attributed a nearly 12-percent decline in 2005 diagnostic product sales from €45.7 million in 2004 to “the unwillingness on the part of two US companies to take our HCV patent portfolio into account.”
According to Innogenetics’ 2005 annual report, the infringement by Abbott and alleged infringement by Third Wave of the HCV genotyping IP “resulted in a shortfall in royalties and licensing income, as well as a reduction in sales for our flagship product — the Bayer-marketed HCV genotyping test.”
“We believe that we were sitting on a rather solid piece of intellectual property and it’s great to have that confirmed under the toughest of circumstances.”
Companies marketing HCV tests “without paying the standard commercial fees that you normally do under licensing terms can, of course, market under different conditions, meaning different prices, and that has had an impact on our top line,” Morich told Pharmacogenomics Reporter.
Morich noted that the firm’s decision to sue Abbott and Third Wave was not made lightly. “We tried to really scrutinize our IP internally and externally as much as possible before we launched [the lawsuit],” he said. “We didn’t do this with a ‘Let’s have a go at it’ attitude. We simply don’t have the size and the money for that kind of attitude.”
Innogenetics employs 530 staffers and has a market cap of €295 million. The company’s cash position was €34.5 million as of June 30.
“To shoulder a case like this is always a burden on the organization, and it definitely has an impact on operational efficiency,” Morich said.
With the lawsuit behind it, the firm said it expects to be able to meet its 2006 revenue target of €68 million.
In documents filed with the district court on Sept. 12, Innogenetics said it planned to file motions for a permanent injunction against Abbott as well as enhanced damages and attorney’s fees, and requested an extension of the filing date from Sept. 22 to Sept. 25.
Jonathon Hamilton, a spokesman for Abbott, told Pharmacogenomics Reporter sister publication GenomeWeb News that the company continues to believe the ‘704 patent is not valid and will continue evaluating its legal options.