The U.S. Patent and Trade Office has issued a preliminary ruling against a Genentech patent, which brings in an estimated $300 million in patent royalties each year from companies such as Johnson & Johnson, MedImmune, and Amgen. Examiners have said that the Genentech patent, which expires in 2018, covers the same inventions as another Genentech patent which expires in early 2006.

The Genentech patent at issue, known as the Cabilly patent (named by its inventor Shmuel Cabilly), covers a method of making antibodies and has been the subject of extensive litigation, including dispute with the European biotech company Celltech, as is summarized by Stephen Albainy-Jenei in his Patent Baristas blog:

[O]n March 25, 1983, Celltech filed in the United Kingdom a patent application directed to the methods of making recombinant antibodies and antibody fragments, together with vectors and host cells useful in these processes. Celltech filed a related patent application in the United States, which issued as U.S. Patent No. 4,816,397 (“the Boss Patent”). On April 8, 1983, about two weeks after Celltech’s original U.K. filing, Genentech filed a United States patent application directed to similar technology, which issued as U.S. Patent No. 4,816,567 (“the Cabilly Patent”). The Boss Patent and the Cabilly Patent issued on the same day, and both were scheduled to expire on March 28, 2006.

After Celltech’s Boss Patent issued, Genentech copied the Boss Patent claims into a previously-filed Cabilly Patent continuation application. As a result, the United States Patent and Trademark Office declared an interference between Celltech’s issued Boss Patent and Genentech’s Cabilly Patent continuation application to determine who was the first to invent, and therefore which company would be entitled to a patent on, the claimed invention. Seven years after the Genentech-Celltech interference began, the Patent Office determined that Celltech’s inventors, and thus Celltech, were entitled to the patent. . . . Genentech appealed. . . .Following two years of discovery, i.e. more than nine years into the dispute, the District Court denied Genentech’s motions that it was entitled to a patent on the disputed technology. . . . Shortly after the District Court ruled on those motions, Genentech and Celltech settled their dispute [in 2001]. . . .

In addition, one of Genentech’s Cabilly patent licensees, MedImmune, filed a lawsuit against Genentech and Celltech claiming violations for antitrust, patent,and unfair competition laws, and asking for a finding of invalidity of the Cabilly patent. The MedImmune case has not yet been resolved.

According to Red Herring, the Cabilly patent covers only 3-4% of Genentech’s antibody product sales; however, the ruling may still raise reporting questions for Genentech. CNN Money reports that a loss of this matter could curtail a significant portion of Genentech’s $641 million in annual royalty income.

Genentech will now have the opportunity to respond to the ruling, which the company is anticipated to do within the next sixty days. Forbes reports that it is expected that all of the licensees will continue to pay royalties until such time as a final adverse ruling is made.