Lilly Loses Round 1 in Patent Trial

Lilly lost the first round in its patent-infringement battle with Ariad Pharmaceuticals, which was granted a $65.2 million award. The award includes a 2.3% royalty on all sales of Lilly drugs Evista and Xigris, until Ariad’s patent expires in 2019.

The suit was based on a patent held by Ariad and co-plaintiffs MIT, Harvard, and the Whitehead Institute covering regulation of the NF-KB cellular pathway, a method that Evista and Xigris both employ. Lilly contends that the patent should never have been granted, and that the company began developing drugs using this pathway before the patent was filed. According to a Lilly lawyer, the patent is tantamount to “discovering that gravity is the force that makes water run downhill, and then demanding the owners of all the existing hydroelectric plants begin to pay patent royalties on their use of gravity.”

Ariad acquired the patent from the other plaintiffs and has attempted to license the patent to companies that could be interpreted as infringing upon it. The patent was awarded in 2002, 16 years after it was filed. Amgen recently filed suit to nullify Ariad’s patent, which could also target Enbrel ($2.5 billion in 2005 sales for Amgen).

Evista had sales of $653 million in 2005; Xigris had $119 million. Lilly is planning to appeal the verdict if the trial judge does not overturn the verdict, and has also requested that the Patent Office review the NF-KB patent. Ariad has no drugs on the market.