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XOMA v. CENTOCOR JURY CONSIDERING VERDICT ON FOUR QUESTIONS FROM SAN FRANCISCO FEDERAL COURT; DELIBERATION FOLLOWS OVER THREE MONTHS OF TESTIMONY

Executive Summary

The eight-member jury in the Xoma v. Centocor monoclonal antibody-based anti-endotoxin products patent case is considering verdicts on four questions handed down by the San Francisco federal court in a civil case that began July 15. The jury, which heard closing arguments from the two biotech companies' attorneys on Oct. 22-23 followed by instructions from Judge Robert Schnacke, was first asked to consider the question: "Has Xoma proved, by a preponderance of the evidence, that Centocor has literally infringed claim 7 of the '163 patent?" Claim 7 of Lowell Young's patent (#4,918,163), which belongs to the University of California and was exclusively licensed to Xoma, has been the only claim at issue in the suit. The claim covers a "therapeutically effective amount of an antilipid A region monoclonal antibody of the IgM isotype that competitively inhibits the binding of the monoclonal antibody by the cell line ATCC Accession No. HB9081." Centocor's HA-1A patent, issued on Oct. 15, was not mentioned during closing arguments, nor were the results of the Sept. 4 meeting of the Vaccines & Related Biologic Products Advisory Committee on Xoma's E5 and Centocor's Centoxin sepsis products. The jury's main task in judging infringement appears to hinge on which expert witness to believe. At the Sept. 4 advisory committee meeting, Centoxin was found effective for a presumptive diagnosis of gram-negative bacteremia in patients with and without septic shock and E5's consideration for an approval recommendation was put on hold for additional analyses by FDA of the company's clinical trial results ("The Pink Sheet" Sept. 9, p. 14 and p. 17). The outcome of the meeting was alluded to only indirectly by Centocor attorney Donald Dunner, who said that Centoxin is "well on the way" to approval in the U.S. Both Xoma and Centocor have conceded that Centoxin meets all of the elements protected by claim 7 of Xoma's patent, with the exception of the clause concerning "competitive inhibition," or one antibody's ability to stop the other antibody from binding to an antigen, presumably proving that the two antibodies bind to the same site. Whether HA-1A competitively inhibits the binding of E5 has been one of the main thrusts of the trial. Xoma attorney Gerald Sobel, of the New York law firm Kaye, Scholer, Fierman, Hays & Handler, argued in his closing statement that Xoma had presented over the course of the trial a "mountain" of evidence proving competitive inhibition. In addition to Xoma's own competitive inhibition tests, Xoma relied on the work and testimony of David Benjamin, MD, University of Virginia Medical School, who, in a number of assays, said he proved both that HA-1A competitively inhibits the binding of E5, and that E5 competitively inhibits HA-1A. While claim 7 of the Young patent calls for measurement of competitive inhibition by "an enzyme immunoassay or other competitive inhibition immunoassay," Sobel claimed that Xoma had shown competitive inhibition in two types of enzyme immunoassays -- EIA and LAL -- and also by RIA, a radiolabeled immunoassay. Centocor attorney Dunner, of the Washington, D.C. law firm Finnegan, Henderson, Farabow, Garrett & Dunner, in his closing arguments sought to undermine the credibility of Xoma's expert witness by pointing to what he called "flip-flops" made in Benjamin's testimony. Dunner compared Benjamin's responses with the testimony of Centocor's expert witness David Morrison, MD, University of Kansas Medical Center, who testified that no conclusion of competitive inhibition could be drawn from his or any of the other assays performed. The jury also has been asked to decide if Centocor has infringed claim 7 of Xoma's patent by the "doctrine of equivalence." Xoma's Sobel contended that even if it could not be established that HA-1A competitively inhibits the binding of Xoma's E5, it would be sufficient to establish infringement if E5 competitively inhibits HA-1A. Dunner argued that the two are not the same thing, but rather that the doctrine of equivalence was intended to provide protection to patent holders against products exhibiting only insignificant differences from the patented original. Such was not the case here, he maintained. Independent of infringement issues, the jury also was asked to decide: "Has Centocor proved, by clear and convincing evidence, that claim 7 of the '163 patent is invalid?" Centocor offered arguments on four separate grounds, any of which, if unanimously agreed upon by the jury, would render Xoma's '163 patent invalid. Centocor's Dunner argued that the language of claim 7 is "indefinite," and was variously interpreted by different Xoma experts. He also argued that the "description" requirement of the patent is not satisfied because the patent application "did not clearly show that antibodies that competitively inhibit E5 were part of Dr. Young's invention." Dunner also argued that a 1985 article by Nelson Teng, MD/PhD, University of California-Berkeley, constituted "prior art" that served to enable Young's patented discovery. He finally argued that HA-1A was "on sale" for more than a year -- Stanford University sought and obtained over 70 licensors for the monoclonal antibody -- prior to the patent application, thus making any later attempt to limit HA-1A's use invalid. Sobel countered by arguing that the U.S. Patent & Trademark Office had been in possession of Teng's article throughout the review process and had decided at the time it granted the '163 patent application that Teng's article was not "enabling." He said that the language of the claim is clear and that any details omitted are "obvious" to anyone "ordinarily skilled in the art" the patent covers. He claimed that Centocor did not meet the stringent requirements necessary for a successful "on sale" claim, since HA-1A was not highly developed at the time of Young's April 1986 patent application. To invalidate claim 7 of the '163 patent, the jury must find the evidence "clear and convincing," a higher standard than the "preponderance" of evidence required in the other questions. Judge Schnacke said each juror must hold a "firm conviction" in order to hold the patent claim invalid. The final question on which the jury will return a verdict asks: "Has Centocor proved, by a preponderance of the evidence, that it has an implied license to make, use and sell HA-1A despite claim 7?" The question hinges on the interpretation applied to the exclusive licensing agreement between Xoma and the University of California-Berkeley, the licensing agreement between Stanford University and Centocor, and the cooperative agreement between Stanford and Berkeley, which share the '163 patent. Centocor's Dunner argued that a clause in the Stanford/Centocor agreement requiring Centocor to use all reasonable efforts to develop and market HA-1A implies that HA-1A must have been intended under that agreement to be sold for the treatment of gram-negative infection in humans, regardless of the limitations of claim 7. Sobel pointed to several "negative warranty" clauses in the agreements which state that Centocor is not free from the liability of infringement of any patents it violated.
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