Millions of dollars at stake in patent lawsuit

V. Paul

Attorneys representing the University and a North Carolina-based pharmaceutical company convened Thursday in St. Paul federal court to negotiate a settlement over an anti-AIDS drug patent dispute.
Earlier in the week, U.S. Federal Magistrate Judge John Mason ordered the parties to attend the settlement conference, postponing a hearing that would have brought the University’s lawsuit against Glaxo Wellcome Inc. closer to trial.
The University sued the company in October 1998, alleging Glaxo Wellcome infringed on University patents and violated a 1992 licensing agreement.
Associate General Counsel William Donohue said the University is positioned to recover tens of millions of dollars in royalty payments from the sale of Ziagen if the lawsuit is successful. Glaxo Wellcome argues that the University is not entitled to profits from the drug’s sale.
The University contends that compounds in the anti-AIDS drug Ziagen were developed by Robert Vince, a professor of medicinal chemistry and a researcher licensed by Glaxo.
Ziagen inhibits the replication of an HIV virus and was approved by the Federal Drug Administration for sale in the United States in December 1998.
Mason mediated Thursday’s conference between the University and Glaxo Wellcome, walking back and forth between each group, who sat in separate rooms.
The University and Glaxo have been negotiating a settlement for the past four months, Donohue said.
Court documents filed Sept. 16 indicated that neither party wanted to participate in additional mediation. Typically, judges order settlement conferences to encourage parties to resolve an issue without a lengthy trial.
University attorneys do not expect a trial date until 2001, Donohue said.
Both parties declined comment on the settlement conference.
The pre-trial hearing would have resolved disputes between the University and Glaxo Wellcome regarding the exchange and transfer of documents and information for the case, a necessary step before the case could go to trial.
University attorneys said they want the case to be decided by a jury rather than by a judge, a matter that would have been discussed during the pre-trial hearing.
“At this point, we think it’s the fairest way to resolve it,” Donohue said. “We prefer the judgment of 12 citizens of Minnesota.”
Under terms of the 1992 contract, Glaxo Wellcome agreed to pay the University 10 percent of net sales on Ziagen in the United States, as well as 5 percent based upon the manufacture of Vince’s compounds for use in other products sold in the United States.
University officials allege Glaxo Wellcome has manufactured Ziagen only in the United Kingdom to avoid the license agreement with the University.
“Our argument is primarily that they haven’t paid us the royalties,” Donohue said. Glaxo is also contractually bound to substantially produce Ziagen in the United States, he said.
In response, Glaxo filed a counter suit against the University, alleging that the compounds in question were not developed by Vince but by a Glaxo employee who was a post-graduate student working for Vince at the time.
Glaxo Wellcome contends that the University’s failure to acknowledge the student’s contribution to the compound invalidates the University’s patents, according to court documents.
In other words, the company claims that neither University patents nor Glaxo’s agreement with the University could be applied to the manufacture and sale of Ziagen.
Attorneys for Glaxo declined comment because of company policies regarding pending litigation.

V. Paul Virtucio covers courts and welcomes comments at [email protected]