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The U.S. court of Appeals for the Federal Circuit appears to have written the end to a long-standing and hard-fought patent battle between two competing biotech companies. In a ruling handed down on Sept. 6, a divided appeals court panel tossed out a jury verdict against Cadus Pharmaceutical Co. of New York and invalidated for “obviousness” a patent for a test whose purpose is to identify compounds used for discovering drugs. S IBIA v. Cadus, No. 99-1381. The test could help researchers find drugs that would aid in the treatment of cancer, inflammatory disorders and a wide range of other diseases. SIBIA Neurosciences Inc. of La Jolla, Calif., sued Cadus in July 1996, charging that a Cadus screening technique infringed SIBIA’s ’629 patent, which issued in March 1995 and was assigned to The Salk Institute Biotechnology/Industrial Associates Inc. of San Diego (SIBIA). The two companies then fought a bitter battle, both in federal court and in the marketplace, with each side sending out flurries of press releases at each procedural step in the case. LONG TIME BREWING Before the case was filed, the two companies had been involved in lengthy discussions over the disputed technology. Cadus went public in 1996 and then accused SIBIA of waiting to file suit until the time of the initial public offering, “intending to interfere and disrupt” the IPO. In December 1998, a jury in San Diego found that Cadus had infringed SIBIA’s ’629 patent. That jury awarded SIBIA $18 million in damages. After the jury verdict, Cadus turned to Laura A. Coruzzi, a partner at New York’s Pennie & Edmonds, who successfully pursued the appeal. Under patent law, an invention cannot receive a valid patent if someone with ordinary skill in the art could deduce the technology from available public information, known as prior art. Coruzzi argued that more than a year before SIBIA applied for the patent, an article by biochemist Deborah J. Stumpo and other scientists appeared in the Journal of Biological Chemistry and essentially outlined the same test method. The appeals court agreed with Coruzzi, noting that “the undisputed teaching of the Stumpo paper leads one to within a hairsbreadth” of one of the claims in the ’659 patent. LACK OF TIME Coruzzi does not fault the Patent Office for failing to find the invalidating prior art during the examination period. “I think the Patent Office did the job it could in the time allotted,” she said, noting that examiners have a limited period to process an application from start to finish. “It’s not impossible [for an examiner] to miss a reference that is relevant,” she added. SIBIA no longer exists as a separate entity. The company was acquired by Merck & Co. of Whitehouse Station, N.J., in November 1999. Merck was represented at the appeals court by Stephen P. Swinton of the San Diego office of Cooley Godward, who declined to comment on the case. However, Merck assistant counsel William Krovatin said that his company had not yet decided whether to apply for an en banc rehearing. He also said that any disputes with Cadus over allegations of interference with the SIBIA IPO “had been resolved at the time of purchase by Merck.”

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