Cambridge Antibody Technology v Abbott Biotechnology Ltd and another

JurisdictionEngland & Wales
JudgeMr Justice Laddie
Judgment Date20 December 2004
Neutral Citation[2004] EWHC 2974 (Pat)
CourtChancery Division (Patents Court)
Date20 December 2004
Docket NumberClaim No: HC03 CO 3963

[2004] EWHC 2974 (Pat)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

PATENTS COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

The Honourable Mr Justice Laddie

Claim No: HC03 CO 3963

Cambridge Antibody Technology Limited
Claimant
and
(1) Abbott Biotechnology Limited
(2) Abbott Gmbh & Co KG
Defendants

Mr Geoffrey Vos QC, Mr David Kitchin QC, Mr John Nicholls and Mr Richard Meade (instructed by Herbert Smith for the Claimant)

Lord Grabiner QC, Mr Simon Thorley QC, Mr Marcus Smith and Mr Justin Turner (instructed by Freshfields Bruckhaus Deringer for the Defendants)

Hearing dates: 22, 24–26, 29–30 November, 1–3, 6, 9–10 December 2004

APPROVED JUDGMENT

I direct pursuant to CPR Part 39 P.D. 6 that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Laddie

Mr Justice Laddie

Introduction

1

The claimant in this action is Cambridge Antibody Technology Ltd ("CAT"). It is a research based company which is involved in the development and licensing of technology relating, among other things, to the production of antibodies. The first defendant is Abbott Biotechnology Limited and the second is Abbott GmbH & Co KG. I shall refer to them together as "Abbott". The second defendant was known, until its acquisition by the Abbott group of companies in 2000/2001, as Knoll AG ("Knoll"). That company was part of the well known large pharmaceutical group, BASF. The first defendant is the second defendant's holding company. In the course of this judgment it will be necessary to refer to one other company which was part of the same corporate group as Knoll. I will draw no distinction between them and Knoll save and to the extent that the context demands. Before me Mr Geoffrey Vos QC, Mr David Kitchin QC, Mr John Nicholls and Mr Richard Meade appear for CAT and Lord Grabiner QC, Mr Simon Thorley QC, Mr Marcus Smith and Mr Justin Turner appear for Abbott.

2

This action arises out of a dispute as to the meaning of the royalty provisions in two agreements entered into between CAT and Knoll under which the latter obtained a licence to use ground-breaking technology invented by CAT which was, at the time when the agreements were entered into, the subject of two patent applications. The first agreement was entered into in 1993 ("the 1993 Agreement"). It was replaced by another one entered into in 1995 ("the 1995 Agreement"). There is little difference in the language of the two and the parties agree that they were intended to have and did have, in substance, the same meaning and effect. I shall refer to them together as the Agreements. In what follows, I will refer to the Articles in the two Agreements, where appropriate, by putting the number of the Article against the year of the Agreement. Thus Article 12.01 of the 1993 Agreement would be referred to as 12.01/1993.

3

Knoll wanted to use the CAT technology, a brief description of which I will give below, so that it could develop certain pharmaceutical preparations. In particular in the early 1990's it wanted to develop an antibody to a protein known as TNFa. TNFa is thought to play a major role in the chronic disease, rheumatoid arthritis. An antibody which targeted and neutralised that protein was considered a promising possible treatment of the disease. So it has proved. The result of the collaboration between CAT and Knoll/Abbott has been the production and marketing by the latter of a product called HUMIRA. It contains an antibody to TNFa made by use of, inter alia, CAT's technology. It has been described in the course of these proceedings and elsewhere as a potential block-buster drug. In the very short time since it has been placed on the market, its sales have grown fast and they are expected to reach a very high level. CAT's royalties are set on a sliding percentage of the income generated by sales of HUMIRA.

4

In a nutshell, Abbott argues that the 1995 Agreement entitles it to offset against what is due to CAT 50% of royalties it pays to third parties in respect of other patented technology it uses or has used in the development of HUMIRA. This is subject to a contractual minimum according to which CAT will always receive a royalty of 2%. Because it has taken licences under a number of third party patents, Abbott says that the offset has reduced the amount payable to CAT to that minimum. Its royalty payments to CAT have been calculated accordingly. Further it intends to pay the same 2% royalty to CAT in respect of sales of further pharmaceutical preparations which have been or will be made using the technology licensed to it by CAT. It was the decision to develop an additional product which resulted in the 1993 Agreement (which had been drafted in contemplation of the development of HUMIRA) being replaced by the 1995 Agreement. A second pharmaceutical developed by Abbott by use, amongst other things, of the CAT technology is currently undergoing clinical trials. A third licence was entered into in 1999 which relates to a number of other possible targets for commercial development by Abbott. It is not central to this dispute and can be ignored.

5

CAT accepts that there is an offset provision in the Agreements. However it argues that it applies only to royalties which Abbott needs to pay to third parties in respect of the use of the technology licensed by CAT. Since all the licences relied on by Abbott are in respect of patents covering parts of the process for producing HUMIRA other than that involving CAT's technology, the offset provision is not triggered. In the result Abbott should be paying a royalty for the bulk of its sales at the rate of about 5%.

6

CAT's primary submission is that its construction of the 1995 Agreement is correct. But it has fall back positions. It says that if it is wrong on construction, the 1995 Agreement (which is the one now in force) should be rectified either on the basis of common mistake or unilateral mistake. Further it argues that Abbott is estopped from asserting its construction. All of these points will have to be considered in due course. However before turning to the Agreements and the factual context in which they must be construed, it is necessary to understand, at a fairly superficial level, the technology involved in making a product like HUMIRA. HUMIRA contains, as its active ingredient, an antibody made by using recombinant DNA technology; so-called genetic engineering. It is therefore necessary to know something of how antibodies work and something of how recombinant DNA technology can be harnessed to produce proteins of choice.

The technical background

(i) Antibodies

7

Antibodies are molecules which are generated by an animal's immune system to assist in neutralising or destroying foreign matter, for example bacteria and viruses, which may have entered or be trying to enter the body. The surface of bacteria and viruses contain proteins. Proteins are very long molecules made up of building blocks, known as amino acids. It is the precise sequence and identity of the amino acids in the protein which, to a large extent, determine its size, shape, and chemical and physical behaviour. When a foreign protein enters, say, the blood stream of a human, the immune system recognises it as foreign and will set about trying to destroy or neutralise it. Each protein will have a number of places on its surface which are recognised as foreign and which can provoke an immune response from the host. These places are called antigens. An antibody is a molecule which the host immune system designs to lock onto a specific part of an antigen (called an epitope) on a foreign molecule. Since each antigen and epitope is different, different antibodies have to be made to lock on to each of them. Once an antibody has been built and it has attached to the antigen, it may interrupt some adverse behaviour of the protein on which the antigen is located, so that that behaviour is neutralised, or it may make the protein recognisable by the molecule-destroying systems in the host, with the result that the protein is either excreted by the host or destroyed.

8

Antibodies are themselves proteins. They are manufactured in specialist cells called blymphocytes. An individual blymphocyte cell can only produce a single design of antibody. If, therefore, the host wants to make five different antibodies to combat a foreign protein, it will be necessary to teach some blymphocytes to make one, others to make the second and so on. In fact there will usually be a number of different antibodies which can attach to a single epitope. Some will attach faster than others and some will have greater neutralising power than others. Once again each antibody molecule will be produced by a single blymphocyte. Since there are a vast number of possible permutations of foreign proteins and their antigens which the host has to be capable of responding to, each blymphocyte has to be capable of making any one of a vast number of bespoke antibodies. For the purpose of these proceedings it is not necessary to understand how blymphocytes do this. Suffice to say that all blymphocytes are capable of being programmed to make one of a vast array of possible antibodies.

9

Because they are proteins, antibodies are made by the protein-manufacturing apparatus within the blymphocyte cells. But because they are proteins they can also generate an immune response if they are put into an alien immune system. Thus an antibody generated in a mouse (called a "murine" antibody), if injected into, say, a human will generate an immune response in the human. This, as we shall see, is important when it comes to designing artificial antibodies for use as therapeutic agents in humans.

10

Antibodies are a group of proteins (strictly glycoproteins) known as immunoglobulins ("Ig"). There are a number of classes of...

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