| -> | | | | parties in relation to other patented technology |
| The case, Cambridge Antibody Technology v | | | | used in the development of HUMIRA. They |
| Abbott Biotechnology Ltd and another, concerned | | | | argued that having taken licences from a number |
| what royalty payments were due to the claimant, | | | | of third parties that owned patents; the offset |
| Cambridge Antibody Technology, under the | | | | had reduced the amount payable to the claimant |
| agreements between the parties. | | | | to the minimum payment of 2%. Accordingly, |
| Cambridge Antibody Technology was a company | | | | they had calculated the royalty payments due to |
| undertaking research and development work and | | | | the claimant as 2%. The claimant accepted that |
| licensing of its technology, in relation to the | | | | the agreements contained an offset provision but |
| production of antibodies. The first defendant was | | | | argued that it applied only to royalties which the |
| the holding company of the second defendant | | | | defendants needed to pay to third parties in |
| which was one of a group of pharmaceutical | | | | respect of the use of the licensed technology by |
| companies. The parties entered into a | | | | the claimant. They contended that all of the |
| collaborative agreement in 1993, whereby the | | | | licences relied on by the defendants related to |
| claimant granted the defendants the right to use | | | | patents covering parts of the HUMIRA production |
| its technology in the production of a | | | | process rather than that involving the claimant's |
| genetically-engineered human antibody for use in | | | | technology. Therefore the offset provision was |
| the treatment of rheumatoid arthritis. | | | | not triggered. The claimant submitted that the |
| Two years later in 1995, the parties substituted | | | | defendants should have been paying a royalty for |
| the first agreement for a second one on | | | | the bulk of their sales of HUMIRA at the rate of |
| substantially the same terms. As a result of the | | | | just over 5% and not at the rate of 2%. |
| collaboration, the defendants produced a product | | | | The claimant's claim was allowed. The judge held |
| known as HUMIRA. | | | | that on the true construction of the agreements, |
| In accordance with the agreements, the | | | | the construction put forward by the claimant was |
| defendants agreed to make royalty payments to | | | | correct - that was the only construction which |
| the claimant at a rate of just over 5% of the net | | | | was consistent with all the other provisions of the |
| sales of HUMIRA, subject to an offset or | | | | agreements and made commercial sense in the |
| royalty-sharing provision. This provision allowed the | | | | factual matrix within which the agreements had |
| defendants to deduct from the royalties due to | | | | been made. |
| the claimant half the royalties due under licences | | | | Accordingly, the royalties' payable by the |
| from third parties for certain categories of | | | | defendants should have been calculated on the |
| technology. This was subject to the payment by | | | | basis of the full royalty of approximately 5%. |
| the defendants of a minimum royalty provision of | | | | If you require further information contact us |
| 2%. The interpretation given to the royalty | | | | Email: © RT COOPERS, 2005. This Briefing |
| provisions in the agreements came in dispute. | | | | Note does not provide a comprehensive or |
| The defendants claimed that they were entitled | | | | complete statement of the law relating to the |
| to offset, against what was due to the claimant, | | | | issues discussed nor does it constitute legal advice. |
| 50% of the royalty payments paid to third | | | | It is intended only to highlight general issues. |