Cambridge Antibody Technology soars on Abbott trial victory

The trial concerns an agreement made between the two companies, originally entered into in 1993 and replaced in 1995, under which Cambridge Antibody Technology (CAT) licensed Abbott to use its technology to develop, manufacture and market a genetically engineered human antibody for the treatment of rheumatoid arthritis.

The disagreement concerns a dispute over the extent of an offset or royalty sharing provision. CAT argues that Abbott can only demand that CAT shares royalties in respect of third party rights covering CAT’s technology, while Abbott argues that it is entitled to require CAT to share half of the royalty burden it has for all technology used during the product’s development and production.

In late 2003 Abbott began paying royalties to CAT under the 1995 agreement at a level of two percent of Humira’s net sales. CAT argues that it should have paid and should continue to pay the full royalty, at a level of five percent, without deductions.

The judge ruling on the case concluded that, “the construction advanced by CAT is correct and the construction advanced by Abbott does violence to the language of the agreements, renders them obscure and makes little or no commercial sense. For this reason CAT wins this action.”

Abbott has made an application for permission to appeal, although this will not be heard before late January 2005.