Genentech says key patent rejected, may appeal

NEW YORK (Reuters) - Genentech Inc (DNA.N: Quote, Profile, Research, Stock Buzz) said on Monday the U.S. Patent and Trademark Office has rejected the validity of a key patent that governs the biotechnology company's method of producing some of its drugs.

Genentech, which also receives revenue under licensing agreements covering other companies' medicines that utilize the technology, said it would file a response to the action and, if necessary, appeal the decision to the Board of Appeals within the Patent Office.

The company said the patent, known as the Cabilly patent, remains valid and enforceable through the appeals process, which it anticipates could take one to two years, or longer.

The patent involves the method of producing antibodies and antibody fragments, a crucial step in the manufacture of biotechnology drugs.

The patent had been challenged by MedImmune, which has since been acquired by AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz).

The patent was awarded in 2001 even though the discoveries on which it was based were made in the 1980s. If not revoked, the patent would run until 2018.

Companies that pay royalties to Genentech based on the patent include Abbott Laboratories Inc (ABT.N: Quote, Profile, Research, Stock Buzz) and Johnson & Johnson (JNJ.N: Quote, Profile, Research, Stock Buzz), for their widely used rheumatoid arthritis medicines, Humira and Remicade, and ImClone Systems Inc (IMCL.O: Quote, Profile, Research, Stock Buzz) for its Erbitux cancer drug.

If the patent is ultimately found to be invalid, it could amount to substantial savings for companies now paying royalties.

(Reporting by Bill Berkrot; Editing by Braden Reddall)