Eli Lilly can’t avoid royalties in insulin suit
Eli Lilly will have to pay undetermined royalties from the net sale of its diabetes treatment to Research Corporation Technologies (RCT), an Arizona judge has ruled.
The order granting in-part and denying in-part a summary judgment in a contract dispute over diabetes medication was handed down on Tuesday, October 19 by the US District Court for the District of Arizona.
The suit stems from a 1990 license agreement between Lilly and Phillips Petroleum Company, in which Lilly agreed to pay Phillips 2% of net sales of its drug in exchange for the use of a certain strain of yeast.
Phillips agreed to provide Lilly with the strain Pichia pastoris and related technology needed for Lilly to produce insulin. In 1993, Phillips sold all related IP from the Pichia technology, including patents, to RCT.
In 2001, Lilly extended the license agreement with RCT and entered into a manufacturing agreement with Sandoz to use Pichia to manufacture Carboxypeptidase-B (CpB), which Lilly then used to manufacture its diabetes drugs.
According to the complaint, Lilly did not provide written notice to RCT of the manufacturing agreement with Sandoz until 2015.
RCT sued Lilly in April 2016, alleging Lilly breached its contract by failing to pay royalties, exceeding the scope of the license, and failing to notify RCT about its agreement with Sandoz. Lilly moved for a summary judgment on all claims.
The court ruled that RCT demonstrated that it was entitled to a judgment on Lilly’s failure to report sales and pay royalties, with the amount of damages to be determined at trial.
The court also held that Lilly’s breach of contract was not “genuinely in dispute” and should be treated as established fact.
However, the judge also ruled that Lilly did not exceed the scope of the license agreement, nor did it breach confidentiality provisions of the agreement as Sandoz was a sublicensee, but it did breach the agreement by failing to notify RCT of its agreement with Sandoz.
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories sent like this straight to your inbox
