Friday, 29/08/2008
Abbott Litigation
CAT's entitlement to royalties in relation to sales of HUMIRA® is governed by an agreement dated 1 April 1995 between CAT and Knoll AG. The agreement allows for offset, in certain circumstances, of royalties due to third parties against royalties due to CAT, subject to a minimum royalty level. In March 2003, Abbott indicated to CAT its wish to initiate discussions regarding the applicability of the royalty offset provision for HUMIRA. Following unsuccessful efforts to resolve the matter with Abbott, CAT commenced legal proceedings against Abbott Biotechnology Limited and Abbott GmbH.
The trial took place in the High Court in London in November 2004. On 20 December 2004, the judge ruled in CAT's favour stating that Abbott was in error when it made its royalty payments to CAT on the basis that only two per cent of Net Sales was due and that Abbott should have pay the full royalty of just over five per cent. On 28 January 2005 the judge announced his decision on various procedural matters; he denied Abbott's request for permission to appeal his judgment of 20 December 2004 and ordered Abbott to pay CAT's costs of the case together with certain interest payments and a payment representing currency losses. In January 2005, Abbott paid CAT $23.73 million, representing the royalty arrears due to CAT arising from the original judgment plus additional payments of $1.29 million for interest and currency losses and £2.85 million interim legal costs.
In March 2005, the Court of Appeal granted Abbott's application for permission to appeal and was due to hear Abbott's appeal in October 2005. On 26 October 2005, CAT and Abbott reached an agreement regarding royalties and the appeal did not take place.
Further details on royalty payments can be found in the news release dated 26 October 2005.