UC Regents Sue Lilly in Dispute Over Biotech Patent for Insulin

The regents of the University of California on Wednesday sued Eli Lilly & Co., alleging that the largest U.S. maker of insulin infringed on a university patent for the biotechnology that Lilly uses to make its genetically engineered insulin product.

The university obtained the patent in 1984 after the technology was developed by four scientists at UC San Francisco, the regents said in a complaint filed in U.S. District Court in San Francisco. The scientists discovered a way to splice the gene for human pro insulin (an insulin precursor) from human genetic material and turn it into a bacteria that produces human insulin, the university said.

Indianapolis-based Lilly “has been and still is willfully infringing” on the patent despite protests from the university, the complaint said. The university filed the suit after reaching an impasse in negotiations with Lilly toward a licensing agreement to compensate UC for the technology, UC attorney Allen B. Wagner said. He said this is the first time the university has sued to protect one of its approximately 100 biotechnology patents.

The university is seeking an injunction barring Lilly from continuing the alleged patent infringement, an accounting of profits and triple damages “in view of the willfulness of the infringement.” The suit also seeks attorney’s fees.

Lilly officials couldn’t be reached for comment.

Lilly, one of the largest U.S. pharmaceutical companies, controls 80% of the U.S. insulin market with two products. It markets insulin derived from animals under the name Iletin but sells far more of the genetically engineered insulin sold under the Humulin name. Some analysts estimate 1989 sales of Humulin at $295 million, compared to $160 million for Iletin.

Wagner said the share of those sales to which the university believes it is entitled “will be the subject of considerable research.”

Lilly’s major product is the oral antibiotic Ceclor, and analysts expect sales of the antidepressant drug Prozac, introduced in 1988, to explode in 1990. But Humulin is considered a key factor in Lilly’s sales growth and expansion overseas. Physicians appear to prefer Humulin for treating diabetics because it is identical to human insulin, whereas insulin derived from animals has some differences.

Lilly was the first company to introduce a human insulin and was able to enter the European market and win some market share from the European manufacturers. Lilly announced in 1988 a new $150-million plant in Indianapolis to meet worldwide demand for Humulin and has announced plans for a new Humulin plant in France.

Universities are increasingly willing to take on private industry to protect patent rights. The University of Pennsylvania recently said it is suing Johnson & Johnson Co. in a dispute over the acne medicine Retin-A, which has also been touted as an “anti-aging” cream that smoothes facial wrinkles.

The university and one of its professors who developed Retin-A had a license agreement with Johnson & Johnson on the use of Retin-A for acne. But the university alleges that the professor, without telling the university, obtained a separate patent for Retin-A to fight wrinkles and signed a separate deal with Johnson & Johnson. The university claims that all patent rights belong to the institution because the professor was a university employee. It is also seeking damages and royalties from the sale of Retin-A.