The United States Court of Appeals for the Ninth Circuit has overturned a lower court judgment requiring Eli Lilly and Company to pay approximately $278 million in royalties to Research Corporation Technologies Inc. in a dispute involving insulin production technology.
A three-judge appellate panel ruled that Eli Lilly was not obligated to make royalty payments under a 1990 licensing agreement covering yeast expression technology. The court determined that the contract did not extend to insulin products manufactured using the specific biological process cited by the plaintiff.
The dispute began in 2016 when Research Corporation Technologies alleged that Eli Lilly improperly used licensed yeast expression technology linked to a partnership with Phillips Petroleum Co. The licensing rights were later transferred to RCT. The company argued that Eli Lilly’s insulin manufacturing relied on the patented biological method and therefore triggered royalty obligations.
Eli Lilly countered that its diabetes medications were not covered under the agreement because the company did not directly use the specified expression system in the final pharmaceutical products. The company maintained that it paid only minimum maintenance fees to keep the contract active.
