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Celgene's Stinginess: Hell Hath No Fury Like a Scorned Woman Who Discovers a Billion-Dollar Cancer Drug

A federal judge seems to be suggesting that Celgene (CELG) should settle a widow's lawsuit -- one in which the woman accused the company of not compensating her for discovering that Thalomid (thalidomide) can be used to treat the blood cancer multiple myeloma. The company should take the judge's advice before it makes an even bigger fool of itself than it already has. It's a classic case of legal blinkers: Management has convinced itself -- probably correctly -- than it can win the case as a matter of law. But the law is not what the case is about. It's about whether companies want to encourage people to bring them new ideas, and how they treat those who do so. This time, Celgene has picked on the wrong victim, and if you read between the lines of Judge Faith Hochberg's ruling (which keeps the case alive by as thinly contrived a judicial thread as I've ever seen) the message seems to be that Celgene might do better to write a discreet check than litigate this in public.

The case revolves around Beth Jacobson, who watched her husband die of multiple myeloma in 1997. Before he passed, Jacobson pointed out to her doctor that thalidomide was successful in childhood leukemia, which is similar. They obtained a supply of the drug from Celgene, but it failed and her husband died. It was then requested by another patient at the same facility and was successful. By 2008, at least 80 percent of Celgene's annual revenue of $2.3 billion was derived from the sale of Thalomid to treat the disease.

Over the years, Celgene lauded Jacobson's discovery of Thalomid's anti-cancer properties in its annual report and at a gala for the International Myeloma Foundation at which Jacobson received an award for identifying thalidomide as a multiple myeloma treatment. The company even said it would put her name forward for its board of directors.

But then Celgene's new CEO, Sol Barer, stupidly stopped returning her calls.

If you read the ruling, it's clear that the judge doesn't expect Jacobson to win. She's letting the case proceed on the narrowest of grounds, allowing only discovery as to evidence of whether Celgene tried to hoodwink Jacobson with a bogus board seat offer. The judge noted that Jacobson's case rests on an "unprecedented theory" that she can "own" the right to a medical therapy outside of patent law. And the judge wrote that she believes the limited discovery permitted will fully establish Celgene's right to Thalomid.

So why did Judge Hochberg let the case go ahead? Because she can see, just like everyone else, that Celgene has treated Jacobson about as shabbily as it possibly could, within the law. Now it's time for Celgene to settle.