I believe that Roche is continuing to pay royalties. Their claim is that they really owe no royalties on European sales, due to a difference between US and EU patent law, but I think they're paying until the issue is resolved.
The Roche/PDLI contract specifies a huge penalty for Roche if they ever challenge the patent. So when Roche challenged, they did so not in a lawsuit, but in the form of a polite letter to PDLI management requesting clarification regarding European sales. Roche claims this was not really a challenge, but PDLI has been aggressive in claiming that Roche has already triggered the penalty clause. Some posters here and elsewhere concluded at the time that Roche must be trying to buy PDLI (which does make logical sense for them), and that this entire issue is just a negotiating ploy -- "sell us the entire company and this thorny issue goes away." I have no clue where the truth lies, nor how PDLI's breach of contract action against Roche may play out. It's just one more piece of uncertainty that's depressing PDLI's PPS at present, and it's part of the rationale behind the persistent rumors of a looming Roche buyout.
You are 100% correct................opinion FWIW....PDL feels strong enough that Roche did in fact challenge the patent that they filed suit against them in Nevada over the (2003?) agreement. That's a possible $1 BILLION payout against Roche. Add that to PDL assets and the Medimmune issue becomes mute. As mentioned before it would be in Roche's best interest to settle or Buy PDL thus saving them future royalities, getting the possible drugs that are in the pipeline and the other royalities PDL gets get in the future. Easily over $11 PER SHARE!!!!!!!!!!!FOR PDL STOCKHOLDERS
PDL Inc. /quotes/comstock/15*!pdli/quotes/nls/pdli (PDLI 5.01, +0.01, +0.10%) said Wednesday that it has filed suit in a Nevada state court to compel commercial partner Roche /quotes/comstock/11i!rhhby (RHHBY 38.60, +0.31, +0.81%) to continue paying royalties on certain Roche products that infringe upon PDL's biotechnology patents. The products include such top-selling Roche oncology agents as Avastin and Herceptin. On Aug. 13, PDL said it had been informed by Roche that Roche's products did not infringe on PDL's patents. That announcement sparked a sell-off in PDL shares, as Roche's royalty payments accounted for about 30% of PDL's top-line for the first half of 2010.