How do you make a small, but persistent biotech with an intellectual property claim go away? Maybe the answer is to pay for a non-exclusive license to use its technology. In this instance, Protiva Biotherapeutics, which is immersed in the hot field of RNAi, will receive an unspecified, one-time payment from Merck, with the potential for milestones and royalties, depending on the progress of various drug candidates. In exchange, Protiva agreed to drop all litigation against Sirna Therapeutics, which Merck bought last year for $1.1 billion.

This is key - the deal also includes lifting a preliminary injunction granted last March preventing Sirna from product development using RNAi technology specified in a 2005 strategic alliance agreement with Protiva. In granting the injunction, California Superior Court Judge Patrick Mahoney concluded that “Sirna has used and may be continuing to use Protiva trade secrets and know-how.” The injunction meant that Sirna couldn’t use Protiva intellectual property to pursue product development in certain key areas, such as oncology, macular degeneration and various respiratory ailments, among other things.

In other words, Protiva appears to have backed Merck into a corner - just a few months after paying a bundle for a biotech with a seemingly promising list of projects, the litigation threatened to undermine Merck’s ability to fully exploit the technology, develop new meds and, ultimately, get a return on its widely touted investment.

In a statement, Protiva’s ceo and prez, Mark Murray, offers a low-key declaration of victory: “Merck’s licensing of our ‘SNALP’ technology is an important validation of the skill of our scientific team and our leadership position in the siRNA delivery space. Protiva is moving forward with financial strength and a continued focus on the development of new therapeutic products and business alliances.” For his part, Alan Sachs, vp of Merck’s RNA Therapeutics, sounds happy to have gotten this over with: “We are pleased to have licensed Protiva’s SNALP technology,” he says. “This technology can now be used to advance Merck’s RNAi-based therapeutic development programs.”