The biotech disclosed the rejection last night. At issue is its Cabilly patent, which governs the method of producing some of its drugs. And so Genentech, which also receives licensing revenue from other drugmakers that use its methodology, plans to file a response and, if necessary, appeal the decision to the US Patent and Trademark Office.

In a brief statement (look here), Genentech says the patent remains valid and enforceable through the appeals process, which could take one to two years, or longer. The PTO decision covers two separate reexaminations of the patent and was initiated after a challenge filed by MedImmune, which is now owned by AstraZeneca, Reuters notes.

The patent, which involves the method of producing antibodies and antibody fragments, a crucial step in the manufacture of biotech meds, was awarded in 2001 even though the discoveries on which it was based were made in the 1980s. If not revoked, the patent would run until 2018.

Genentech receives royalties based on the patent from Abbott Labs and Johnson & Johnson for their rheumatoid arthritis med, Humira and Remicade, as well as ImClone Systems for its Erbitux cancer drug. If the patent is ultimately found to be invalid, it could amount to substantial savings for companies now paying royalties.