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Applera, Caltech Accept MJ Suit; Response Due in September

NEW YORK, July 29 - It looks like MJ Research won't have to call on a marshal to deliver its lawsuit seeking to overturn the four-color sequencing patents at the heart of Applied Biosystems' sequencing business.

Defendants Applera, Caltech, ABI, and Celera Genomics agreed to accept service of the 16-count complaint and said they would file their response on Sept. 23, according to MJ attorney Allen Foster.

"They have to respond to each allegation in the complaint and either admit it or deny it or say they don't have enough information to admit or deny it," Foster said.

 

After the defendants file a response, there will be a series of scheduling meetings and the beginnings of discovery, expected to occur from mid-October to late November, Foster estimates. The case will be heard by Judge Colleen Kollar-Kotelly, best known for overseeing the government's antitrust case against Microsoft.

 

MJ's challenge of the validity of the sequencing patents, fired up in its suit in September 2000, hardly shocked the industry. Insiders have for years debated which of the names listed on the patents--Lee Hood, Lloyd Smith, brothers Mike and Tim Hunkapiller, and Kip Connell--actually belong there. Chatter doesn't amount to much, but the legal team at MJ, a small instrumentation company based near Boston, thinks its lawsuit just might be the stone David slings at Goliath.

 

At stake for the defendants is the automated, four-color, fluorescent DNA-sequencing patent estate, owned by Caltech and licensed to ABI in 1988, that is arguably the cornerstone of ABI's sequencing business. In addition to revenue from its own sequencers and their reagents--from the ancient ABI 373 to the new 3730--ABI collects licensing fees from companies like MJ, which relies on the technology for its BaseStation tool.

 

If MJ succeeds in overturning the patents it would open the doors for anyone to use four-color fluorescence for sequencing. A victory could also potentially raise the floodgates for lawsuits against ABI from companies that have had to pay for the license all these years.

 

MJ is charging that the sequencing patents are invalid because they intentionally omit a key inventor, Caltech researcher Henry Huang, and that the technology was developed using federal funds, entitling the government to full ownership of the patents or a royalty-free license. In addition, MJ alleges that the defendants deliberately overcharged the government and that they monopolized the sequencing market.

 

Invoking a provision of the 1863 False Claims Act that allows individuals or companies to sue on behalf of the US, MJ is seeking damages of hundreds of millions of dollars in overcharges to the government. And if lawyers can convince a jury that ABI knowingly charged too much, damages are automatically tripled in penalty. MJ is also looking to have the patents invalidated and the IP turned over to the public domain.

 

The case isn't exactly new. As early as 1998, MJ prompted a full-scale government investigation when it brought the matter to the attention of the US Department of Justice. Months passed and MJ saw no progress, so it filed its own suit on behalf of the government, which was kept under seal until the DOJ, US Department of Health and Human Services, and the US National Science Foundation wrapped up their joint investigation this spring. The DOJ unsealed the case and decided not to get immediately involved, allowing MJ to pursue its suit with the provision that the government could step back in at any point.

 

That MJ has taken the burden of what promises to be a years-long legal struggle is something of a peculiarity. MJ's Foster says that federal funds paid to make the sequencer, so the public has been cheated of the rewards of its investment. "It's wrong," said Foster, "and that's why MJ is going to do this."

 

Indeed, the government is eyeing quite a windfall if MJ wins the civil case. But to believe that MJ, which stands to get 15 to 30 percent of any earnings from the suit, is driven by pure civic-mindedness would be naïve. There's little love lost between MJ, headed by cofounding brothers Mike and John Finney, and ABI, also known for its sibling force: President Mike Hunkapiller and his brother, much-relied-on consultant Tim.

 

"MJ Research has been ... fighting ABI on things all the way back to PCR for years," asserts Tim Hunkapiller.

 

Whatever the motives, MJ's case could be stronger than would be indicated by ABI's official no-comment and Tim Hunkapiller's boiled-down assessment that "there's no issue here." Bookcases full of documents gathered by the DOJ and by MJ's legal team suggest that, if nothing else, the battle will be fiercely fought.

 

An earlier version of this story appears in the June issue of GenomeWeb's sister publication Genome Technology.

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