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Third Wave Countersues Digene for Alleged 'Monopolistic Abuse' and Seeks $20 Million

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
Nearly two months after Digene sued Third Wave Technologies for allegedly infringing its human papillomavirus intellectual property, Third Wave last week filed a countersuit with the US District Court for the Western District of Wisconsin, alleging that Digene has “abused its monopoly power to thwart competition” in the HPV diagnostics market.
Among the remedies Third Wave is seeking is a $20 million judgment against Digene, a denial of all relief sought by Digene, and a declaration that Digene’s patent at the center of the case be declared invalid.
Third Wave’s latest legal salvo comes a year after the firms settled a related suit, and just as Third Wave concluded a settlement with Stratagene in a separate patent infringement case.
In January, Digene sued Third Wave for allegedly infringing “unidentified claims” of one of its patents. The suit, filed in the US District Court for the Western District of Wisconsin, said Third Wave’s Invader technology infringes US Patent No. 5,643,715, which covers a single type of human papillomavirus — HPV type 52.
According to Third Wave, HPV type 52 is prevalent only in .5 percent of all HPV-positive cases in the US.  
“We took great care to create a detection method free from the limited scope of the '715 patent's claims,” Third Wave President and CEO Kevin Conroy said in a statement at the time Digene had filed the suit. Conroy added that Third Wave’s Invader chemistry “operates differently from any other nucleic acid analysis and is well protected by intellectual property rights of its own.”
Last week, Third Wave filed its response to Digene’s claims and filed its own countersuit with the Wisconsin court. In a statement, Conroy said Digene sued his company for patent infringement because Third Wave’s Invader product is “superior to Digene's,” and reasserted that the firm’s Invader analyte specific reagents do not infringe Digene’s patent.
“Third Wave is not infringing, and has not infringed, contributed to the infringement of, or induced the infringement of any valid and enforceable claim of the ‘715 patent, either literally or under the doctrine of equivalents,” said Third Wave in its filing with the court.
Challenging a Monopoly?
Third Wave said that its counterclaims “are based on Digene’s repeated abuse of its substantial market power … and the direct and substantial antitrust injury to Third Wave and consumers resulting directly from Digene’s anti-competitive conduct.
“Digene could not maintain its substantial market power in the relevant markets but for its unlawful conduct, including its exclusive dealing arrangements, its false statements about Third Wave in the marketplace, and the objectively baseless and sham litigation it has pursued in this court,” Third Wave alleges in the suit.
In addition, Third Wave claims that in several discussions with Digene over the past couple of years, Digene officials have said they would “place ‘landmines’ in the way of Third Wave’s attempts to compete.”
According to Third Wave, it has gained less than 2 percent of the HPV genetic testing market thus far, due largely to Digene’s monopoly. However, Digene’s HPV DNA test is approved by the US Food and Drug Administration as an in vitro diagnostic, while Third Wave currently sells ASRs.
Third Wave said it is currently conducting clinical trials on its HPV reagents and intends to submit an application for FDA approval this year.
Digene officials did not return a call from BioCommerce Week seeking comment. For its fiscal second quarter of 2007 ended Dec. 31, 2006, Digene said that its worldwide HPV test revenues grew 40 percent year over year to $45.2 million. Its total revenue for the quarter was $49.2 million, while Third Wave recently reported 2006 fourth-quarter revenue of $6.8 million.
“The harm and lost profits to Third Wave from Digene’s illegal conduct are ongoing and cumulative, and because they substantially and adversely affect the goodwill of Third Wave with its customers and in the markets and cannot be relieved completely through monetary competition, leaving Third Wave no adequate remedy at law and, in large measure, irreparably harmed,” Third Wave said in its filing.

“The harm and lost profits to Third Wave from Digene’s illegal conduct are ongoing and cumulative, and … cannot be relieved completely through monetary competition, leaving Third Wave no adequate remedy at law and, in large measure, irreparably harmed.”

As a result, Third Wave is seeking damages “in excess of $20 million and in an amount to be determined at trial.” In addition, the firm has asked the court to deny all relief sought by Digene in its suit; dismiss all of Digene’s claims; invalidate the claims in the ‘715 patent; enjoin Digene from allegedly violating antitrust laws and enforcing its exclusive contracts with customers; and declare the case exceptional and award Third Wave compensation for attorneys’ fees, as well as triple damages.
Third Wave said a conference on March 15 will convene to set a date for the trial, which it expects to be sometime in early 2008.
Third Wave had initially sued Digene in 2005 in an effort to get a court to support its right to sell its HPV diagnostic test. That suit was settled on Jan. 13, 2006, "without the grant of any license or freedom-to-operate under the patents-in-suit and without any effect on the patents-in-suit,” according to a statement released by Digene at the time.
Under that agreement, the companies also agreed not to sue each other for one year. Now that that time has elapsed, they have jumped back into the dispute.
The rekindled legal battle with Digene also comes just as Third Wave ended two years of litigation with Stratagene. The firm recently settled a patent dispute over competing PCR technologies with Stratagene, which resulted in a $10.75 million payment to Third Wave (see BioCommerce Week 1/31/2007).
The settlement was far less than the roughly $21 million, including attorneys’ fees and costs, awarded a year earlier to Third Wave by the US District Court for the Western District of Wisconsin, but it enabled both firms to avoid further litigation costs.

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