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US District Court Dismisses Promega s $1B Fraud Suit Against Roche: Promega to Refile

NEW YORK, June 30 (GenomeWeb News) -A US Federal court in Virginia today dismissed a lawsuit Promega filed against Hoffman La-Roche seeking up to $1 billion in damages for allegedly overcharging government agencies for royalties on Taq polymerase and related products.


Promega said the court invited it to file an amended complaint within 14 days, and requested that Promega provide additional facts regarding the "who, what, when, where, and how of the fraud" related to sales of Taq and related patents to the government and universities.


"They ruled that we should submit a claim that has additional specific facts with regard to the misrepresentation of the claims," said Randall Dimond, Promega's vice president and chief technical officer. "That's what we will be doing in 14 days, is filing an amended complaint that has much more detail ... than the original one did."


But Lanny Davis, an outside counsel for Roche, told GenomeWeb that Promega's attorneys "have a very difficult job ahead of them" if they want to refile. "They lost the case, and they are invited to try to fix the problem. We don't think they can fix it because we don't think they had a case to begin with."


Furthermore, he said, "Promega's case was thrown out today by the District Court because it was so vague and so nonspecific that even if you assume every word of the complaint is true, which the judge is obligated to do [under the rules of procedure] the judge threw it out."


In the underlying claim, filed in the US District Court for the Eastern District of Virginia, Promega of Madison, Wis., alleged that Roche "and its co-conspirators" overcharged the US Government and government agencies by charging royalty payments for Taq enzymes-the patents for which Promega has claimed in a separate suit were obtained by inequitable conduct on Roche's part-and in doing so, diverted millions in US tax dollars that could otherwise have been used for research programs. It also accused Roche of "anticompetitive tying of sales of Taq to other products; deceptive licensing practices; and predatory threats of litigation," according to a statement released by Promega. 


The US Civil False Claims Act, also known as the Informer's Act or the Qui Tam Statute, allows a private person to sue a person or company that knowingly submits false bills to the federal government. It is designed to encourage whistleblowers to come forward in order to prevent this type of fraud.


The case was filed in November 2000, and was unsealed in November of last year. Roche was first notified of the allegations only last November, according to press statements by both companies.


Roche and Promega have been engaged in lawsuits over patents to PCR technology since 1992, when Roche sued Promega in US District Court for breach of the Taq DNA polymerase license agreement and infringement of PCR process patents, according to a timeline of the litigation on Roche's website. Promega defended against this infringement suit by claiming that Roche had obtained one of these patents (US Patent No. 4,889,818), by inequitable conduct and that others were invalid. Recently, a US appeals court ruled in Promega's favor on this patent, but returned the litigation to the US District Court on other patents. In the latest round of this long-running legal saga, a US District Court judge in California found in May that other PCR-related patents that Roche held were not unenforceable, and Roche claimed a "substantial legal victory." The litigation is ongoing.


Today, Davis alleged that this False Claims Act suit by Promega was an attempt to get Roche to settle the underlying patent-related cases.


"Let's remember that by their own words, in threatening letters written to Roche which we filed with the court, [Promega's] threats to us were 'if you withdraw your case against us in California, we will withdraw this case that were suing in the Eastern District of Virginia on behalf of the US Government.' So the motives of their filing in Virginia obviously weren't to protect the US from fraud if they are willing to withdraw [their case] in response to our withdrawing our case in California," Davis said.


Davis also asserted that Promega's False Claims Act suit is flawed because it is based on public information. "You can't sue somebody for fraud based on information already known to the US Government," he said.


But Dimond said in a statement that Promega has "a significant amount of evidence supporting the fraud scheme alleged in the initical complaint," and "will amend the complaint immediately to address the court's request."


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