After the European patent office decided last week to uphold the so-called Southern patent for DNA microarrays, a license to the patent may become a must-have for any microarray producer who wants to sell its wares in Europe without facing legal opposition.
The patent, European Patent number 0373203, was granted in August 1994 to Oxford Gene Technologies (OGT), a company set up by Oxford University biochemistry professor Edwin Southern.
Southern, the inventor of the Southern Blot method for DNA genotyping and sequencing, first filed patents for his version of microarrays in 1988 in the UK, and soon after filed patent applications in the US and Europe.
The foundational US Patent, number 5,700,637, Apparatus and method for analyzing polynucleotide sequences and method of generating oligonucleotide arrays, provides for a glass plate or other support that carries an array of oligonucleotides that can be hybridized to labeled complimentary oligonucleotides under certain conditions.
Since this patent and the others were filed during the technologys infancy, before most companies had even thought of going into the microarray field, they have a very broad reach. This means that anyone who wants to operate under them in lay terms, to make and sell microarrays described in the patents will have to get a license or risk being sued by OGT.
Affymetrix, Agilent, Rosetta Inpharmatics (now part of Merck), and Incyte have all licensed the patent, and OGT is in advanced negotiations with five other companies on licensing, said Chris Shelley, the outside counsel for Oxford Gene Technology. About a dozen additional companies have contacted OGT, Shelley said.
The licensing terms typically include an up-front fee and a percentage of royalties for arrays, but OGT is also open to negotiating for licensing fees in the form of company stock for early-stage companies.
While OGT has moved into other microarray services in the interim, including antisense discovery, probe optimisation, resequencing, and expression analysis, licensing makes up most of its revenues.
Who Should Line Up For a License
So what, exactly, is covered? Who should be worried about getting a license?
In Europe, the sorts of arrays that are covered are ones made on smooth and permeable surfaces where the oligonucleotide is covalently attached to the substrate, and that would include glass and plastic, said Shelley. The patents in the US are broader, and are not limited to smooth impermeable surfaces or covalent attachment.
The patents do not apply to photolithography, or to arrays on nylon membranes or nitrocellulose-covered paper, and it is an open issue whether cDNA probes are included in the patents definition of oligonucleotides. Last May, a California US District judge ruled in a separate patent infringement case between Affymetrix and Incyte that cDNAs were not included in the definition of oligonucleotides because oligonucleotides are polymers of nucleotides ranging in length from 2 to about 100 nucleotides while cDNAs are ordinarily between 500 and 1,000 base pairs in length.
But while judges in other courts may look to this case for guidance, they are not bound by the judges ruling, Shelley noted.
Of course, OGTs broad view of its patents is also not universal, and some companies may decide to risk potential liability for infringing upon the Southern patents rather than paying a license fee and royalties on technology that is not clearly covered by the patents.
Affymetrix, however, paid a price for failing to license the Southern patents.
Affy vs. OGT: An Object Lesson?
In 1994, when the European patent was granted, Affymetrix, along with Nanogen, Abbott, Roche, Vysis, Hyseq, and Multilyte, a UK-based microarray diagnostics company all opposed it. (In Europe, parties can formally oppose a patent once it is granted. The patent offices opposition division hears arguments for and against the patent, and decides whether to uphold it.)
Then OGT decided to file a patent infringement suit against Affymetrix, seeking $120 millon in damages.
OGT painted the dispute as a David-and-Goliath conflict between Southern, who said all he wished was for his microarray technology to be available to all through an open licensing scheme, and Affymetrix, whom Southern viewed as a bully trying to corner the market on microarray technology and intimidate potential competitors.
But Affymetrix claimed OGT was more a Judas than a David: According to arguments Affymetrix presented, the company had been in good faith licensing negotiations with OGT, and OGT had unilaterally dropped licensing negotiations and initiated the suit, after Agilent had provided $15 million to the company which it could use to cover its legal bills.
In the end, Affymetrix agreed to pay OGT $19 million in a settlement, and to license the patents.
It is doubtful whether Nanogen, Abbott, Roche, or any of the other parties that initially opposed OGTs European patent will file for licenses, and none of them have contacted OGT because these companies are not now engaged in microarray manufacture, said Shelley. (None of the companies could be reached for comment.)
Also, there is always the possibility that one or more of these parties will appeal, said Shelley. But more likely, companies like Nanogen and Motorola, which make oligonucleotide arrays, will look toward licensing.