By Ben Butkus
This article has been updated from a version posted June 22 to include comments from ABL.
Luxembourg's Advanced Biological Laboratories last week settled a defamation lawsuit against a Stanford University professor who claimed that ABL was discouraging physicians from freely using his online database for HIV drug resistance by enforcing its own bioinformatics patents.
The agreement comes approximately three months after ABL and Stanford reached their own settlement in the lawsuit, which ABL filed in December against both the university and the professor, Robert Shafer. In the suit, ABL accused Shafer and Stanford of defamation and of breaching a patent immunity contract Stanford and ABL had previously inked regarding the HIV database.
Despite the settlement, Shafer said this week that he will continue to dispute the validity of ABL's patents with the US Patent and Trademark Office; and that he will maintain a website to draw attention to what he considers detrimental "medical process" patents, using his dispute with ABL as a case study.
ABL disclosed details of both settlement agreements in separate statements issued this week.
The legal morass revolved around a pair of patents, US Nos. 6,081,786 and 6,188,988, which are owned by ABL (after it purchased them from now-defunct biotech startup Triangle Pharmaceuticals) and pertain to methods of using a computer to guide the selection of therapeutic treatment regimens for known diseases; and the Stanford University HIV Drug Resistance Database, a free online resource for guiding HIV treatment maintained by Robert Shafer, an associate professor of medicine and pathology at the school.
According to Shafer's website, HarmfulPatents.org, sometime before October 2007, ABL threatened to sue Stanford because the HIVdb website, which Stanford offered free to the general public, allegedly infringed upon the '786 and '988 patents.
However, according to Chalom Sayada, co-founder and CEO of ABL, his company had partnered with Stanford for many years prior to the legal dispute. "We wanted their thoughts about our IP, and they felt that was a threat, and the confusion started there," Sayada told BTW this week.
The company and university do have a relationship based on the database that dates back to at least 2005, when ABL announced that it had licensed an algorithm for determining HIVdb drug resistance from Stanford.
Nevertheless, Stanford sued ABL in October 2007 for declaratory relief, claiming that it had sufficient grounds for invalidating the ABL patents based on a previously awarded family of patents – US RE38352; 5,856,086; and 5,631,128 – that the school owned related to using PCR assays to monitor antiviral therapy and make therapeutic decisions to treat HIV patients.
In March 2008, however, Stanford and ABL negotiated an agreement under which neither entity would sue the other for infringement, with the understanding that the HIVdb website could be used for research purposes only, except by Stanford; and that Stanford would place a disclaimer on the database that use of the site did not imply rights under the '786 and '988 patents, particularly for those standing to commercially benefit from use of the database.
According to Shafer, this patent immunity agreement was inked without his knowledge or consent, and he did not agree to the disclaimer, arguing that ABL's patents were overly broad and obvious and that such a disclaimer on the site would discourage its use by any party.
"The implication was that any other commercial lab would have to think twice before they used the database," Shafer told BTW in an interview earlier this month. "Of course the agreement didn't give [ABL] the right to sue those labs, but they always have that right."
The agreement also gave ABL "ammunition," Shafer added, because "it strengthened the non-obviousness of the ABL patent and it weakened a public resource that has been funded by taxpayer dollars." Although Shafer made his comments earlier this month, this week he told BTW that he stood by them.
In October of last year, Shafer initiated a reexamination of ABL's patents with the USPTO; and at some point, the exact timing of which is unclear, constructed the HarmfulPatents website, which laid out his case against ABL. In response, ABL in December filed its breach of contract and defamation suit against Shafer and Stanford.
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Finally, in March, Stanford and ABL settled again, this time for an undisclosed amount of money paid by Stanford in exchange for ABL dropping its suit against the school. Following this, ABL amended its complaint to name Shafer as the sole defendant, and defamation as the primary complaint. ABL did not disclose financial details of the settlement with Stanford.
ABL last week for the first time disclosed details of the original patent immunity and settlement agreements, although documents pertaining to both have been available on HarmfulPatents.org.
In a statement, ABL said that it "has not and will not seek to shut down Stanford's HIVdb website, nor does it seek to hamper research or non-profit activity. ABL denies such allegations and rumors that have been made about its relations with Stanford, which it believes are based on a misinterpretation of its intentions."
In addition, ABL noted that since 2005 it has "actively co-invested [in the database] through an in-licensing agreement with the Stanford Office of Technology Licensing, and is further promoting at its own expense around the world, and paying minimum yearly royalties to OTL on all ABL worldwide sales that are using the licensed HIVdb Drug Resistance Algorithm."
The algorithm referenced in ABL's statement was related to know-how that the company licensed from Stanford and Shafer in 2005 to use in its ViroScorer HIV product for helping doctors tailor therapies for HIV patients based on drug resistance. It is unclear whether ABL's agreement regarding this algorithm came into play in its original communications with Stanford about its possible infringement of the '786 and '988 patents.
This week, Sayada expanded on his company's statement, telling BTW that Shafer went overboard with his implications to colleagues and users of the HIVdb. "Stanford said that they wanted to meet with us, and that they just didn't want to take a license to our patents. And we didn't want to force them to take a license. We quickly reached the patent immunity agreement, and we signed it two months later because Stanford wanted time for everyone to review it."
Sayada added that he believes Shafer's claim that he never saw the patent-immunity agreement. "But once the agreement was signed by Stanford University, he contacted everybody he knew [to tell them] that we wanted to shut down HIVdb," Sayada said. "He doesn’t want to remove that from his website, and that's his right. But we are a small company, and we are selling the HIVdb drug-resistance algorithm – why would we try to shut down HIVdb? That makes no sense. That was never our intention."
Sayada also said that "the only reason we filed suit [against Stanford and Shafer] is because we tried our best and we could not get some level of resolution to stop these false rumors that continued to spread. At the end of the day, the only choice, and it was against our interests, was to bring [Shafer] to a point where through the legal process he had to react. When a well-respected scientist like him writes things, people believe him."
Shafer also told BTW earlier this month that he was "very disappointed that Stanford made [the patent immunity] agreement that compromised a free public resource, and strengthened a patent that many people consider obvious and that has been the cause of several lawsuits."
According to Shafer's website, prior to its legal row with Stanford and Shafer, ABL had sued several companies for allegedly infringing the same patents, including Hoffman La Roche, Virco Laboratories, Applera, Celera Diagnostics, Abbott Laboratories, SmartGene, and Ameripath. The suits against Hoffman La Roche, Virco, Applera, Celera, and Abbott were dropped for undisclosed reasons. Meantime, ABL settled with Ameripath last year and had its suit against SmartGene dismissed in a Texas court.
But Sayada said that the website does not tell the whole truth. "It is correct that we filed suit against those companies," he said, but only because ABL had licensed its patents to a company called Evidence Medical with exclusive sub-licensing rights. He said that Evidence initiated those suits because it had "full authority to enforce the rights," and that ABL followed.
Evidence, which is no longer in business, "had a different agenda," Sayada said. "If that was our strategy, to take IP to file lawsuits against companies, we would not be withdrawing the suits in a week or two.
He added that Shafer is wrong "to try to paint ABL as a company trying to get a monopoly, filing lawsuits against the entire industry. In reality, we are not following every company around with our patents. We are a small company and want to be at peace with the entire industry."
ABL terminated its agreement with Evidence by early 2006, Sayada added, because "we were displeased with the way they were operating. They were not building value around IP. We made some money; that's why we did that deal. The main intention was to create value. Today our reputation is still affected by this."
Shafer also told BTW that he was "disappointed for a second time that Stanford settled with ABL independently of me. In some ways, Stanford is bankrolling ABL's continued efforts against me." Although Shafer made these comments earlier this month, when his negotiations with ABL were ongoing, he again stood by his quotes this week.
Shafer's disappointment with his employer notwithstanding, last week, under orders from the district court in which the suit was originally filed, ABL and Shafer finally negotiated their own settlement.
Under the terms of the settlement, ABL agreed to dismiss its lawsuit against Shafer, in exchange for Shafer removing from the HarmfulPatents.org site certain language that suggested ABL's patents were undeserved and obvious, and that users of the HIVdb site should be concerned about restrictions that ABL might place on the use of the site.
In a statement endorsed by Shafer, ABL said that it "never intended to shut down or adversely impact the HIVdb. To further demonstrate its commitment to the HIV community at large, ABL clarifies that it will not assert its US Patent 6,081,786 and 6,188,988 against any non-profit institution, or any hospital, researcher, or individual doctor that utilizes it in the treatment of HIV."
However, the agreement between Shafer and ABL does not preclude him from pursuing a reexamination of the '786 and '988 patents, which he said he continues to do.
"Dr. Shafer remains committed to the reexamination of the '786 and '988 patents," ABL said in its statement. "ABL believes its issued patents will withstand this challenge and plans to continue to defend its intellectual property against unauthorized commercial use, subject to the limitations" it described regarding not-for-profit use.
ABL also said that the USPTO has issued a pair of actions closing prosecution, confirming the patentability of all 66 claims of the '988 patent, "thus closing prosecutions of both the ex parte and inter partes reexaminations of this patent."
However, Shafer told BTW this week that this office action was expected due to a loophole he and his patent attorney discovered in their original reexamination filing; and that they are currently preparing another reexamination request that they believe will eventually render the ABL patents invalid.
As for HarmfulPatents.org, Shafer said that his goal now is to modify the site to focus on medical process patents, which he says are a source of many ongoing patent disputes and a general bane of the medical community.
"ABL will be one of the case studies," Shafer said. "I'm not saying that all patents are harmful, but these medical process patents generally are. Hopefully the site will help raise awareness."
Sayada said that he will believe it when he sees it. As of now, he said, the website continues only to espouse Shafer's displeasure with ABL.
"The whole concept of the HarmfulPatents website – it claims that it wants to defend the idea that databases [such as HIVdb] should be as free as possible," Sayada said. "It's a great concept; however, the only patents we see covered on the website are the ABL patents."
Sayada added that Shafer is "a great scientist, and he should stay a great scientist, and stop trying to paint our company as devils. As a small company, we believe that patents should not be asserted against non-profit organizations. We hope the entire world and HIV community will be pleased with that.
When it comes to for-profit companies, however, "in the few cases where we can assert our patents, we will try in the future to do so," Sayada said.