Supreme Court's Genentech Patent Ruling May Hinder IP Deals; Academia, Biotech Vulnerable
A recent ruling by the US Supreme Court allowing MedImmune to challenge a fundamental Genentech patent while Genentech continues to out-license the IP may hinder future technology licensing deals, the Licensing Executives Society said last week.
The Court’s decision may be particularly detrimental to future deals in the biotechnology industry and in academic technology-transfer offices, according to the LES, a 30-year-old tech-transfer professional society comprising more than 6,000 members. The ruling, handed down on Jan. 9, allows MedImmune to sue Genentech over the validity of a patent that covers techniques for making monoclonal antibodies.
According to the LES, 80 percent of a 186-participant survey said that the Court’s ruling would “hold large implications for the [IP] licensing profession.” The survey, released at the LES winter meeting in San Francisco last week, also found that 79 percent of participants said that licensees would be either “somewhat” or “much more” likely to challenge patents even after striking a licensing agreement, and that 57 percent thought that licensors would be “somewhat” or “much more” likely to seek higher upfront payments to offset the risk of losing out on future royalties.
“Historically, once you did a [licensing] deal, for the most part you stopped thinking about whether the patent you licensed was really valid,” Allen Baum, president of the LES and a partner with Raleigh, NC-based Hutchison Law Group, told Cell-Based Assay News sister publication GenomeWeb News last week. As a result of the ruling, licensees “are going to think about whether they need the relationship and whether they need the rights; or whether they should roll the dice and challenge the patent.”
Before the ruling, a patent licensee would have to breach a license agreement in order to challenge the patent in court. “Now you don’t have to do that,” Baum said.
“Under the old rules, if you decided to go ahead and breach, you exposed yourself to the potential of enhanced damages, up to triple,” he said. “Now, because you can keep paying royalties and challenge the patent, there is really no downside risk to the licensee other than … legal expenses if they ultimately lose.”
In addition, according to Baum, “biotechnology is an obvious place where [challenging a patent] is likely to happen because you’ve got such big dollar values — where you’ve got large amounts of money changing hands for enabling technologies.
“If you start thinking about the patents that are going to be most affected by this decision, [then] what you’re talking about typically are sort of fundamental, enabling technologies,” he added.
Academic tech-transfer offices could be particularly vulnerable. “This case will particularly hurt academic institutions, which cannot afford litigation costs and have relied on licensing fees to pay for their technology transfer efforts,” an unnamed survey respondent said, according to the LES.
Some experts believe that the decision may also spur university tech-transfer offices to add language to license contracts that would prohibit licensees from challenging the validity of a patent, which in turn could further hamper future tech-transfer efforts.
In a live online discussion held last week by The Chronicle of Higher Education, Jonathan Soderstrom, managing director of the Yale University Office of Cooperative Research, wrote: “My guess is that it will have a bigger impact in non-exclusive licenses than in exclusive licenses. I think obtaining contractual prohibitions will be very difficult to negotiate into license agreements.”
However, Soderstrom also wrote that it is still too early to judge exactly how the court ruling will change university licensing practices.
BD Biosciences, Roche to Co-Develop Intracellular Phosphorylation Site Antibodies
BD Biosciences and Roche this week said they plan to jointly identify and develop intracellular phosphorylation site antibodies that will improve their understanding of the pathways that carry information inside of cells, and why these pathways sometimes malfunction to cause disease.
These insights could ultimately lead to the discovery of new drugs and biological markers for certain conditions, the companies said.
Under the terms of the agreement, Roche and BD will share information and resources to identify intracellular phosphorylation-site target specificities of high interest in a number of disease areas.
The companies will also develop and validate antibodies for those targets using BD’s Phosflow technology and in other cell and tissue analysis applications.
Roche will receive nonexclusive pre-launch access to “all developmental BD Phosflow antibodies” and a period of exclusive commercial access to those validated antibodies.
"This is a potentially very powerful technology that will enable us to understand the molecular basis of complex heterogeneous disorders," said Anthony Manning, vice president and global head of inflammation, autoimmunity, and transplantation research at Roche Palo Alto.
ITI Life Sciences Licenses IP to Two Labs to Develop Fluorescence Instruments
ITI Life Sciences last week said it has signed two commercialization license agreements based on intellectual property created during its Fluorescence Lifetime Assay Program, which used fluorescence lifetime for 3-D cell-based assays and other applications.
The first license, signed with Scotland-based Almac Sciences, is for IP relating to novel fluorescent dyes and their uses. The second deal is with Edinburgh Instruments, which licensed IP relates to a fluorescence lifetime plate reader with high sensitivity and versatility. Edinburgh will sell the platform into the high-throughput screening and drug-discovery market.
Cellexus Incorporates US Subsidiary, Plans to Create Customer Service Arm Soon
Cellexus Biosystems last week said it has incorporated its wholly owned subsidiary in the US.
The unit, Cellexus Biosystems Inc., was incorporated in the Delaware and will have a registered office in New Jersey. The company also “aim[s] to open” a customer-support centre in New Jersey “in the immediate future.”
“We are moving rapidly to establish a permanent presence in the US as we continue to make in-roads into the US-biopharmaceutical industry,” CEO Kevin Auton said in a statement. “
Cellexus Biosystems develops disposable bioreactors and disposable, cell-based technologies for biopharmaceutical research and production.
Genetix Closes Acquisition of Applied Imaging
Genetix last week said it has completed its acquisition of Applied Imaging. The combined company will sell Genetix’s ClonePix FL and CloneSelect Imager cell-biology platforms and Applied Imaging’s Ariol and CytoVision product lines.
As a result, the company will be able to deliver systems that “track the progress of drug discovery from the research laboratory through to the clinic,” it said in a statement.
Last September Genetix said it would acquire Applied Imaging for $18.3 million in cash, or $3.06 per share. At the time the companies said the deal would close in the fourth quarter of 2006.
But two months later an unsolicited bid from a third party to acquire all of Applied Imagings’ outstanding shares has caused the company to the raise by around 24 percent the original price that Genetix was to pay for it.
The amendment offering increased the per-share cost to $3.80 from from $3.70, which means Genetix paid around $22.7 million for Applied Imaging.