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USPTO Grants Ariosa Request to Review Key Sequenom Patent

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The US Patent and Trademark Office has granted Ariosa Diagnostics' request for an inter partes review of certain claims of a key patent Sequenom holds in the noninvasive prenatal testing space.

The patent at issue, US Patent No. 6,258,540, which was assigned to Dennis Lo of the Chinese University of Hong Kong and licensed to Sequenom, covers methods related to detecting cell-free fetal DNA from maternal plasma to enable prenatal diagnosis. The patent is also the subject of ongoing lawsuits between Sequenom and the three other US-based firms offering sequencing-based prenatal tests — Ariosa Diagnostics, Verinata Health, and Natera.

Ariosa filed for an inter partes review of the patent last September (CSN 9/19/2012).

In its petition, Ariosa argued that the '540 patent is invalid because it is anticipated by prior publications; experts in the field would have considered it "obvious to use then-conventional PCR techniques to detect fetal DNA in maternal serum;" and the presence of fetal DNA in maternal plasma is a natural phenomenon and therefore not patentable, according to the US Supreme Court's ruling in Mayo v. Prometheus.

Interestingly, one of the pieces of prior art that Ariosa cited was a publication by Lo himself.

Aside from granting the inter partes review, the USPTO also revised the '540 patent filing date to March 1998 from March 1997, which enables Ariosa to claim prior art from two additional publications.

The patent office has set a Dec. 11, 2013 date to hear oral arguments, so the outcome could potentially be decided by the end of the year..

Both Sequenom and Ariosa remain confident in their respective positions.

Ariosa CEO Ken Song told CSN that Ariosa has "always been, and continues to remain, extremely confident" within the IP landscape.

Sequenom's senior director of investor relations and corporate communications Marcy Graham told CSN in an email that the company is "confident that the PTO will uphold the validity of the '540 patent."

Two of the "key prior art references" were "disclosed to and reviewed by the Patent Office before the '540 patent issued," Graham explained. "The PTO has decided that Ariosa has raised some questions with respect to this prior art which need to be addressed in greater depth — nothing more."

Aside from the inter partes review, both Ariosa and Sequenom are suing each other in the US District Court for the Northern District of California.

Sequenom is suing Ariosa for infringement of its '540 patent, while Ariosa is suing Sequenom for over-interpreting the scope of the '540 patent (CSN 1/25/2012 and CSN 12/21/2011). Additionally, Sequenom filed a preliminary injunction against Ariosa last year, which was denied, to prevent it from offering or selling its Harmony Prenatal Test.

The fact that the USPTO granted the inter partes review and that the court denied Sequenom's motion for a preliminary injunction against Ariosa, gives Ariosa "confidence in our position," Song told CSN.

While the district court litigation and the patent office's review "each offer independent paths toward which they could offer resolution," Song said, what's uncertain is how or whether the outcome of one might impact the outcome of the other.

At least one analyst thinks that the review does not bode well for Sequenom. Piper Jaffrey research analyst William Quirk wrote in a note this week that "reviewed patents are frequently overturned and/or have the number of claims modified."

Looking at data between 1999 and 2011, reviewed patents were modified 45 percent of the time and completely revoked in 44 percent of the cases, he wrote. However, he noted that prior to 2012, the review rules were more favorable to the plaintiff and have since been tightened.

Quirk speculated in his note that the four involved parties — Ariosa, Natera, Sequenom, and Verinata — "will eventually sign cross-license agreements for modest royalties." The size of the royalty will be determined by the strength of the '540 patent, he wrote, adding that he anticipates "a low single digit level."

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