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Roche Files Patent Infringement Suit Against Cepheid Over US Sales of TB Test

NEW YORK (GenomeWeb News) — Roche Molecular Systems has sued Cepheid for allegedly infringing a US patent assigned to Roche and covering PCR-based methods for detecting Mycobacterium tuberculosis and drug resistance, according to court documents filed this week.

In a complaint filed with the US District Court for the Northern District of California, Roche claims that Cepheid, through the development, commercialization, and sale of its Xpert MTB/RIF assay in the US, infringes US Patent No. 5,643,723, entitled "Detection of a genetic locus encoding resistance to rifampin in mycobacterial cultures and in clinical specimens."

The patent, which Roche refers to in its complaint as the Persing patent, has as its lead inventor David Persing, a former faculty member and director of the Mayo Molecular Microbiology Laboratory at the Mayo Clinic, and Cepheid's chief medical and technology officer since 2005 after joining the company in 2004.

The Persing patent was filed in May 1994 and awarded in July 1997, and is dually assigned to the Mayo Foundation for Medical Education and Research and Roche. The patent expired at the beginning of July this year.

Laying out the timeline for the alleged infringement, Roche notes in its complaint that in May 2006 Cepheid entered into a cooperative research and development agreement with the Foundation for Innovative New Diagnostics to develop a PCR-based test for detecting Mycobacterium tuberculosis (MTB) and identifying rifampin resistance in human sputum samples. It also notes that Persing participated in the evaluation and eventual commercialization of this test as the Xpert MTB/RIF assay for use on Cepheid's GeneXpert diagnostic testing system.

Then, in 2007, Roche notified Cepheid that the Persing patent was one in a list of patents available for licensing, but Cepheid declined to take a license, Roche alleges.

"At all material times during its development and commercialization by Cepheid, the Xpert MTB/RIF Assay comprised one or more primers claimed in the Persing patent, was especially adapted for practicing methods claimed in the Persing patent or their equivalent, and had no substantial use other than for performing methods claimed in the Persing patent or their equivalent," Roche claims in its complaint.

Furthermore, "Cepheid knew that it was actively inducing infringement of the Persing patent, and Cepheid knew that the Xpert MTB/RIF Assay was especially adapted for use in performing methods claimed in the Persing patent or their equivalent," Roche alleges.

Roche is seeking judgment that Cepheid infringed the Persing patent through its manufacture, use, offer for sale, and sale of Xpert MTB/RIF in the US; that use of Xpert MTB/RIF in the US, including by Cepheid customers, constituted infringement; and that Cepheid actively induced others to infringe and contributed to the infringement of the patent. Roche is seeking compensatory damages for the alleged infringement as the court sees fit.

A notable aspect of the lawsuit is that Roche is seeking judgment that Cepheid's activities only in the US constituted infringement. The US Food and Drug Administration cleared the Xpert MTB/RIF assay in July 2013, so it has only been on the market in the US for about a year. However, Cepheid has been selling the test overseas through its high-burden developing country program for several years. The company has not disclosed sales figures for the test in the US since its launch, but over the past few years has underscored the importance of revenues from HBDC sales of the test to its business.

To wit, this week Cepheid said that in the second quarter of this year it placed a record 1,084 GeneXpert systems, 926 of which were through the HBDC program and are used specifically to perform the Xpert MTB/RIF assay.

During a conference call recapping its Q2 earnings, Cepheid CFO Andrew Miller noted that Cepheid was aware that Roche filed but did not serve Cepheid with its patent infringement suit.

"We have not yet had the opportunity to assess the claim, [and] our understanding is that the patent in question … expired [on] July 01, 2014," Miller said. "I will remind you that expert MTB/RIF [was] cleared in the US in June 2013 and that revenues to date are quite modest. With that in mind, we do not believe that this litigation, even if successful, would have a material adverse impact on our financial results."

Cepheid and Roche are currently embroiled in another legal tussle in which Cepheid is seeking to invalidate a pair of core real-time PCR patents owned by Roche. PCR Insider first reported on this dispute in February 2012 after Roche filed for an arbitration with Cepheid in response to Cepheid's decision to terminate existing licensing agreements involving the patents.

Then, in August 2012 Cepheid filed a formal lawsuit against Roche in the US District Court for the Northern District of California seeking to invalidate the patents in question.

That suit has been only partially resolved, with one patent dismissed from the case, and a hearing on the second patent delayed pending the outcome of arbitration that, according to recently filed court documents, is ongoing at least until November of this year or until anything of substance happens in the arbitration that may affect the status of the case.