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Roche Wins One Battle, Delays Another in PCR Patent Legal Row with Cepheid

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In an intellectual property lawsuit filed by Cepheid against Roche, a US district court has stayed a hearing on whether a PCR patent owned by Roche is invalid until the companies finish ongoing arbitration hearings.

In addition, the court has granted a motion by Roche to dismiss Cepheid's request that the court rule a second PCR patent owned by Roche to be unenforceable, ruling that it is not pertinent to the case and that Cepheid has "manufactured a controversy" over the patent.

At the heart of the ongoing legal tussle are two patents, US No. 5,804,375, which covers a key element of the real-time PCR process; and US No. 6,127,155, entitled "Stabilized thermostable nucleic acid polymerase compositions containing non-ionic polymeric detergents."

The '375 patent, which is also currently under re-examination at the US Patent and Trademark Office at the behest of intellectual property watchdog group Troll Busters, was covered under a license originally granted to Cepheid by Roche in 2004.

In October 2011, Cepheid disclosed in a statement accompanying its third-quarter 2011 financial release that it was terminating the remainder of its PCR license with Roche after determining that any patents remaining under the license were "not pertinent to Cepheid's future business plans." (PCR Insider, 10/20/2011).

It was later revealed in court documents that Cepheid informed Roche of this license termination in July 2010, to which Roche responded that the '375 patent remained enforceable until its expiration in 2015, and that Cepheid would be infringing upon the patent by continuing to sell products covered by the patent, including Xpert diagnostic kits.

Cepheid had also alleged that before it decided to terminate its licensing agreement with Roche that Roche had informed Cepheid that the second patent, '155, was also necessary for certain of Cepheid's products.

In November 2011, about a month after Cepheid's disclosure that it was terminating its PCR license, a Roche spokesperson told PCR Insider that the company was "surprised" by Cepheid's actions, that the pertinent patents were enforceable until 2017, and that it was investigating the matter to see whether Cepheid's actions could be construed as patent infringement (PCR Insider, 11/10/2011).

A few months prior to that, in August 2011, Roche filed an arbitration hearing against Cepheid with the International Chamber of Commerce in an attempt to resolve the dispute — information that Roche disclosed in February 2012 (PCR Insider, 2/9/2012).

Finally, in August of last year, Cepheid filed a formal lawsuit in the US District Court for the Northern District of California against Roche seeking to invalidate both the '375 and '155 patents and seeking judgment that both patents had expired and that Cepheid did not infringe them (PCR Insider, 8/30/2012).

Despite the lawsuit, Roche claimed that it expected arbitration hearings regarding the matter to proceed, and maintained that its patents remained valid and enforceable. Roche then requested the court to stay hearings on the '375 patent pending the outcome of this arbitration, and to dismiss Cepheid's counts regarding the '155 patent, claiming that it was not pertinent to the case.

In the order handed down this week, the district court granted Roche's motions, ordering that the hearing on the '375 patent be delayed until further order by the court.

Detailing its decision, the court noted that Cepheid did not contest Roche's motion to stay, but initially argued that the stay should continue only until the arbitration tribunal issues its decision on jurisdiction. At a hearing on the matter, however, Cepheid conceded that, rather than having the stay expire automatically when the tribunal issued this decision, it would be appropriate for it to bring a motion to lift the stay if and when the tribunal issues a decision that is favorable to Cepheid.

Accordingly, the court granted the stay until further order, and directed Cepheid and Roche to update the court within 30 days of the issuance of the tribunal's decision on the issue of jurisdiction.

Regarding the '155 patent, the court dismissed Cepheid's request to find the patent unenforceable, noting that "it appears from the facts in this case that the plaintiff [Cepheid] took specific actions to attempt to manufacture a controversy over the '155 patent, possibly to gain leverage in the dispute over the '375 patent."

Further detailing its decision, the court noted that Roche first mentioned the '155 patent in a letter sent to Cepheid in November 2010 indicating that a license for the patent was necessary for certain of Cepheid's products — though it did not specify which products infringed.

According to court documents, Cepheid did not respond to the deadline provided by Roche to answer an offer to license the '155 patent. However, about a year and a half later, Cepheid reinitiated contact with Roche regarding the '155 patent, asking Roche to send it terms for licensing three Roche patents, including the '155.

"The fact that [Cepheid] rather than [Roche] initiated this communication undermines the argument that this communication is evidence of [Roche's] intent to enforce its patent rights against [Cepheid]," the court noted in its decision.

The court also noted that "the facts of the '375 patent litigation do not suggest there was a ripe controversy over the '155 patent. To the contrary, they suggest that [Roche] was not prepared to bring suit over the '155 patent in the foreseeable future."

Cepheid is not the only party to challenge Roche's PCR patents, and specifically the '375 patent. In June 2011, Troll Busters, led by Jeff Oster, asked that the USPTO rule the patent invalid under 35 USC 102 and 35 USC 103, which cover novelty and loss of right to patent and non-obvious conditions for patentability; as well as under the equitable doctrine of obviousness-type double patenting (PCR Insider, 6/23/2011).

Cepheid alleged in its original complaint that the USPTO had issued an office action rejecting several of the claims of the '375 patent as unpatentable in view of prior art; and rejected all of the claims as unpatentable due to non-statutory double patenting. However, Roche subsequently filed an amendment and response that added limitations to the independent claims of the '375 patent; and filed a preliminary amendment in an application for reissuance of the patent.

As of August, Roche confirmed that the re-examination proceedings were ongoing and have been merged with Roche's request for re-issuance of the '375 patent.

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