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PerkinElmer-Agilent MS Suit Narrows Focus to Licensing Deal after USPTO Rejects Disputed Patents

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Perkin Elmer and Agilent's mass spec dispute continues, with defendant Agilent recently hitting back with counterclaims of its own.

The counterclaims come after the two parties have agreed to narrow the scope of their dispute pending US Patent and Trademark Office reexamination of the two Perkin Elmer mass spec patents under dispute – US Patent Nos. 5,686,726 and 5,581,080, entitled "Composition of Matter of a Population of Multiply Charged Ions Derived from Polyatomic Parent Molecular Species" and "A Method for Determining Molecular Weight Using Multiply Charged Ions," respectively.

In May, the USPTO issued office actions regarding these reexaminations in which it rejected multiple claims of both patents. PerkinElmer now has the right to respond to these rulings.

Agilent made its counterclaims in a submission filed with the US District Court for the District of Massachusetts on Aug. 21, asserting that it overpaid royalties on the sales of certain mass spectrometers that were not used in a manner covered by patents it had licensed from Perkin Elmer. As such, Agilent argues it is owed restitution by Perkin Elmer of any money the latter company unlawfully received via this overpayment.

Agilent additionally claimed that Perkin Elmer violated certain terms of its contract with Varian, which Agilent acquired in 2010, and that it is therefore entitled to compensation for Perkin Elmer's breach of this agreement.

Responding in a filing made on Aug. 28, Perkin Elmer denied Agilent's claims regarding overpayment of royalties and breach of the Varian license agreement. Additionally, the company offered a number of affirmative defenses.

In the case's initial complaint, filed in April 2012 in the US District Court for the District of Massachusetts, PerkinElmer alleged that Agilent mass spectrometry systems — including the company's 6100 series quadrupole, 6200 series TOF, 6300 series ion trap, 6400 series triple quadrupole, and 6500 series Q-TOF instruments — infringe the '726 and '080 patents.

Both patents were issued to inventors John Fenn, Chin-Kai Meng, and Matthias Mann, and were subsequently assigned to Yale University, which granted an exclusive license to the patents to Analytica of Branford, which PerkinElmer acquired in 2009.

Analytica entered into an agreement with Agilent in March 1997, granting Agilent a license to the patents. According to PerkinElmer's complaint, Agilent stopped making royalty payments required by this agreement after June 30, 2011, breaching the contract and leading to termination of the licensing agreement.

According to a June 28, 2011 letter written by Agilent General Manager of LC/MS John Fjeldsted to PerkinElmer IP Licensing Counsel John Hamilton, Agilent ceased making royalty payments upon expiration of the PerkinElmer-held US Patents Nos. 5,130,530 and 6,188,120, claiming that the '726 and '080 patents were "remarkably similar to the expired patents."

Therefore, Fjeldsted wrote, "Agilent owes no further royalties under the license."

In October 2012, Agilent petitioned the court for a stay in the proceedings pending the USPTO's reexamination of the disputed patents (PM 10/23/2012). And in July, the two firms jointly submitted a motion to narrow litigation to PerkinElmer's breach of contract count encompassing only damages relating to the period before July 1, 2011. The motion proposed staying the patent infringement counts and contract issues relating to the time period after June 30, 2011.

This effectively takes off the table the issue of Agilent's infringement of the '726 and '080 patents. While the benefit of this move to Agilent is straightforward, PerkinElmer's acquiescence to it is perhaps explained by the two USPTO office actions issued in May regarding the reexamination of the patents.

On May 14, the USPTO issued an office action for the '080 patent in which it rejected all but two of the claims of the patent for double patenting. On May 24, it issued an office action for the '726 patent in which it rejected all of the claims of the patent for double patenting and being anticipated and/or obvious.

PerkinElmer is entitled to respond to these USPTO rulings, but were they to stand they would appear to validate Fjeldsted's June 28, 2011 claim that Agilent owed no further royalties following expiration of the '530 and '120 patents.

PerkinElmer anticipated this possibility a year ago in an Oct. 2, 2012 filing in which it modified its initial patent infringement complaint to include a count for breach of license agreement. The addition of this count, PerkinElmer said, meant that even were the USPTO to declare the disputed patents invalid, litigation would still be necessary to resolve the breach of license charge.

According to the two firm's joint motion, under the new scope of litigation, PerkinElmer aims to pursue the questions of whether Agilent breached the license agreement when it failed to pay certain royalties prior to July 1, 2011 and whether it breached the agreement by failing to pay royalties on certain software sales.

Agilent, meanwhile, has asserted that litigation should focus on whether royalties are due only on sales of electrospray mass spectrometers used in the US for production or analysis of "multiply charged ions" as described in the '530 and '120 patents; "whether royalties are due on sales of electrospray ion sources for use with mass spectrometers on which royalties have already been paid;" and whether royalties are due on certain software sales – specifically "second seat" copies of deconvolution software sold for use with mass spec's already equipped with such software on which royalties had been paid.

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