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Ambion Tries to Free Itself From Benitec, Promega Dispute; Nucleonics Fights On

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When Ambion settled a patent-infringement lawsuit with Benitec in August, it probably figured it had put an end to the matter. This turned out not to be the case after Promega made the companies’ settlement a key issue in its own legal battle with Benitec.

Now, facing charges of unlawful interference in Benitec’s troubled partnership with Promega, Ambion is simply looking for a way out of the dispute.

In March, Benitec sued Nucleonics, Ambion, and GenScript for infringing its US patent — entitled “Genetic Constructs for Delaying or Repressing the Expression of a Target Gene” — which forms the core of its DNA-directed RNAi platform (see RNAi News, 4/2/2004).

Ultimately, Ambion chose to settle with Benitec (see RNAi News, 8/13/2004). As part of the settlement, Ambion took a non-exclusive global license to make and sell research tools and products using the ddRNAi technology. (GenScript also settled, while Nucleonics continues to defend itself in the case.)

Although the move took Ambion off of Benitec’s legal radar, it swept the company into the fray of an intellectual property dispute between Benitec and Promega.

In July, Benitec filed a lawsuit against Promega, which had acquired the exclusive rights to use and sublicense the ddRNAi technology in areas outside human therapeutics in exchange for $350,000 and royalties. The suit charged that Promega had failed to meet its payment requirements to Benitec, and therefore had forfeited its exclusive rights to the technology in lieu of a non-exclusive license to simply use the technology (see RNAi News, 7/30/2004). As a result, Benitec negotiated the ddRNAi license with Ambion itself.

Promega, however, has long maintained it did not breach its contractual obligations. In a court filing from late August, the company stated that it did not make the full royalty payment because it had deducted the cost of a US income tax payment made on behalf of Benitec.

According to Promega, its exclusive license to the ddRNAi technology is still in effect, and therefore Benitec’s licensing deal with Ambion was a violation of the Benitec/Promega arrangement. Promega stated in the August filing that it had all but finalized a ddRNAi license with Ambion, but that “Benitec wrongfully took the Ambion sublicense for itself” (see RNAi News, 9/10/2004).

Aside from its allegations against Benitec, Promega also filed charges against Ambion, which is accused of damaging Promega’s business and exclusive rights to the ddRNAi technology by entering into its deal with Benitec.

In court papers filed on Oct. 1, Promega alleges that “based on its dealings with Benitec and with Promega, and the fact that it had received a signature-ready version of a license from Promega, Ambion was well aware that … Promega had the exclusive right to sublicense Benitec’s patents and was actively doing so.

“Ambion eagerly joined Benitec’s plan to cut out Promega” from its exclusive license deal, “negotiating [with Benitec for] the sublicense before July 22, 2004, the date [on] which Benitec repudiated Promega’s exclusive license and filed [its] lawsuit,” Promega added in the legal documents. “After negotiating with Promega, Ambion decided it could negotiate a better deal with Benitec directly and did so.”

Ambion, trying to extricate itself from the legal fracas, repudiates Promega’s charge that it began negotiations with Benitec before the breach-of-contract dispute.

“Ambion should not be a party to this contractual dispute between Promega and Benitec,” Ambion stated in a court filing dated Oct. 8. “Facing claims of patent infringement [from Benitec] … and desiring to settle those claims … before incurring significant attorney’s fees and costs, Ambion had no choice but to negotiate with Benitec.”

Ambion noted in the court papers that “by that time, Benitec and Promega were in a dispute as to whether Promega had forfeited its exclusivity rights. Thus, at the time Benitec and Ambion signed the settlement license … Benitec had already asserted [the Promega license’s] conversion to non-exclusive status.

“The present dispute is solely between Benitec and Promega,” Ambion added.

Meanwhile, as Ambion attempts to distance itself from the matter, Promega and Benitec continue to press their cases to the court.

In the Oct. 1 court filing, Promega stated that Benitec filed its initial suit seeking to invalidate Promega’s exclusive license as a result of “licensor remorse. Benitec got greedy and decided that it would try to take the fruits of Promega’s efforts [promoting the ddRNAi technology] for itself by attempting to take away Promega’s … rights.”

In papers filed with the court on Oct. 8, Benitec asserts that the dispute with Promega hinges entirely on a single tax issue.

“The dispute is whether the amounts Promega withheld from royalty payments due to Benitec were taxes on … net income, which was the only allowable withholding under … the [companies’] licensing agreement, or were instead on Benitec’s gross income,” Benitec stated in the legal filing.

The sole issue of the case “is a legal one,” Benitec added. “The taxes deducted by Promega were taxes calculated … on Benitec’s gross income, [which] … was expressly and unambiguously prohibited by the license agreement.”

Another Challenge

While its dispute with Promega continues, Benitec also finds itself staving off repeated attacks from Nucleonics.

Nucleonics said this week that it has filed a request for re-examination of one of Benitec’s Australian patents, marking the third time Nucleonics has issued a challenge to its rival’s IP estate.

According to Nucleonics, it is now asking the Commissioner of Patents in Australia to review the validating of Benitec’s patent — number 2001100608, entitled “Control of Gene Expression.”

The move comes about two months after Nucleonics announced that it had asked for a re-examination of another of Benitec’s Australian patents (see RNAi News, 9/10/2004), and less than a month after Nucleonics asked the US Patent and Trademark Office to reconsider the validity of Benitec’s US patent (see RNAi News, 10/8/2004).

Benitec, however, recently scored a victory against Nucleonics after the court granted its motion to keep Benitec’s confidential information out of the hands of some of the lawyers that may be representing Nucleonics.

According to a court filing dated Oct. 1, Benitec noted that the law firm representing Nucleonics — Morgan Lewis — is the same firm that represents the Carnegie Institute of Washington. According to Benitec, Carnegie — which co-owns the fundamental Fire-Mello patent with the University of Massachusetts — is “a primary competitor of Benitec, unrelated to Nucleonics.”

Benitec added that “Carnegie claims competing rights in the area of gene-silencing technology, and is undertaking research, development, licensing, and other business activities that significantly overlap those of Benitec. Carnegie also has, through various means, actively opposed Benitec’s patent rights in jurisdictions throughout the world, including the recent copying of the claims of the patent at issue” in the Nucleonics law suit.

Benitec argued that its business would be jeopardized by the disclosure of confidential information such as licensing files to Carnegie. As such, “it is essential that Morgan Lewis attorneys working for Carnegie not have access to highly confidential documents produced to Nucleonics,” and that “attorneys who have access to Benitec’s … information not represent Carnegie in related matters, Benitec stated.

Nucleonics noted in court papers dated Oct. 8 that Carnegie “is not a commercial or for-profit enterprise … [that it] licenses [its] patents to others on a generally non-exclusive basis,” and that it is not developing or marketing products or services. “In no reasonable sense, then, is Carnegie a ‘competitor’ to Benitec,” Nucleonics argued, adding that the confidentiality restrictions sought by Benitec would “severely prejudice Carnegie and Nucleonics.”

The court, however, found that “the nature of the competitive relationship between Benitec and Carnegie, and the potential that future disputes may occur between them, counsels a cautious approach in resolving the pending issue," according to a court memorandum dated Oct. 20. In the court’s view, “the interests of Benitec outweigh any effect [the confidentiality restrictions] may have on Carnegie’s lawyers.”

As such, the court granted Benitec’s motion asking that “during the pendency of the case [with Nucleonics], and for a period of 12 months thereafter, outside counsel for Nucleonics receiving Benitec’s highly confidential, outside counsel eyes-only information shall not represent the Carnegie Institute of Washington or any of its affiliates in any matter relating to the subject matter of the case.”

On Oct. 27, Nucleonics filed a motion asking the court to reconsider its decision. Specifically, the motion requests that “counsel for both parties [be precluded] from preparing or prosecuting RNAi-related patents for their party for one year after the conclusion of this litigation if they are receiving confidential information from the other party,” and that the “restriction on representation of Carnegie to the preparation and prosecution of RNAi-related patents” be limited.

— DM

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