Australia’s Benitec said last week that it has filed patent infringement lawsuits against Nucleonics, Ambion, and GenScript, a legal move widely expected given recent comments by the company’s senior management.
Benitec’s suit alleges that the three companies all have infringed on a US patent entitled “Genetic Constructs for Delaying or Repressing the Expression of a Target Gene.”
Benitec is seeking treble damages from Nucleonics and Ambion, but not GenScript, for “willful [patent] infringement,” according to the lawsuit.
This patent — number 6,573,099 — essentially covers the knocking down of gene expression in plants, as well as animals, using DNA that transcribes double-stranded RNA, one strand of which has a sequence complementary to that of the target gene. The RNAi technology, known as DNA-directed RNAi (ddRNAi), is the core of Benitec’s therapeutic platform and was invented by Michael Graham, the company’s principal research scientist.
After resolving a long-standing dispute over the ownership of ddRNAi (see RNAi News, 12/12/2003), Benitec secured the rights to the technology for all human applications and turned its attention to becoming a US-based and publicly traded RNAi drug developer.
Despite the settlement, the company’s IP concerns weren’t entirely over: Benitec chairman and CEO John McKinley told RNAi News in late January that his company had identified a number of companies infringing on Benitec’s patents and that litigation would follow if outlicensing deals could not be struck (see RNAi News, 1/30/2004). While he declined to name specific companies during that interview, he noted at the time that Nucleonics “needs a license” to Benitec’s IP.
“We believe Benitec’s patent estate is clear and represents an enforceable position in DNA-directed gene silencing,” McKinley said in a statement released last week. “We are committed to vigorously defending the rights that our patent estate confers and the licensees of our technology.”
About a year ago, Benitec exclusively licensed the ddRNAi technology to Promega for applications in areas outside of human therapeutics, such as laboratory and analytic research products, in exchange for an upfront fee and royalties. Promega also obtained the right to sublicense the technology.
“There should be no doubt that we are prepared to [defend our IP] and we have the necessary resources, including patent insurance, to put this strategy into effect,” McKinley added in his statement. “Benitec will consider additional infringement actions as we deem appropriate in other jurisdictions.”
A Benitec spokeswoman told RNAi News that the company had no comment on the lawsuit, in which a jury trial is requested, beyond what was stated in a press release.
According to Benitec’s lawsuit, filed in the US District Court for the District of Columbia, Nucleonics “has actual knowledge of the Benitec patent and its infringement of the Benitec patent has been willful and deliberate.”
Based on conversations with Nucleonics president and CEO Bob Towarnicki, as well as McKinley, it appears that Nucleonics has reviewed Benitec’s IP in the context of licensing discussions, but decided that there is no overlap between the companies’ technologies.
Nucleonics employs an RNAi technique called eiRNA, or expressed-interfering RNA, which involves the delivery into cells of DNA plasmids that have been designed to express long pieces of double-stranded RNA targeting multiple genomic sequences. EiRNA was developed by Nucleonics’ co-founders Catherine Pachuk and C. Satishchandran while they were researchers at Apollon, which was later acquired by Wyeth. Nucleonics’ later co-exclusively licensed the technology from Wyeth, according to Pachuk.
In addition to treble damages, Benitec is seeking an injunction preventing Nucleonics’ infringement.
Towarnicki told RNAi News that Nucleonics has received a copy of the lawsuit, which is being evaluated with the company’s attorneys.
“We believe the suit is without merit — we don’t infringe their patent,” he added. “If necessary, we’re prepared to mount a vigorous defense.”
Towarnicki reiterated his previous position that Nucleonics is not in need of a license to Benitec’s patent, but said his company would not rule out taking a license in light of the litigation.
“If [a license] is a reasonable solution to the problem, we’d certainly consider it,” he said. “We still don’t see the need for [the license], but if its cheaper to do [a deal] than fight a lawsuit, it might make sense to do that.”
Nucleonics is nearing completion of a financing round through which it hopes to raise between $40 million and $50 million. As to whether investors have been spooked by the Benitec suit, Towarnicki said that “it’s a new development and one that we have to deal with with the syndicate of investors and get them comfortable that we don’t infringe.
“If we don’t close [the financing], obviously it was an issue,” he added. “If we do, it’s wasn’t an issue for them.”
(The day after RNAi News’ interview with Towarnicki, Nucleonics announced that it had raised $40.9 million in a Series B round of financing. See Strands on p. 8 for more.)
In its lawsuit, Benitec claims that Ambion also “has actual knowledge of the Benitec patent and has provided instructions to its customers that, when carried out, infringe the Benitec patent. Ambion contributorily infringes the Benitec patent,” the claim adds,” and actively induces infringement … by others.”
Among Ambion’s product offerings is its line of pSilencer siRNA expression vectors, which include an RNA polymerase III promoter, ampicillin resistance gene, and Escherichia coli origin of replication, according to the company’s website.
“To elicit [gene] silencing, a small DNA insert encoding a short hairpin RNA targeting the gene of interest is cloned into the vector downstream of the Pol III promoter,” the website explains. “Once transfected into mammalian cells, the insert-containing vector expresses the short hairpin RNA, which is rapidly processed by the cellular machinery into siRNA.”
The suit seeks an injunction barring Ambion’s alleged infringing activities, in addition to treble damages.
Ambion president Bruce Leander told RNAi News that his company has received a copy of the Benitec suit, but he declined comment.
“I’m in information-gathering mode to try to figure out what all this is about,” he said. “It’s very new [to me and] I have no comment.”
GenScript markets DNA vector-based siRNA products for gene silencing experiments that, according to the company’s website, involves cloning “a small DNA insert encoding a short hairpin RNA targeting the gene of interest … into a commercially available vector. The insert-containing vector can be transfected into the cell and it expresses the short hairpin RNA,” which is processed into siRNA that triggers RNAi.
The Benitec lawsuit simply states that GenScript is infringing the Graham patent by “making, using, offering to sell, or selling gene silencing technologies.” Benitec does not allege that GenScript is aware of its supposedly infringing activities and is not seeking enhanced damages.
GenScript CEO Frank Zhang told RNAi News that his company has received notice of the lawsuit, but said his company has not previously had contact with Benitec over infringement issues or the possibility of licensing the Graham patent.
He said that GenScript feels the lawsuit is “without merit” and that the company intends to “vigorously defend” itself. When asked if GenScript has or is planning to discuss licensing opportunities with Benitec, Zhang said that the matter is still being evaluated by the company’s legal counsel.
Richard Warburg, an IP lawyer and partner at the San Diego office of Foley & Lardner, told RNAi News that it is not unusual that GenScript’s first contact with Benitec regarding the Graham patent would be through a lawsuit.
Pointing out that the three companies being sued are all incorporated in Delaware, he said that throwing GenScript into the mix allows Benitec to consolidate its complaints into one action right from the start, simplifying matters while eliminating costs associated with having “three or four lawsuits going at once.”
Warburg also noted that filing litigation against GenScript could give Benitec leverage in any negotiations that might occur down the road.
Warburg said that a defendant in a complaint such as the one Benitec has filed has 20 days to respond, and that often a one month extension is granted.
“So, [it’ll be] a couple months until we see an answer or a motion to dismiss,” he said, adding that these kinds of legal moves are routine and don’t provide much insight into the situation.
“Discovery will probably start … four to six months from now, and that will all be secret — you [generally] won’t know what’s going on,” he said. “You wouldn’t see anything much until a trial is set, which would probably be a year and a half or two years from now.”
Warburg said that it would not come as a surprise if Nucleonics, Ambion, or GenScript opted for a licensing deal with Benitec rather than deal with litigation. “It’s very common,” he said. “Lawsuits can cost a few hundred thousand dollars, or even millions of dollars, depending on who you have representing you and how aggressive you want to be.
“If Benitec is looking for $100,000 or something, it’s just not worth fighting” for the defendants, Warburg concluded. “Why bother … having that risk [of losing the suit] hanging out?”