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Benitec, Promega Dispute Heads to Mediation

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The ongoing legal dispute between Promega and Benitec has been referred to mediation, according to a court filing issued this week.

The companies have been fighting in a US District Court since last year over an exclusive license to Benitec's expressed RNAi technology. In 2003, Benitec granted Promega the exclusive rights to use and sublicense the technology, termed DNA-directed RNAi, in areas outside human therapeutics. In July 2004, however, Benitec sued Promega for failing to meet its royalty obligations under the arrangement (see RNAi News, 7/30/2004).

Benitec alleged that Promega's exclusive license to the ddRNAi technology had therefore reverted to a non-exclusive one. Promega responded with a countersuit charging that it deducted tax payments that it made on behalf of Benitec from its royalty payments, and that its ddRNAi license remains exclusive.

Benitec's legal maneuvers had been consistent with statements made by then-CEO John McKinley, a one-time IP lawyer who oversaw the company's initiation of patent infringement lawsuits against rival Nucleonics, as well as reagent firms Ambion and GenScript. McKinley had told RNAi News as early as January 2004 that Benitec was planning on suing a number of companies if ddRNAi licensing deals could not be struck.

However, a year later McKinley resigned his position, and COO Sara Cunningham stepped up as the new CEO (see RNAi News, 1/21/2005). Since that time, Cunningham appears to have been working to smooth over relations with Promega, noting last month that Benitec was "seeking resolution with" its one-time partner (see RNAi News, 3/25/2005).

It now seems that that resolution might occur out of court through mediation. According to Richard Warburg, an IP lawyer and partner at the San Diego office of Foley & Lardner, mediation is a common process through which courts look to expedite lawsuits.

"Courts recognize that most litigation, 98 percent in fact, settles out of court," he said. "The quicker that you can get to that settlement, the fewer resources of the court are going to be used. So, [courts] encourage that in many ways … including mediation … which is usually court-ordered but can be done by the agreement of the parties."

Warburg said that a mediator is an independent party with legal training, sometimes a former judge or experienced attorney, who "tries to help the two parties in line." Mediators, he said, will listen to the litigants and try to help them reach a resolution satisfactory to each.

"It opens up all the possibilities of settlement that a court can't order and which a jury can't award, which is usually [just] damages and an injunction," he said.

He noted, however, that mediators differ from arbitrators in that they have no authority to order a resolution. Mediators "can't force anything to happen; they can only help catalyze a reaction," Warburg said.

Cunningham declined to comment on the Promega situation. Officials from Promega were not available to comment.

— DM

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