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Benitec Pushes Forward in Effort to End Nucleonics Suit, Questions Nucleonics Interest in Animal Health

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Continuing its bid to end its protracted legal dispute with rival Nucleonics, Benitec late last month filed documents supporting its earlier motion to dismiss the case without prejudice.

Among Benitec's arguments supporting the motion are its claims that a dispute no longer exists between the companies in light of the recent Supreme Court decision on Merck vs. Integra Life Sciences; that Nucleonics has insincerely raised concerns about how the threat of future litigation may affect investment or partnering opportunities; and that Nucleonics has been suggesting it may expand into the non-human animal field in order to keep the lawsuit moving forward.

The dispute between Benitec and Nucleonics extends back to April 2004 when Benitec, under the leadership of its former Chairman and CEO John McKinley, sued Nucleonics, Ambion, and GenScript in the US District Court for the District of Delaware for allegedly infringing its US patent 6,573,099 (see RNAi News, 4/2/2004). While Ambion and GenScript took licenses to Benitec's technology in order to settle the matter, Nucleonics chose to fight.

Nucleonics has long maintained that it does not require a license to Benitec's technology, and has gone so far as to oppose a recent request from Benitec to dismiss the lawsuit without prejudice (see RNAi News, 8/5/2005). While Nucleonics had previously asked the District Court to dismiss Benitec's suit, it has said in court filings that it now wants to see Benitec's IP invalidated and the matter resolved once and for all.


"Whether or not a potentially infringing product could or would ever be offered for sale by Nucleonics would be sheer speculation now."

Continuing to push for a dismissal of the case without prejudice (which would leave open the door for a similar lawsuit in the future), Benitec filed with the court in late August a reply to Nucleonics' opposition in support of the motion to dismiss.

According to that court filing, the Merck vs. Integra ruling, which gave drug makers the go-ahead to use other companies' patented technology to develop new human medicines under a statutory patent exemption termed 35 U.S.C. 271 (e)(1), "changed the law … [in such a way that] there was no longer a case or controversy" related to Nucleonics' alleged patent infringement.

"Benitec appropriately moved to dismiss its claims against Nucleonics without prejudice," the filing states.

According to Benitec's filing, "Nucleonics represented that all of its activities have been directed to developing and submitting information for an investigational new drug application and, as a result, those activities are exempt from [patent] infringement under 271 (e)(1). Nucleonics further represented that the IND would not be submitted until late 2005 and that 'it will not be ready to file a new drug application to manufacture and market a new drug product until at least 2010-1012, if ever, depending on the progress of its clinical trials.'"

Benitec stated in the filing that since it will be "years, if ever, before Nucleonics will obtain necessary regulatory approval and engage in activities that are not shielded by the 271 (e)(1) exemption … Benitec has no basis to continue to assert its claims. As a result, this court lacks subject matter jurisdiction and this case should be dismissed without prejudice."

Benitec added that "whether or not a potentially infringing product could or would ever be offered for sale by Nucleonics would be sheer speculation now."

In the August court filing, Benitec also alleges that "Nucleonics contends that there is an actual controversy because 'even the threat of a patent lawsuit' may chill the interest of investors or partners in a company … but there is no contention that Benitec has in any way impaired [Nucleonics'] ability to raise funds. In fact, Nucleonics has raised nearly $50 [million] during the pendency of this case."

In April 2004, Nucleonics announced that it had raised $40.9 million as part of a Series B round of venture financing (see RNAi News, 4/16/2004). About two months later, the company reported that it had received an additional $8.3 million from new and existing investors that wanted to take part in the Series B (see RNAi News, 6/4/2004). Shortly thereafter, Nucleonics said it had secured a $2.7 million equipment financing facility.

In its push to have the Nucleonics lawsuit dismissed, Benitec also alleged that Nucleonics has made "vague references to animal work" as part of a "smokescreen" designed to keep the lawsuit alive.

According to the Benitec filing, Nucleonics has said that "it may change its direction and work in the non-human animal field," namely animal husbandry and veterinary medicine.

However, in the court filing Benitec quotes Nucleonics as previously stating to the court that its research "involving dsRNA constructs is specifically directed toward developing and submitting information for its IND. Nucleonics is not preparing or using dsRNA constructs for RNAi for any reason other than to develop and submit information for an IND."

Benitec stated in its court filing that "there is nothing in the declaration of Nucelonics' president and CEO to indicate that there [are] any definite or concrete plans to enter the animal field. An 'eagerness to expand' [into animal health] does not vest this court with jurisdiction.'"

Benitec also points out that it has never sued anyone for patent infringement in the animal field. In late 2003, Benitec signed a deal under which Australia's Commonwealth Scientific and Industrial Research Organization was awarded the rights to the '099 patent in the non-human animal field (see RNAi News, 12/12/2003).

"Therefore, any fear that Nucleonics feels from Benitec in the non-human animal field is misplaced," Benitec stated in its court filing.

Robert Towarnicki, president and CEO of Nucleonics, however, painted a different picture of the company's interests in animal health.

"We think there are opportunities in the animal health field," he told RNAi News this week. "Not just veterinary [opportunities] but also food production. So we've been looking at some grant opportunities in the field and we've had some early discussions with a large agricultural firm."

Towarnicki said that Nucleonics' interest in the animal health field "plays into the [Benitec] lawsuit … [because] the Integra decision has nothing to do with animal health or veterinary" areas.

In terms of Benitec's argument that the animal health issue is one for CSIRO, Towarnicki said that "it's a common patent" and CSIRO "should be a party to this suit." He added that Nucleonics has brought this issue before the court.

Officials from CSIRO were not available for comment.

— Doug Macron ([email protected])

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