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Maturing RNAi Industry Suggests It Spends Time in Court and in the Lab

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By Doug Macron

Just 12 years since Craig Mello and Andy Fire published their seminal paper on RNAi, the young industry has seen its fair share of litigation, with nearly dozen lawsuits having been filed between companies and institutions conducting research in the space.

In fact, lawsuits involving RNAi have been around for nearly half its existence as a mainstream technology, and have embroiled some of the field's highest-profile players.

The industry's litigiousness can be traced to what is now considered its most protracted legal row, a case in which Australian expressed RNAi shop Benitec sued three companies — Ambion, GenScript, and Nucleonics — for allegedly infringing its core US patent. That patent, No. 6,573,099, claims that DNA that transcribes double-stranded RNA can inhibit gene expression (GSN 4/2/2004).

Although GenScript and Ambion settled the matter by licensing the intellectual property, Nucleonics chose to fight, not only asking the court to find Benitec's patent invalid, but requesting the US Patent and Trademark Office to re-examine it.

It took the USPTO one year to rule that all claims in Benitec's patent were invalid, a decision that caused the company to boot its CEO after the dispute hurt both its image and finances.

Aiming to get back to the business of drug development, the company's new management sought to have the lawsuit dismissed, a request the court eventually granted.

Nucleonics, however, pressed on, asking to have the case re-instated so that it could obtain a final ruling on the invalidity of the '099 patent. Though the courts upheld the dismissal, the damage was done: With its primary IP invalidated, Benitec closed its US operations and reorganized into a much smaller company in its native Australia.

Yet for Benitec, the story had a happy ending. This year, USPTO reversed its decision on the '099 patent, finding that all of its claims are valid (GSN 4/14/2011). Emboldened by the decision, the company shortly thereafter closed an $8.5 million round of financing.

Ironically, Nucleonics did not fare as well. In mid-2008, the company shut its own doors after enduring difficulties securing financing (GSN 6/19/2008). However, a subsequent lawsuit between the firm and its two founders suggested otherwise.

Around the time it closed down, Nucleonics filed a lawsuit claiming that co-founders Catherine Pachuk and C. Satishchandran had allegedly falsified preclinical data related to the company's phase I hepatitis B treatment (GSN 7/3/2008). As a result, an investor pulled its financing commitment “and Nucleonics was ruined,” the firm claimed in its suit.

Pachuk and Satishchandran filed counterclaims, but the dispute was settled out of court a few months later (GSN 11/6/2008).

That case was followed in early 2005 by the Massachusetts Institute of Technology suing Dharmacon for allegedly failing to pay sufficient royalties on RNAi products covered by an IP licensing arrangement (GSN 2/11/2005).

The case can be traced to 2001 when Dharmacon picked up co-exclusive access to certain of MIT's siRNA technology to order to help it sell its research products. Court filings revealed that as part of its alliance with MIT, Dharmacon was required to pay the institute a running royalty of 7 percent of all net sales of products incorporating the patented technology, including siRNAs.

However, Dharmacon, which eventually was acquired by Thermo Fisher Scientific, contended that it should have been permitted to pay a reduced royalty on products that incorporated its own proprietary technologies and components by deducting amounts reflecting the additions from the price used to calculate the royalties.

The next year Dharmacon and MIT settled the dispute out of court, though details of the deal were never publicly disclosed.

IP rights were also at the heart of a 2006 lawsuit between Sigma-Aldrich and reagent provider Open Biosystems.

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In that case, Sigma-Aldrich and partner Oxford Biomedica sued Open Biosystems for allegedly infringing IP with its RNAi Consortium shRNA lentiviral library (GSN 6/15/2006).

As the litigation progressed, Open Biosystems, which would also be acquired by Thermo Fisher Scientific, maintained that the suit was merely an attempt by a large corporation to push a smaller rival from the market (GSN 12/13/2007). After almost two years of legal wrangling, the companies worked out their differences when Open Biosystems agreed to license certain Sigma-Aldrich patents and drop its efforts to convince the courts to invalidate the IP (GSN 3/13/2008).

Currently butting heads over RNAi IP are Cold Spring Harbor Laboratory and the law firm Ropes & Gray, with CSHL accusing one of Ropes' researchers of mishandling certain of its patent filings.

In early 2010, the lab sued its former patent counsel and his employer, Ropes,? for allegedly failing to properly prosecute two US patent applications that cover certain shRNA-related work performed by CSHL investigator Greg Hannon (GSN 2/25/2010).

The suit claims Ropes attorney Matthew Vincent failed to provide "an original, complete description of … Hannon's work … [but instead] relied upon copying extensive portions of text — essentially verbatim — from a prior patent application" published by Fire, of the Carnegie Institution of Washington, and Mello, of the University of Massachusetts Medical School.

CSHL said that this “unfairly prejudiced” the filings with the USPTO, which eventually rejected them — a decision that cost CSHL as much as $82.5 million in license revenues and royalties.

But Ropes scored its own victory during the litigation — though not on the merits of the case — when the New York court hearing the case dismissed it on the grounds that it should have been filed in Massachusetts (GSN 1/27/2011). CSHL has since refiled the lawsuit in that state.

A Tangled Web

But it's world's biggest RNAi drug developer, Alnylam, that holds the distinction of being the most litigious company in the field, having been embroiled in at least three lawsuits. Two of these are ongoing, including one with Tekmira Pharmaceuticals, formerly Inex Pharmaceuticals, over the alleged misuse of trade secrets.

The first was initiated about two years ago when Alnylam became a co-plaintiff with the Max Planck Institute, which was suing the Whitehead Institute for Biomedical Research, the Massachusetts Institute of Technology, and the University of Massachusetts for allegedly misappropriating certain RNAi-related intellectual property (GSN 7/9/2009).

Specifically, Alnylam and Max Planck alleged that the defendants misrepresented as their own inventions the so-called Tuschl-II patent estate, which relates to the use of siRNAs 21 to 23 nucleotides in length with 3' overhangs to target specific mRNA for degradation. Max Planck exclusively licensed that IP to Alnylam for therapeutic applications.

The plaintiffs accused Whitehead, MIT, and UMass of wrongly including 3' overhang data in patent applications from the Tuschl-I portfolio, which claims similarly structured siRNAs.

In their suit, Alnylam and Max Planck alleged that the defendants had been "inserting Tuschl-II inventions into the Tuschl-I patent applications … [which] impermissibly broadens the scope of patent protection to embrace the Tuschl-II property that rightfully belongs only to Max Planck.”

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Importantly, Alnylam obtained the rights to share the Tuschl-I IP with Merck after UMMS unilaterally assigned its interest in this patent portfolio to Sirna Therapeutics, which Merck later acquired.

Max Planck and Alnylam settled the case earlier this year (GSN 3/17/2011), although the terms of the deal were not disclosed. However, Alnylam said it had permitted Merck to sub-license a portion of the disputed IP to which it previously had not had access.

Yet just days later, Tekmira announced that it had sued Alnylam for allegedly misappropriating and misusing trade secrets and other confidential information related to its core lipid nanoparticle technology (GSN 3/17/2011).

“Alnylam abused its collaborator status and access to [the] confidential information by improperly using this information for its own internal purposes and to replicate a competing technology in ways that were unauthorized and without our consent,” Tekmira President and CEO Mark Murray said at the time.

Alnylam countersued, claiming that it was Tekmira that had, among other things, violated their commitment to handle disagreements through confidential alternative-dispute resolution procedures (GSN 8/16/2011).

Undeterred, Tekmira went on to expand its suit to include Canadian start up AlCana Technologies, which has been collaborating with Alnylam since it was founded, notably, by a group of former Tekmira employees (GSN 6/9/2011). The case is ongoing.

Meantime, Alnylam is fending off another legal challenge, this one from the University of Iowa. Filed in March, the suit claims that Alnylam and Max Planck inappropriately failed to credit one of its researchers with the inventions described in Tuschl-II (GSN 3/24/2011).

According to the ongoing suit, UI researcher Brenda Bass “conceived the inventions of all the issued claims of Tuschl-II and at least some pending claims of Tuschl-I well before any date asserted by the currently named inventors,” and “reduced her inventions to practice well before any date asserted” by Alnylam or Max Planck.

Through its involvement in the Alnylam litigation, Tekmira places a close second for the RNAi-litigation crown. However, if a pair of lawsuits from its previous incarnation as Protiva Biotherapeutics are included, the company comes out on top.

Spun out of Inex in 2001 to develop a gene-delivery technology for cancer and inflammatory diseases, Protiva had been run by the same management team that heads Tekmira. The company developed the technology into lipid nanoparticles that have had much success for siRNA delivery.

Another RNAi shop, Sirna Therapeutics, had licensed the nanoparticle technology from Protiva but later sued it after determining that the company did not own the IP for RNAi applications. Rather, those rights remained with Inex, according to Sirna's lawsuit.

In early 2006, Protiva turned and sued both Sirna and Inex, claiming that each engaged in improper activities to undermine its ownership of the lipid nanoparticle technology (GSN 3/30/2006).

According to Protiva, Inex was trying to “usurp” its discoveries after experiencing a setback with its own drug candidates, and claimed Sirna maintained a “hidden agenda” to develop its own siRNA delivery technology based on Protiva's proprietary method.

The case was eventually settled in early 2007 when Merck acquired Sirna. As part of the deal, Merck obtained a non-exclusive license to the nanoparticle technology in exchange for a one-time payment and potential milestones and royalties (GSN 10/8/2007).

In early 2008, Inex, which had renamed itself Tekmira, ended its dispute with Protiva by agreeing to a merger of the companies (GSN 4/3/2008). Although the Tekmira name was retained, the new company essentially retained Protiva's focus and team.


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