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Protiva Seeks to Dismiss Sirna Suit Because US Unit Not Named; Says Sirna Offers No Evidence

In a bid to settle one part of its ongoing legal dispute over the rights to an oligonucleotide delivery technology, Canada’s Protiva Biotherapeutics last week said it will ask a US District Court to dismiss a suit filed against it by one-time partner Sirna Therapeutics.
Sirna sued Protiva in March, charging that a license it took to Protiva’s so-called SNALP delivery technology was invalid because Protiva did not own the intellectual property needed to strike the licensing deal in the first place (see RNAi News, 3/2/2006).
In its request to the court, which is to become official on Oct. 27, Protiva alleges that because Sirna’s suit failed to include Protiva’s US subsidiary — a necessary party to the dispute — the case should be dismissed.
The unit, Protiva USA, was formed in 2000 “for the purpose of obtaining funding for Protiva product development, including products arising out of Protiva’s SNALP technology, and ultimately marketing and distributing Protiva’s products in the United States,” Protiva said in a court filing. Since it is not a party to Sirna’s suit, ”Protiva USA risks having its claimed interest in Protiva’s intellectual property rights decided in its absence.”
Protiva’s request for dismissal also states that Sirna had failed to provide evidence that Protiva misled it about who owned the delivery technology.
In fact, “the plain text of the contract [for the firms’ licensing deal] shows that Sirna was fully aware of the risk that Protiva may not have had all of the licenses” required to fulfill its part of their deal, Protiva stated.
In light of these and other reasons, Protiva said in its court request, Sirna’s suit against Protiva should be dismissed or stayed “pending final judgment and exhaustion of all appeals” in related legal complaints.
Seeking Deliverance
At the root of Protiva and Sirna’s legal battle is a delivery technology — termed SNALPs, for stable nucleic acid lipid particles — that comprises the encapsulation of oligos by cationic and fusogenic lipids, which are surrounded by a polyethylene glycol coating to prevent clearance of the positively charged cationic lipid from the bloodstream.
Since at least late 2003, Protiva has been shopping possible licenses to SNALPs, which were developed out of gene-delivery technology licensed from former parent firm Inex Pharmaceuticals in 2001 (see RNAi News, 11/7/2003).
Protiva eventually found a partner in Sirna, but their deal ran aground when Sirna sued Protiva earlier this year, alleging that Protiva did not own SNALPs for RNAi applications. Rather, Sirna charged that those rights remained with Inex.
Protiva countersued Sirna later that month, claiming that its one-time partner stole trade secrets in order to develop its own delivery technology (see RNAi News, 3/30/2006). Protiva has also sued Inex in Canada and, most recently, in the US for allegedly inappropriately claiming it owned the SNALP technology — a move that killed its deal with Sirna and scuttled potential future deals with other RNAi firms (see RNAi News 3/30/2006 and 9/14/2006).
Inex has countersued Protiva in Canada (see RNAi News, 5/4/2006).
Surprise US Subsidiary
As the wrangling between Protiva and Inex continues, Protiva’s request to have Sirna’s suit dismissed may lighten its legal woes.
Key to Protiva’s request is the company’s heretofore unpublicized subsidiary, Protiva USA, which Protiva President and CEO Mark Murray said in a court affidavit was incorporated in Seattle, Wash., at the same time Protiva was incorporated in Canada. Protiva USA was reincorporated in Delaware earlier this year but remains headquartered in Seattle, he said.
According to Protiva’s dismissal request, since Protiva USA was founded to market and license various technologies including SNALPs, even if it was not a signatory to Protiva’s deal with Sirna “it still claims an interest in the SNALP technology rights involved.”

“Protiva USA may find itself bound by a judgment regarding Protiva’s intellectual property rights — without any opportunity to defend its position.”

Protiva USA’s “absence [from the Sirna suit] impairs its ability to protect its interest in [the] intellectual property rights [at issue], since the scope of Protiva’s licensing agreement with Inex is at risk of being affected in this case,” the request adds. “Protiva USA may find itself bound by a judgment regarding Protiva’s intellectual property rights — without any opportunity to defend its position.”
But even if the court determines that Protiva USA’s absence from the Sirna suit is insufficient grounds for a dismissal, Protiva says that the suit should be thrown out because Sirna has failed to provide evidence supporting one of its key complaints: that Protiva misled it about its ownership of SNALPs.
“Sirna’s fraud claim alleges that it contracted with Protiva in reliance on Protiva’s misrepresentation that it had certain intellectual property licenses that it did not actually have,” Protiva stated in its request for dismissal. However, this allegation is “directly contradicted by the language of the agreement between the parties.”
Specifically, the contract between Sirna and Protiva includes an escrow provision under which $900,000 of the $1 million Protiva was owed under the deal would only be released upon “receipt of duly executed amendments” to Protiva’s original technology-licensing deal with Inex to establish Protiva’s ownership of SNALP IP in the RNAi field.
“The escrow provision is a contractual protection for Sirna,” Protiva noted in its court filing. “Sirna expressly understood that at the time that [Protiva] entered into [its] agreement with Sirna, Protiva did not have all the rights that it now claims Protiva needed. Sirna specifically contracted for the very risk it alleges it was unaware of.”
Requests for additional comment from Protiva and Sirna were not returned.

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