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Settling Suit With Promega, Benitec Regains Licensing Rights to Tech


Benitec and Promega announced this week that they had settled their year-old legal dispute over the licensing rights to Benitec's expressed RNAi technology.

By settling their fight, which began last year when Benitec sued Promega for allegedly violating the companies' licensing arrangement, Benitec has taken a big step towards its goal of overhauling its image as a company more focused on filing lawsuits than developing RNAi-based therapeutics.

The company has also managed to regain the sublicensing rights to its technology, which it handed over to Promega as part of the original licensing arrangement at the heart of the conflict.

"We are happy that the issues between Benitec and Promega have finally been resolved and that all parties will be able to concentrate their efforts on business rather than litigation," Benitec CEO Sara Cunningham said in a statement.

Under the terms of the settlement, Promega will have a non-exclusive worldwide license to make and sell research products incorporating the ddRNAi technology. Benitec, meanwhile, has regained from Promega all ddRNAi-related sublicensing rights.

Promega will also receive an undisclosed cash payment from Benitec, as well as royalties on certain sublicenses.

Benitec has "had the same position from the beginning, which is that we are very comfortable with licensing [the ddRNAi technology] ... in the therapeutics field, including clinical indications that we're interested in. Our door is still entirely open to have those discussions."

The settlement completely resolves all claims and counterclaims put forth by Benitec and Promega, including ones against Ambion, which had been sued by Promega for signing its licensing deal with Benitec. It also resolves any claims against Australia's Commonwealth Scientific and Industrial Research Organization, which owns the commercial rights to the ddRNAi technology in all non-human areas but was never actually named as a defendant in the litigation.

According to a representative from Promega's legal department, the settlement with Benitec was an outgrowth of court-ordered mediation held in June (see RNAi News, 4/22/2005). Company representatives "attended that conference, and after that had discussions with Benitec on and off," the representative told RNAi News. "The result was this settlement."

Additional terms of the settlement were not disclosed.

The legal dispute began in April 2003 when Benitec gave Promega the exclusive rights to use and sublicense the expressed RNAi technology -- termed DNA-directed RNAi -- in non-therapeutic human fields. Benitec's then-CEO, John McKinley, heralded the arrangement as key to his company's establishment of a US presence and stable revenue stream.

However, 15 months later, the partnership began to unravel when Benitec sued Promega in the US District Court for the District of Delaware for failing to meet its payment requirements under the companies' arrangement and charged that its exclusive license had become non-exclusive (see RNAi News, 7/30/2004). Promega maintained that it didn't make the full royalty payments because it had been covering taxes owed by Benitec and that its exclusive license remained in effect.

While the case made its way through the courts, Benitec signed a number of research licensing deals for the ddRNAi technology. Promega alleged in a countersuit last September that these deals violated its exclusive license to the technology and that Benitec "manufacture[d]" the royalty dispute in order to re-negotiate the companies' 2003 licensing deal (see RNAi News, 9/10/2004).

Shortly before it sued Promega, Benitec had also sued Ambion, GenScript, and Nucleonics for patent infringement (see RNAi News, 4/2/2004). While Ambion and GenScript took licenses to Benitec's technology to settle the suits, Nucleonics fought back, filing counterclaims of its own and launching oppositions to numerous Benitec patents worldwide.

Facing stiff legal resistance from Promega and Nucleonics, Benitec began to experience a decline in both its perception as a legitimate drug maker and its bankroll. In January, McKinley was ousted as head of the company and was replaced by Cunningham, who initially joined Benitec as COO when it acquired the company she co-founded, Avocel.

From the start, Cunningham stressed that she wanted to put an end to Benitec's litigiousness and focus on the business of developing medicines, telling investors during a conference call shortly after she took the company's helm that the intention was to "resolve [Benitec's] intellectual property disputes" within two years (see RNAi News, 2/4/2005).

Now, Benitec is halfway there.

Cunningham told RNAi News this week that the mediation was "very helpful in allowing each of us to see a path to resolution. It was certainly very constructive." She added that Benitec remains open to any out-of-court discussions could lead to similar results in its lawsuit against Nucleonics.

Although under McKinley's leadership Benitec appeared to operate under the principle that the best defense was a strong offense when it came to guarding its intellectual property estate, Cunningham has set the company on a decidedly conciliatory tack.

Most recently, Benitec filed a request asking that its suit against Nucleonics be dismissed, ostensibly in light of the recent Supreme Court decision on Merck v. Integra LifeSciences (see RNAi News, 8/5/2005).

"We have had the same position from the beginning, which is that we are very comfortable with licensing [the ddRNAi technology] ... in the therapeutics field, including clinical indications that we're interested in," Cunningham said. "Our door is still entirely open to have those discussions." She added that a potential settlement with Nucleonics would not necessarily require a ddRNAi license.

However, Nucleonics, emboldened by a number of successes in its efforts to have Benitec's IP invalidated worldwide (see RNAi News 12/3/2004, 1/14/2005, and 8/5/2005), has said it wants to fight the matter in court (see RNAi News 8/5/2005). Nucleonics' attitude might change in the near future, however, in light of the Australian patent office's recent upholding of a Benitec patent (see related story in this issue).

"Benitec brought this lawsuit accusing Nucleonics of infringement, and in doing so put its patent in play and brought a public cloud of uncertainty over its competitor, Nucleonics," Nucleonics said in a court filing this week. "It did this knowing ... that the very act of litigation would adversely affect investment in biotech start-up Nucleonics. Benitec cannot now unilaterally choose to leave the playing field and, from a distance, keep its patent in 'safe harbor' from invalidity scrutiny."

Nucleonics stated in the filing that it is in part pursuing the litigation because Benitec has not agreed to a settlement that would preclude it from refilling its lawsuit in the future.

Officials from Nucleonics were not available for comment as of press time.

-- Doug Macron ([email protected])

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