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With Technology Ownership Dispute Settled, Benitec Focuses on its Future

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Benitec, the Queensland Department of Primary Industries, and Australia’s Commonwealth Scientific and Industrial Research Organization announced this week that they have settled an ongoing dispute over what may turn out to be a key piece of intellectual property for the whole RNA interference space.

In June, Benitec was granted US patent 6,573,099, the only RNAi-related patent issued in the US other than the fundamental and widely available Fire-Mello patent. The Benitec patent, as well as its patent cooperation treaty counterparts, essentially covers the knocking down of gene expression in plants, as well as animals, using DNA that transcribes double-stranded RNA, one strand of which has a sequence complementary to that of the target gene. This RNAi technology, known as DNA-directed RNAi (ddRNAi), is the core of Benitec’s therapeutic platform and was acquired by the company through a 1997 licensing deal with QDPI, which became a co-owner of the intellectual property.

Importantly, Benitec’s core US patent also has filing date of June 19, 1998 (and claims priority from provisional Australian patent applications filed on March 20 that year), while the PCT patents have a filing date of March 19, 1999. These dates appear to make Benitec the holder of the earliest patented technology covering RNAi in animals, including mammals. The filing dates on the patents even precede those on the much-hyped Tuschl IP.

So with its patents in hand, and plans to transfer its headquarters and publicly traded stock to the US, Benitec seemed in a strong position to establish itself as a major RNAi-as-therapeutics player. But lurking in the background was an almost 2-year-old dispute with CSIRO over the ownership of the patented technology.

At the heart of the situation was Mick Graham, Benitec’s principal research scientist and lead inventor on the patents in question. Prior to taking his position at Benitec in 2001, Graham was employed by QDPI. Before that, he was employed by CSIRO.

According to Benitec CEO John McKinley, Graham had been conducting his ddRNAi work in plants while at CSIRO. But it wasn’t until after he joined QDPI in 1996 that the first patent on the technology’s use in animals was filed.

CSIRO, said McKinley, opposed the patent and claimed ownership to the technology in March 2002, contending that Graham’s patented work was simply an extension of what he had been doing when he was employed by CSIRO.

“In the patent opposition, CSIRO had stated that there was a recognized co-inventor of their patents — Mick Graham — and on our [patents],” he told RNAi News. “What they stated was that there was a continuation of the invention through CSIRO into QDPI.”

As might have been expected, Benitec disagreed with CSIRO’s claim and, in fact, still does, said McKinley. For the company, he said, ownership of the patented technology should be defined by “where [the invention] was reduced to practice,” and that, McKinley said, was at QDPI.

Bad for Business

But McKinley said that this kind of dispute “between two government organizations — Queensland DPI, which is the state of Queensland … and the Commonwealth government scientific organization — is never a particularly good thing to do when you have a new technology being brought into the marketplace.” He noted that it creates uncertainty over the intellectual property rights, which could jeopardize future licensing arrangements.

As such, the parties agreed to settle the matter and drop any existing and future claims against each other, with no admissions of liability, McKinley said. No payments have been made between the parties to settle the issue, he added.

Under the terms of their deal, Benitec will hold exclusive rights to the ddRNAi technology for all human applications. QDPI has transferred its co-ownership of the Benitec patents to CSIRO, which has acquired the exclusive right to the technology for all applications in animals (other than humans), plants, and insects.

QDPI, said McKinley, will be able to use the technology for research and development pur- poses in any field, but is obligated to use Benitec or CSIRO as commercialization routes for any of its ddRNAi inventions in the human or animal/plant/insect fields, respectively.

CSIRO and Benitec said they have also agreed to share revenues from products commercialized using the ddRNAi technology, with “each party retaining the majority of revenue generated from its respective area.”

McKinley said that the revenue sharing arrangement is such that each party will pay the other a “little bit more than single digit” percentages of its revenues. He noted that, since the potential value of human applications for ddRNAi is greater than those in plants, animals, and insects, the percentage of Benitec’s pay out to CSIRO will be “marginally” lower than CSIRO’s to Benitec. “The idea is to give some form of equivalence to revenues,” McKinley said.

For Benitec, said McKinley, the arrangement is a good one, allowing each party to pursue projects in its own area of interest. “Benitec has humans, CSIRO has plants and animals — why should we want to be involved in plants and animals if we are a human-field company? Why would they want to be in ddRNAi in the human science side?” he said.

“With that in mind, we had a structure to the settlement before we’d even considered how to finalize it,” McKinley added. “Now it’s over and done with — we’ve got a clear run on the technology and, hopefully, certainty in the marketplace for the customers.”

—DM

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