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GTG Celebrates Win Over Applera

By Graeme O’Neill, Australian Biotechnology News

Feb 15, 2006 | An elated Mervyn Jacobson, CEO of Genetic Technologies (GTG), flew back to Australia from San Francisco on Dec. 9 after slaying his company’s most reluctant dragon, giant U.S. rival Applera.

Applera’s lawyers agreed to license GTG’s patented “junk DNA” gene-testing technology, one of the broadest patents ever issued in the recombinant DNA technology field, and the only U.S. patent on the use of noncoding DNA markers for gene testing. Applera will pay GTG about $11 million in the form of cash, equipment, and intellectual property. The suit was formally dismissed by the Northern California District Court on Dec. 30.

Lone Holdout
GTG originally sued Applera and two other U.S. gene-testing companies, Nuvelo and Covance, in March 2003, for refusing to take licenses and pay royalties on its patented technologies (see Playing by Aussie Rules, Aug. 2003 Bio•IT World, page 24). Nuvelo and Covance both submitted and took licenses in November 2004, leaving Applera — the largest gene-testing company in the United States — as the lone holdout. Applera and GTG were originally to have reached a negotiated settlement on Nov. 9, 2005, but after three extensions, finally settled on Dec. 9, 2005.

Jacobson described the mediation process as “quite strenuous.” “But standing back and looking at it from 38,000 feet, it’s a very significant result,” he said. “Since GTG launched its licensing program three years ago, we’ve had people challenging our right to charge license fees, or telling us to go to hell and sue us.

“Today, with the Applera matter settled, nobody in the world is challenging our patents. For a little Australian company to file a lawsuit against Applera, and have the resources to see it through, and bear the associated legal costs for three years, is obviously very significant.”

Jacobson said the research community and commercial gene-testing companies around the world had been watching the case and would see it as a turning point.

“Lots of people have hidden behind Applera, believed that time was on their side, if Applera could continue to obstruct us, and invalidate our patents — or simply wait us out,” he said. “Now that Applera has come to an agreement with us, they have nowhere to hide.”

Jacobson warned that companies that had delayed taking a license from GTG were now exposed. “The nature of the settlement may justify us repricing,” he said. “Our own view on what the patents are worth may need to be reexamined.

“I am now setting my sights on hundreds of targets who, in our view, already owe substantial amounts for past activities, and will owe us more for future activities.”

Jacobson characterized the win as “a great victory for Australia’s biotechnology industry too.”

“In human terms, this is a case of the little guy taking on a giant and prevailing,” he said. “So we have to assume that the little guy had something of great value — that’s now clearly established.”

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