'What fatigue?' Auckland Health offers view of GTG settlement

The Auckland District Health Board has offered its own perspective on the out-of-court settlement of its dispute with Victorian biotech Genetic Technologies (ASX:GTG) over GTG's request for AUD$12 million in licensing and royalty payments for NZ agencies using its proprietary gene-testing and gene-mapping technologies.

Last week GTG's executive chairman, Dr Mervyn Jacobson, said the NZ High Court-mediated settlement reflected both parties' "mutual fatigue", and the "peculiar challenges" of GTG's negotiations with negotiating with the NZ agencies.

But Auckland District Health Board's general counsel, Bruce Northey, today dismissed Jacobson's "positive spin" on the settlement, and said there had been "no fatigue" on the part of the ADHB and its supporters. "I assure you that the only party with fatigue was GTG -- [we] were well resourced and very ready to continue proceedings," he said via email.

"Surely only the now-departed Sir Clive Woodward, coach of the blackwashed [British] Lions Rugby team, could create positive spin from this outcome," Northey said.

On Northey's account, the ADHB had successfully called GTG's bluff over its request for the $12 million payment, and Jacobson had "now departed New Zealand with a wad of legal bills and an agreement that if ADHB would stop the litigation, GTG would waive any claims under the NZ patents in respect of ADHB and about 25 other entities, who together run most of the significant laboratories undertaking gene testing in New Zealand."

Northey said Jacobson had written to the NZ Ministry of Health and the ADHB two years ago demanding $10 million and $2 million as royalities for a licence for the public health sector to use the company's non-coding DNA analysis and genome mapping patents. "The sums demanded at that time of various commercial entities are confidential, but comparable," Jacobson said.

But Northey said that when asked to justify the amount, and detail any infringing of the patents by NZ agencies, Jacobsen had "very quickly" dropped GTG's demand to $560,000, and rather than explain the infringements, had reverted to what Julian Miles, QC, had characterised as "actionable threats" against ADHB.

GTG's legal response had not been to defend the validity of the patients, but to suggest that Jacobson's actions were not threats at law. In response, the ADHB had extended the proceedings early this year to include revoking the patents for invalidity, based on expert advice that they were "highly vulnerable" to challenge.

Northey rejected Jacobson's suggestion that the "fine detail" of the mediated settlement was confidential. For example, it expressly stated that no NZ entity accepted the validity of the GTG's patents in New Zealand. However, four NZ entities had agreed to pay a small sum for extensive international rights under foreign registered patents, to avoid complications in dealing with foreign customers.