Benitec wins IP stoush

Gene therapy company Benitec (ASX:BLT) has weathered a head-on challenge from US rival, Nucleonics, to its key DNA-directed RNA-interference (ddRNAi) patents.

Nucleonics has been the lone holdout among four original US-based companies that declined to pay royalties for using Benitec's RNA gene-knockdown patents, jointly held by Benitec and Australia's national research agency CSIRO.

Nucleonics was one of four US biomedical companies that declined in 2003 to pay royalities to Benitec for using the company's patented ddRNAi technology. Three of the companies backed down and began paying licence fees and royalties after Benitec launched lawsuits in the US District Court of Delaware alleging patent infringements.

But Nucleonics CEO Robert Towarnicki took the patent fight into Benitec's Australian backyard, by asking IP Australia (the Australian patent office) to re-examine Benitec's original gene-knockdown patents in the light of documents that Nucleonics submitted as evidence of prior art, and their alleged non-novelty.

Yesterday, Benitec CEO Sarah Cunningham announced that, after completing its review of Benitec's issued patients, the APO had upheld them.

Cunningham, who has headed Benitec since the company decamped from Brisbane to its new US headquarters in Mountain View, California, last year, said the company was "delighted" with the outcome.

"There has never been a doubt in our minds about the validity of our patents," Cunningham said in a statement. "In conjunction with the recent successful resolution of our contract dispute with Promega, this result will allow us to broadly license our issued patent estate and use ensuing revenue to focus on developing RNAi-based therapeutics for... infectious diseases.

"RNAi, as with any ground-breaking technology, has been the subject of enormous legal scrutiny. As pioneers in the field, we are delighted to see our patents emerge from this challenge both intact and strengthened."

Nucleonics filed requests for two IPA re-examinations of Benitec's IP. The first, in March last year, challenged Australian Patent No 743316, 'Control of Gene Expression', and the second, several weeks later, challenged the complementary Innovation Patent No 2001100608 on the same technology.

"The patents have been reviewed, published for opposition, and Benitec has received notice from the Australian Patent Office that both re-examination proceedings have been successfully concluded," Cunningham said.

Relations between the two companies became acrimonious at the time of Nucleonics' action, as Towarnicki publicly cast doubt on the validity of the Benitec patents.

Benitec is still suing Nucleonics in the US District Court of Delaware for alleged patent infringement, and the case is further complicated by IP Australia's decision, as it reviewed Benitec's patents, to grant Nucleonics several broad Australian patents on ddRNAi techniques that appear to clash with the now-validated Benitec patents.

At the time of IP Australia's granting of its patents, Towarnicki suggested that Benitec would need a licence from Nucleonics to use the technology if it wished to continue working on vertebrate applications of ddRNAi, including human gene-therapy applications in anti-viral and anti-cancer therapies.

On the strength of its own IP position, Nucleonics went to the market for a successful US$40 million capital raising.

Benitec's announcement yesterday made no mention of whether it plans to ask IP Australia to review the Nucleonics patents, in light of this week's ruling in favour of Benitec.

And more complex still, Nucleonics is still awaiting rulings from the US and European patent offices on similar challenges to the Benitec patents.

At the time IP Australia granted Nucleonics its Australian patents, Towarnicki said his company firmly believed it had a strong case in the US for getting the Benitec-CSIRO patents invalidated.

"We don't expect to lose," he said. "But having said that, we've always been of the mindset that we don't have to be the only RNAi company in the world. There's room for many players, and if there are reasonable ways to resolve the dispute, we'd be prepared to do it."