GTG sues 'major US companies' for patent infringements

Melbourne company Genetic Technologies (ASX: GTG) has filed lawsuits against three major US companies for infringement of the company's non-coding DNA patents.

Executive director Dr Mervyn Jacobson said that the lawsuits were necessary under the terms of the company's patent insurance policy. "It's a defensive act by us to protect our patent insurance policy, a necessary step to maximise protection for the company," he said.

The three companies in question have been on notice for infringing GTG's patents for almost a year, according to Jacobson, and have shown little interest in reaching a settlement. Two separate lawsuits have been filed, one against a company described by Jacobson as very large. The other, he said, was a joint lawsuit against a large company plus a smaller affiliated company which is part of the same infringing process.

But although the lawsuits have been filed in court, Jacobson said it was a preliminary action, and would not necessarily lead to a court battle. Generally speaking, lawsuits over intellectual property were settled out of court, he noted.

"The most likely scenario is discussion with those companies and a good faith effort to negotiate a license. There is a reasonable chance that will happen," he said. "In the absence of successful legal action within a certain period of time, we would need to serve them with a full lawsuit. For us there is no issue of malice, it's simply a matter of prudent business."

Jacobson said that he would not rule out filing more lawsuits if necessary to protect the company's non-coding DNA patents.

"It's likely that other companies might take us more seriously and reach agreements on license terms," he said.

The company is currently pursuing negotiations with more than 60 potential licensees in Australia, New Zealand, Japan, Canada and Europe as well as the US. Jacobson said that the company had now expanded its targets to include pharmaceutical companies, IT companies involved in marketing software or services for gene mapping, DNA testing service providers and academic institutions.

He pointed out that academic institutions could easily obtain a research license to use GTG's technology purely for research purposes for a token cost, but universities providing substantial commercial services such as testing services that took advantage of GTG's patents would be required to negotiate terms for a license. The company is currently negotiating with several Australian universities for both research and business licenses

"We're trying to be fair to them, but fair to us too," he said. "We wish to be sensitive to what they are doing and not be heavy handed."

GTG also expects to be cash flow positive for the second consecutive quarter, after receiving the first $US400,000 payment from Swedish licensee Pyrosequencing.