GTG tightens patent grip

Melbourne company Genetic Technologies Ltd (ASX: GTG) has settled two of three lawsuits brought against US biotechnology companies for alleged infringements of its non-coding DNA gene-testing patents.

GTG's Executive Chairman, Dr Mervyn Jacobson, said discussions with the two companies - Nuvelo and Covance - had resulted in "total settlement" of the disputes.

GTG remains in dispute with Applera Corporation, the parent company of Applied Biosystems, Celera Genomics and Celera Diagnostics.

The company initiated legal action in the US District Court of Northern California against Nuvelo, Covance and Applera on April 1 this year.

Jacobson says that company's patent-insurance policy, secured on September 5, 2001, requires GTG to initiate legal action within 12 months to settle a dispute with any company it believes has infringed its patents and refuses to take out a licence.

The terms of the Nuvelo and Covance settlements are confidential. Jacobson says GTG will now focus its efforts on a similar settlement with Applera.

The two settlements are linked. Jacobson says GTG's original action was against a US company called Variagenics, for allegedly infringing GTG patents with two gene-testing products called Nucleave and ProSNP.

Variagenics had developed the products for Covance, which also declined to take out a licence, and referred GTG's inquiries to Variagenics.

Variagenics subsequently merged with another company, Hyseq, to form Nuvelo. When Nuvelo also declined to take out a licence, GTG launched an action in the US District Court of Northern California.

Nuvelo recently sold off the technology in question to Sequenom, which Jacobson says has already obtained a licence to use GTG's non-coding DNA patents. But if Sequenom cannot implement Nucleave on its proprietary mass-spectrometry platform, it must obtain a separate licence.

Nuvelo joins a growing list of US, Australian and New Zealand biotech companies, gene-testing services and research institutions that have taken licenses to use GTG's technology.

GTG has established an office in Princeton, New Jersey, to look after its interests in the US, and is planning to establish an office in Israel to serve Europe and Middle East, and another in New Zealand.

Jacobson says GTG is currently negotiating with 60 other companies and agencies, some of which use products made by existing GTG licensees.

Some said they preferred to wait to see how other disputes over GTG's controversial patents things play out, but Jacobson says that may not be a wise strategy.

"The longer they wait, the more expensive the licence might be. If we offer exclusive licences, they could miss out altogether -it's a scary prospect if a company can't do what it was set up to do."

Jacobson defends the strong pressure his company is applying to recalcitrant companies it believes are infringing its non-coding DNA patents.

He says GTG is in the unusual position of having made its discoveries, and applied for its non-coding DNA patents, more than a decade ago, when few in the research community understood the importance of its invention.

A decade later with the human and mouse genome projects complete, research institutions and biotechnology companies were routinely using non-coding DNA sequences to identify genetic haplotypes to predict inherited disorders and susceptibility to cancer and other health problems.

"We're not offering a product in a box, like PCR, that people are happy to pay for," Jacobson said.

"We're trying to make them pay for something they're already using, and a lot of businessmen just don't get it. It's a unique marketing challenge."