Patent Fight Over Fetal DNA Sampling

SAN FRANCISCO (CN) - Two biotech companies and Stanford University will square off in Federal Court to determine who owns the rights to a noninvasive prenatal test that uses DNA sequencing to search for abnormal fetal chromosomes.

Verinata Health and Stanford University sued Sequenom and the Sequenom Center for Molecular Medicine, in a dispute over the rights of two patents genetic analysis by nucleic acid sequencing. Stanford owns the patents and licensing rights; Verinata is its exclusive licensee.

Verinata has just completed clinical trials of the test for aneuploidy, a genetic defect involving extra, missing, or malformed chromosomes. The most common birth defect associated with aneuploidy is Down syndrome.

Verinata claims the new test is more accurate than the maternal serum screening tests now available. It also claims its tests are less dangerous to the fetus than an amniocentesis, or placenta-sampling tests.

Verinata says it plans to start offering its test commercially this year and already has moved to a larger facility, signed multiyear contracts for DNA sequencing instruments, and has begun hiring and training sales and marketing employees to roll out its product. The company has spent "tens of millions of dollars in the research, evaluation, and development of the Verinata test," according to the complaint.

The complaint states that Sequenom licensed a patent for "Non-Invasive Prenatal Diagnosis," which was issued in 2001. The so-called '540 patent was invented by Yuk-Ming Lo and James Wainscoat, according to the complaint.

Verinata claims that Sequenom's lawyers sent it a letter in 2010 alleging that "'the practice of non-invasive prenatal diagnostics, including diagnosis of the Down Syndrome and other genetic disorders, using cell-free nucleic acids in a sample of maternal blood infringes' the '540 patent, as well as the claims of a pending United States Patent Application."

Verinata's predecessor, Artemis Health, responded by stating that Sequenom's infringement claims were "unsupported by the patent," according to the complaint.

Verinata says that since then, "Sequenom has repeatedly stated to the public that anyone who performs a non-invasive prenatal test using cell-free DNA circulating in the blood of a pregnant woman would infringe the '540 patent. Many such statements have been specifically directed at Verinata. ... [T]hese statements, which misrepresent the scope of the '540 patent, are intended to broadly convey that, because Sequenom holds exclusive rights under the '540 patent, no one other than Sequenom has the freedom to perform non-invasive prenatal testing under the '540 patent - with the goal of deterring potential competitors from entering the market and deterring doctors and healthcare providers from using anyone other than Sequenom for those services."

Verinata adds that "during a May 5, 2011 earnings call, in response to a question about a validation of Verinata's aneuploidy test published in Clinical Chemistry, Sequenom's CEO stated that "'it's our opinion that they [Verinata] are infringing the '540 patent.'"

Verinata claims that in another published article, Sequenom is quoted as telling an investment analyst that its "management believes the in-licensed '540 patent ... will block all non-invasive cell-free DNA-based approaches." (Ellipsis in complaint).

And in an interview published on the website GenomeWeb in September 2011, Verinata claims, Sequenom's vice president of research and development was quoted as saying: "'We already warned them [Verinata] last year that when they launch [their test], this would be infringing.' This executive further stated that Sequenom plans to enforce its patent." (Brackets in complaint).

"Each of these statements has been published on the Internet," the complaint states. "Sequenom made these statements with the knowledge and intent that the statements would be widely disseminated to the public - and in particular, to Verinata. These statements, as well as the letter from Sequenom's patent litigation counsel, make it abundantly clear that Verinata is a target for enforcement of the '540 patent."

Verinata claims it's not the only company involved in litigation with Sequenom over the '540 patent. It claims that Aria Diagnostics and Natera Inc. also have sued Sequenom, seeking to enter the noninvasive prenatal testing market.

Sequenom responded to those lawsuits by filing actions of its own against the two companies, the complaint states.

Verinata seeks declaratory judgment that its test does not infringe on Sequenom's patent.

And it claims that Sequenom itself infringes on Verinata's patent for determining chromosomal abnormalities, by manufacturing and marketing its MaterniT21 test.

Stanford's '018 patent, "Determination of Fetal Aneuploidies by Massively Parallel DNA Sequencing," was issued in August 2011 to Drs. Stephen Quake and Hei-Mun Fan, employees of Stanford University, which owns the rights to the patent, according to the complaint.

"Defendants have and continue to directly infringe the '018 patent by practicing one or more claims of the '018 by, including without limitation, performing the MaterniT21 test, and will continue to do so, unless and until enjoined by this court," the complaint states.

"Sequenom has and continues to induce others to infringe the '018 patent by ... encouraging Sequenom CMM to perform the MaterniT21 test" and contributes to patent infringement by "supplying to Sequenom CMM material components of the MaterniT21 test having no substantial non-infringing use, and will continue to do so, unless and until enjoined by this court," Verinata claims.

Verinata claims that Sequenom's MaterniT21 test also infringes on another of its patents, the '017 or "Non-invasive Fetal Genetic Screening by Digital Analysis."

The '017 patent also was invented by Drs. Quake and Fan and is owned by Stanford University and licensed to Verinata.

Sequenom's infringement of both patents has been "deliberate and willful, warranting increased damages and attorney's fees," Verinata says.

Verinata and Stanford University seek declaratory judgment that both patents have been infringed, a permanent enjoinder from further infringements, damages and treble damages. They are represented by Edward Reines and Derek Walter with Weil, Gotshal and Manges, of Redwood Shores.

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