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Sunday, March 3, 2024 | Back issues
Courthouse News Service Courthouse News Service

Scientist Gets Break From Clamor Over Merck Deal

CHICAGO (CN) - A Dartmouth professor will not have to pay damages for failing to disclose his commercial intentions, which later proved quite lucrative, when he bought genetic sequencing data from a private company.

Tillman Gerngross, a professor at Dartmouth's Thayer School of Engineering since 1998, co-founded a private corporation called GlycoFi that aimed to genetically modify yeasts in such a way that they would manufacture human proteins.

To speed up development and "save a few weeks here or there," Gerngross sought to obtain genetically sequencing data for Pichia pastoris, a species of yeast.

He contacted Integrated Genomics Inc., which maps genomes of various organisms and sells the data to clients of various types, whether they are commercial, academic or another breed of noncommercial.

Integrated Genomics was experiencing financial stress at the time because the price of genetic sequencing data was falling dramatically. At trial, representatives for the company testified that they made many deals at reduced prices to keep the company solvent.

Gerngross ultimately paid Integrated Genomics $5,000 for a license to P. pastoris data.

Four years later, pharmaceutical giant Merck & Co. acquired GlycoFi for $400 million. Merck became owner of all assets, including computers that held the P. pastoris data.

Integrated Genomics demanded additional compensation from Merck and then sued Gerngross when those demands were rebuffed. The company claimed Gerngross had misrepresented himself, misused the data failing to disclose his commercial purpose, and breached his contract by "publishing" the data to Merck.

The text of the original agreement has been lost, though correspondence in which Gerngross acknowledges restrictions on his ability to publish sequencing data was shown in court.

An Illinois federal judge ruled that the data had not been "published" in the transfer to Merck, and thus no breach of contract had occurred.

Integrated Genomics claimed it gives academic users "huge discounts," and that Gerngross misrepresented himself to take advantage of that offer. Had it know Gerngross' commercial intentions, the company says it would have charged more.

While Gerngross' failure to disclose his commercial intentions was misleading, Integrated Genomics failed to prove that it would have charged a commercial client more than it charged Gerngross, the lower court ruled.

The Chicago-based appellate affirmed that decision on Feb. 24. "We cannot say that the district court's determination was clearly erroneous," Judge Ilana Rovner wrote for the court.

"Although the record may have supported a finding that IG certainly would have charged Gerngross more for the Pichia data had it known that he intended to use the data in furtherance of GlycoFi's commercial aims, the evidence also supports the contrary inference," she continued.

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