MIT and Harvard Profs Team with BlackBerry Lawsuit Lawyers in Patent Suit Against Affymetrix—Could MIT Get Caught in the Middle?
It’s an impressive and even intimidating group. Two world-renowned professors, one from MIT, the other from Harvard Medical School; MIT itself; and the lawyers who won a $612 million settlement from Research in Motion, the Blackberry folks. They’ve joined forces in a patent lawsuit, filed without fanfare last week in federal court, against one of biotech’s pioneers: Santa Clara, CA-based Affymetrix. No dollar amount was named in the suit. But analysts and the plaintiffs, who are seeking treble damages, say the technology in question is vital to much of Affymetrix’s business—an indication that many millions of dollars are at stake.
What may also be at stake is a long-standing relationship that MIT has with Affymetrix (NASDAQ: AFFX)—a maker of microarrays and associated tools for analyzing genes—through the Broad Institute, a Cambridge, MA-based biomedical research institute jointly run by MIT and Harvard. The collaboration, focused in part on the very technology at the core of the patent suit, could put MIT in a bind—or at least create the appearance of a conflict—as the case progresses.
The named plaintiffs in the lawsuit, filed on July 1 in U.S. District Court in Massachusetts, are MIT and a newly formed company called E8 Pharmaceuticals. The firm is the brainchild of MIT biologist David Housman, a pioneer in forensic DNA analysis whose co-invention is at the nub of the litigation, and Richard Mulligan, a MacArthur Prize-winning biologist formerly at MIT and now at Harvard Medical School. (Mulligan, an Xconomist, serves on ImClone’s board and was nominated, but not elected, to Biogen Idec’s board as part of billionaire investor Carl Icahn’s attempted takeover of the company.) The plaintiffs’ lawyers are from Wiley Rein, the Washington, DC-based law firm that represented patent-holding company NTP in its infringement suit against RIM; that suit ended with in the BlackBerry firm settling in 2006 for $612 million.
At issue in the suit against Affymetrix is U.S. patent No. 6,703,228. In their complaint, E8 and MIT hail the technology covered by the patent as a pioneering discovery in genotyping and DNA analysis that “enables users to perform accurate, reproducible and cost-effective genetic analysis, using minute amounts of sample DNA and a small number of reactants to generate results that were previously impossible, even in specialized high throughput centers using many thousands of different reactants.” The patent was awarded to MIT in March 2004, with Housman and his group named as the inventors.
The lawsuit alleges that some of Affymetrix’s GeneChip (the firm’s trade name for microarray) products infringe the ’228 patent, and that by selling these products Affymetrix is causing its customers to also infringe the patent. Neither Mulligan nor Housman would discuss the suit in detail, but they did explain to me that the products at issue are those designed for analyzing a certain type of genetic analysis, called SNP (pronounced “snip”) genotyping. “The issued patent, which is public record, describes the Affy SNP chip genotyping methodology,” says Housman. “It is what it is. Anyone who wants to compare the Affy SNP chip manual to the issued patent is welcome to do so. They are one and the same thing.”
There’s a history here. According to the complaint, in September of 2004, some six months after Housman’s patent was issued, Affymetrix filed its own U.S. patent application claiming the priority date of an earlier 1994 application. Then, in March 2005, Affymetrix added new claims that in effect “asserted the patentability of and ownership of the methods claimed in what is now the ’228 patent.” An interference was initiated in April 2006 as the U.S. Patent and Trademark Office tried to sort out which group was first to develop the methods at issue, and on May 2, 2007—again according to the complaint–the PTO ruled “that the Housman group at M.I.T. was the first to invent the claimed methods and was therefore entitled to the patent.”
E8 and MIT allege that Affymetrix nevertheless kept on using the methods—and directed its customers to use them—in direct infringement of MIT’s patent. E8, meanwhile, now holds an exclusive license to the patent.
Housman and Mulligan are former MIT colleagues and longtime friends. Mulligan was not involved in the work underlying the ’228 patent but, as an inventor himself who now has extensive knowledge of patent litigation through his business experience, he says he understood the incredible resources that have to be mustered to mount a challenge like this. His role, he says, was to help round up those resources, which are hard even for an institution like MIT to commit.
And MIT might have other reasons for not acting on its own before now—it has ties to Affymetrix via the Broad Institute, whose mission is to use genomic science to transform medicine. Since September of 2004, Affymetrix and the Broad have had a supply and research collaboration which gives “preferential terms to the Broad Institute for applications development in return for the option to make commercial products available from the resulting research,” according to an Affymetrix annual report. One of the main focuses of the alliance is whole-genome SNP analysis.
Indeed, two of Affymetrix’s newest SNP-analysis chips, launched commercially in December 2006 and May 2007, are products of the Broad collaboration. And SNP products are a substantial and growing source of Affymetrix’s revenue, which totaled $371.3 million in 2007. The product released in May 2007, for example, generated about $15 million in sales in the first quarter of this year out of about $80 million total, and it has “clearly been the biggest growth driver for Affymetrix’s genotyping franchise,” said Shaun Rodriguez, an analyst with Cowen & Company in Boston, in an e-mail. Genotyping product sales as a whole grew 25 percent in 2007, and Cowen forecasts it will grow another 16 percent this year, largely because of the newest SNP device, according to Rodriguez.
Given the history with the interference proceeding that went MIT’s way, E8 and MIT appear to have a strong case against the company, Rodriguez says. If Affymetrix loses, it could end up having to pay royalties on product sales that stretch out “for many years,” he adds.
The Broad Institute, for its part, relies on Affymetrix’s products for a portion of its experiments. Our request to MIT and the Broad for more information on the collaboration with Affymetrix was not answered by the time of this writing, though an MIT spokeswoman said it was unlikely they would comment. Similarly, MIT Technology Licensing Office Director Lita Nelsen said in an e-mail that she could not comment on a case in litigation.
An Affymetrix spokesman also declined to comment. Affymetrix did file a form with the SEC on July 3 acknowledging the lawsuit. “We believe that the plaintiffs’ claims are without merit and will vigorously defend against the claims advanced in the complaint,” the company said in the filing.
According to court filings, a summons was served on Affymetrix last week, giving the California company 20 days to answer the complaint. In the meantime, you can read the whole text of the E8-MIT complaint here.