Bloomberg News

Patenting Genes, Trolls, Domains: Intellectual Property

April 16, 2013

Several U.S. Supreme Court justices sought a compromise on the decades-old practice of granting patents on human genes, debating a case that could redefine rights throughout the biotechnology and agriculture industries.

Hearing arguments yesterday in Washington, the justices discussed chocolate-chip cookie recipes, baseball bats and Amazonian plants as they grappled with a challenge to Myriad Genetics Inc. (MYGN:US)’s patents on genes linked to breast and ovarian cancer. A group of doctors, patients and scientists say the patents are stifling clinical testing and research.

Several justices asked whether barring gene patents would deter innovation by stripping companies of legal protection for their research.

The case has implications for the growing field of personalized medicine as well as efforts to map the human brain and discover new uses for embryonic stem cells. It could also ripple well beyond medicine. Agricultural companies, including Monsanto Co. (MON:US), inject genes into seeds, and industrial microbiology businesses use microorganism DNA to improve biofuel manufacturing.

The Obama administration says Myriad isn’t entitled to a patent on “isolated DNA,” which the government says is merely a snippet of the genetic sequence as it appears in the body. The administration says Myriad might be entitled to a patent on so- called complementary DNA, which involves a greater level of human manipulation.

The administration’s stance marks a rejection of the longstanding policy of the U.S. Patent and Trademark Office, which has been awarding human gene patents since 1982.

The case, which the court will decide by the end of June, is splitting the medical community. Trade groups for the biotechnology, agriculture and drug industries are siding with Myriad. They say gene patents have led to valuable treatments, including Amgen Inc.’s Epogen anemia drug and synthetic insulin developed by Genentech Inc., now part of Roche Holding AG. (ROG)

The case is Association for Molecular Pathology v. Myriad Genetics, 12-398, U.S. Supreme Court (Washington).

For more on the arguments, click here.

Monetization Entities Filing Most Patent Cases, Study Finds

A study released last week shows that a majority of cases challenging patents are initiated by patent monetization entities, or so-called patent trolls.

The study, by Sara Jeruss of Lex Machina Inc. Robin Feldman, a professor at the University of California Hastings College of the Law, and Thomas Ewing, found that as of last year, “litigation by patent monetization entities now represents a majority of patent litigations filed in the U.S.” In contrast, the authors said, in 2007 only 24 percent of litigation was filed by the such entities.

The study also concluded that the process for notifying the public of lawsuits involving patents is inadequate.

“Despite federal legislation, the system was not operative for more than two-thirds of the patents asserted,” the authors said.

For more patent news, click here.

Trademark

Macy’s Appeals Ruling on J.C. Penney’s Martha Stewart Sales

Macy’s Inc. is appealing a New York judge’s ruling that allows J.C. Penney Co. (JCP:US) to sell unbranded items designed by Martha Stewart’s company in certain categories exclusive to Macy’s.

Justice Jeffrey Oing of New York state court in Manhattan on April 12 declined to expand an earlier preliminary injunction to cover products designed by Martha Stewart Living Omnimedia Inc. (MSO:US) and sold at J.C. Penney that aren’t branded with the Stewart name.

Macy’s said in a court filing yesterday that it met the requirements for an injunction and that Oing “erred in several significant respects.”

Macy’s is suing both Martha Stewart Living and J.C. Penney, alleging that sales of products designed by Stewart’s company in J.C. Penney stores violates an exclusivity deal between Martha Stewart and Macy’s signed in 2006. Macy’s had asked Oing to broaden the preliminary injunction he issued in July.

Macy’s wanted Oing to extend the injunction to cover goods designed by Stewart’s New York-based company that don’t carry her name, which Plano, Texas-based J.C. Penney plans to sell under the name “JCP Everyday.”

Lawyers for J.C. Penney and Martha Stewart Living Omnimedia didn’t immediately respond to e-mails seeking comment on yesterday’s filing.

The cases are Macy’s Inc. (M:US) v. Martha Stewart Living Omnimedia Inc., 650197/2012; Macy’s Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan).

Web Domains Added Over Qualms of Companies, Governments

Internet Corp. for Assigned Names and Numbers, the non- profit organization that manages the Internet’s address system under a contract with the U.S. Commerce Department, each week unveils a batch of new domains.

Each new suffix creates millions of possible addresses to be sold by registries. There are 106 million variations in .com alone, according to Verisign Inc. (VRSN:US), the Reston, Virginia-based global registry for .com and other domains.

The non-profit, known as Icann, is charging $185,000 for rights to a new right-of-the-dot name, and expanding the Web over qualms from the U.S. Federal Trade Commission and brand- name companies including Coca-Cola Co., Ford Motor Co., Procter & Gamble Co., General Electric Co. and Johnson & Johnson.

At Icann’s meeting last week in Beijing, countries told the group to ensure that those selling and using new domains comply with laws and safeguard certain generic names -- among them .money, .pay, and .save, as well as .poker, .book and .weather.

Under Icann procedures, the group’s board is to consider advice from the governmental committee, which has representatives from the U.S., U.K., Germany, China, Japan and the European Commission.

“The expansion could create opportunities for scammers to defraud consumers online, shrink law enforcement’s ability to catch scam artists, and divert the resources of legitimate businesses into litigating and protecting their own good names,” Julie Brill, a Federal Trade Commission member, said in a March 20 speech to the Association of National Advertisers.

For more, click here.

For trademark news, click here.

Deals

Kodak Agrees to $210 Million Imaging Sale to Brother to Set Bid

Eastman Kodak Co. (EKDKQ:US), the bankrupt photography pioneer, agreed to sell document-imaging assets to Japanese office-equipment company Brother Industries Ltd. (6448) for about $210 million, setting the minimum bid for an auction.

Any deal requires approval from the judge overseeing Rochester, New York-based Kodak’s bankruptcy case, the companies said in statements yesterday. Nagoya, Japan-based Brother’s bid also assumes about $67 million of customer prepayment liabilities.

Kodak is selling businesses to shrink and to fund its shift into commercial printing and packaging after seeking Chapter 11 protection in January 2012. Chief Executive Officer Antonio Perez in December sold some of Kodak’s digital-imaging patents for about $525 million, and is also looking for buyers for its consumer-film and photo-kiosks divisions and shuttering its consumer inkjet-printer unit.

The deal would add Kodak scanners, image-capture software and technical services to Brother’s printers and fax machines. An auction with Brother as the stalking horse, or initial bidder, will be run after sales procedures are approved this month, Kodak said.

Kodak filed for bankruptcy after years of burning through cash as the rise of digital photography eroded its film business. The company cut about 4,000 jobs last year and spent $3.4 billion on restructuring before bankruptcy, including payouts to fire 47,000 employees since 2003.

The bankruptcy case is In re Eastman Kodak Co., 12- bk-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Royalty Pharma Raises Offer for Elan to as Much as $12 an ADR

Royalty Pharma, an investor in royalty streams from drugs, raised its offer to buy Elan Corp. (ELN) to as much as $12 an American depositary receipt, threatening the Irish drugmaker’s plan to embark on its own acquisitions.

The formal offer is higher than a previous informal bid of $11 an ADR, and compares with the $12.01 closing price on April 12. The proposal is a “firm, fully financed offer,” New York- based Royalty said in a statement yesterday.

Royalty Pharma has said the sale of Elan would allow shareholders to avoid the risks of Chief Executive Officer Kelly Martin’s strategy of reinvesting a portion of the $3.25 billion Elan received from Biogen Idec Inc. (BIIB:US) for divesting its stake in the multiple sclerosis drug Tysabri. Elan, based in Dublin, is also buying back $1 billion of stock, a proposal shareholders approved last week.

Royalty Pharma has said it plans to pay for the acquisition with more than $1.1 billion in available cash and through debt financing to be arranged by Bank of America Corp. and JPMorgan Chase & Co. JPMorgan, Bank of America and Groton Partners are advising Royalty Pharma.

Founded in 1996, the company owns royalty interests in 37 approved and marketed pharmaceutical products. For example, in 2004, the firm bought Memorial Sloan-Kettering Cancer Center’s U.S. royalty interest in Amgen Inc. (AMGN:US)’s Neupogen drug. Pablo Legorreta, the founder, previously worked as a banker at Lazard.

“The board of Elan will, in line with its obligations under Irish takeover law, promptly assess the Royalty Pharma announcement and will advise its shareholders accordingly,” the company said in a statement yesterday.

For more, click here.

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • MYGN
    (Myriad Genetics Inc)
    • $38.1 USD
    • -0.20
    • -0.53%
  • MON
    (Monsanto Co)
    • $109.86 USD
    • -0.93
    • -0.84%
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