Tuesday, July 24, 2007 9:00am — IP WARS, PHARMA, BIOTECH & CHEM IP STRATEGY, GLOBAL IP STRATEGY

What to do in the US if you don't have standing to sue for revocation - more on Benitec v Nucleonics

Further to my recent post about the US CAFC decision, I was asked by a few people to dig in a little more and comment on the litigation between Benitec and Nucleonics.

Benitec withdrew their original infringement suit against Nucleonics in relation to US 6573099, when it became clear that they would not win in light of the newly broadened safe harbour for research which came from the US Supreme Court decision in Merck v Integra. In withdrawing the suit, Benitec were forced by Nucleonics and the Judge to undertake not to sue for any activities which occurred prior to the date on which they withdrew. At the same time, they made noises about suing in the future should Nucleonics have a commercial product (rather than be using the technology for research).

This is obviously a long way short of a full undertaking not to sue. In fact, it leaves open the possibility of further suit in relation to future research activities.

In the meantime, Nucleonics had commenced proceedings before the USPTO to have the patents Re-Examined and also filed counter claims seeking to invalidate Benitec’s patent (or render it unenforceable).

As previously stated, the CAFC decision holds that Nucleonics no longer has standing to bring the invalidity suit before the court as the threat of infringement litigation has dissipated. This is a little curious, especially given the comments made by Benitec about potentially suing in the future. The dissenting Judgment by Judge Dyk picks up and expands this point.

From an investor’s point of view, then, Benitec has saved an enormous amount of money and management time by ending the US infringement proceedings – which is good. However, their patents are still at high risk of invalidation (or substantial claim narrowing) in the ongoing Re-Examination proceedings, which Nucleonics started, and which they have the right to participate in.

Even after the Re-Examination result (which can be appealed), Nucleonics would have the option of invalidating the claims in the future, if faced with a sufficient threat, or indeed an infringement suit from Benitec.

Note here in particular, that according to the 20 July 2007 Court of Appeal Judgment, Benitec hasn’t fared so well in the Re-Examination proceedings to date – all claims of the patent are currently either rejected by the Examiner, or have been withdrawn by Benitec. I understand that Benitec have since filed a response, but that the examiner is yet to respond.

In any event, it seems that at the very least, some of the claims asserted against Nucleonics may have been too broad, and would in fact have been invalidated. An outcome from the Re-Examination that Nucleonics may be seeking is that the claims are sufficiently narrowed so that Benitec can no longer sue for infringement (as Nucleonics would be outside their scope).

On the other hand, one of the risks for Nucleonics is that they put forward their best prior art in these Re-Examination proceedings and the Examiner does not agree that it invalidates all of the claims which cause potential problems for Nucleonics. This would make things more difficult for them as they don’t have as much opportunity to fully support their arguments with Experts and oral argument as they would in Court and once the USPTO has reviewed prior art, the courts will assume that the patent claims are valid in light of that art (the presumption of validity). Hence, Nucleonics may be damaging their best case, right now.

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