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Service sparks interest and questions about price and participation

A company that runs patent pools for the consumer electronics industry is aggregating patent rights to genes and will soon license them nonexclusively to labs, diagnostics firms, and investigators developing tests and research tools.

MPEG LA, LLC, based in Denver, Colorado, will launch its service during the first quarter of 2012, says Larry Horn, the company's president and CEO. The company calls its service a “gene patent supermarket” because unlike participants in the company's existing patent pools, gene patent holders aren't necessarily dependent on gene patents owned by others to make products function.

According to MPEG LA, its pool is intended for diagnostics and may alleviate problems that gave rise to lawsuits by the American Civil Liberties Union and others against Myriad Genetics, which has an exclusive license to BRCA1 and BRCA2 patents held by the University of Utah. Horn describes patent pools as a way to balance companies' risks and rewards with greater access to technological innovation.

How It Works

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The online supermarket, called Librassay, will offer nonexclusive licenses for defined fields of use. Those shopping for patents will cruise “aisles” organized by particular types of assays and diseases, including those targeted by newborn screening, cardiovascular conditions, and central nervous system disorders, and searchable using keywords like gene, mutation, patent claim, and patent owner. Available licenses will confer rights to a variety of patent types, such as those on composition of nucleic acid molecules, other biomarkers including proteins, methods of use based on particular nucleic acid molecules and protein expression/signaling, and related epigenic, translocation, and transmutation test data and analysis.

If license buyers discover new uses for licensed intellectual property, they will be required, under certain circumstances, to grant back to the pool a license or sublicense for those uses, says Horn. Patent holders' royalties will be a percentage of reimbursable test cost and will vary according to how many patents are licensed per test. MPEG LA's fee is a percentage of the royalty depending on the package selected by each patent holder, and the remainder is distributed among applicable patent holders, Horn adds.

The company is gathering pool participants with rights to genes and other biomarkers associated with conditions plagued by patent thickets. One such area, of concern to pediatric geneticists, is hereditary hearing loss, which comprises about half of all cases. Upwards of 10 patents owned by at least 12 different institutions cover genes associated with hereditary hearing loss, according to company research.

A Useful Service?

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  3. A Useful Service?

Many see value in Librassay, expressing cautious enthusiasm tempered by questions about cost and patent holders' buyin on the pool's utility.

The American College of Medical Genetics, a plaintiff in the Myriad case, opposes gene patents, but holds a second position should the appeals court decision be upheld, says its executive director, Michael Watson, MD. “Gene patent licensing has to be fair and not overly expensive,” he explains, adding that MPEG LA's approach “is reasonable if they keep the cost down.”

Librassay's usefulness will ultimately depend on the price of licenses, says geneticist Heidi Rehm, PhD, Assistant Professor of Pathology at Harvard Medical School and Director of the Laboratory for Molecular Medicine at the Partners Healthcare Center for Personalized Genetic Medicine, which will offer a CLIA whole genome sequencing interpretation service in 2012. Widespread participation in MPEG LA's pool may ease the process of figuring out whether her lab is infringing on patents and getting them to secure licenses to them, Dr. Rehm says. But she expects low whole-genome sequencing volume to start. “I can't pay thousands in fees if I've only tested 10 patients,” she says.

It's great if it works, but significant hold-outs could cast a shadow over full-genome analysis, or even multi-allele testing.—Robert Cook-Deegan, MD

Others say the key to the pool's success is widespread participation among patent holders. “It's great if it works, but significant hold-outs could cast a shadow over full-genome analysis, or even multi-allele testing,” says Robert Cook-Deegan, MD, of Duke's Institute for Genome Sciences and Policy.

James Evans, MD, PhD, points to situations where a test's effectiveness depends on inclusion of particular genes with significant causality. “If I have patents on three genes that comprise most of the causality of a disease and another entity has one, we can both block each other,” says Dr. Evans, who is Bryson distinguished Professor of Genetics and Medicine at University of North Carolina at Chapel Hill, Editor-in-Chief of Genetics in Medicine, and Chair of the Patent Task Force of the now disbanded Secretary's Advisory Committee on Genetics, Health, and Society. According to Dr. Evans, the reason for this is because the biotechnology industry, unlike the electronics industry, doesn't have standards that require patent holders to work together.

Patent pools often do “not work so well for medical technologies where the patent is the product,” says Wes Blakeslee, director of the Johns Hopkins Office of Technology Transfer, which is considering participation in Librassay. But pools could be useful where multiple technologies are needed together to make the product, he says, offering the cystic fibrosis test as a good example.

Sometimes researchers can work their way around such situations described by Drs. Cook-Deegan and Evans. Dr. Rehm, for example, is developing a test for 73 genes involved in hearing loss, an area that is both affected by a patent thicket and a focus in the patent pool. There's an exclusive license to the patent on the GJB2 gene, which causes about 20% of congenital hearing loss cases, according to Dr. Rehm. That patent covers particular methods to detect the mutation, but not all methods infringe on it, she says.

“The Librassay supermarket does not have to include all relevant intellectual property in order to be successful,” Horn says. According to Horn, the “supermarket” is intended to reduce the number of negotiations for patent users—not necessarily eliminate them—in addition to filling in market niches and allowing access to undeveloped testing markets. “The pool will grow in popularity as more people use it and as multi-marker testing and research including whole genome sequencing becomes more common,” he says.