CEO SUMMARY: In September, a jury returned a $272.5 million verdict against Labcorp, representing royalties owed to biotech company Ravgen for infringement of its diagnostic genetic test patent. Soon after, Quest Diagnostics settled a similar lawsuit with Ravgen before its trial began. The victories against the two largest commercial labs illustrate the risks of navigating genetic testing patents and what is considered fair use by competitors.
After a favorable jury verdict and subsequent quick settlement involving the nation’s two largest commercial laboratories, it remains to be seen what further action Ravgen may take in response to alleged patent infringement of two prenatal genetic tests.
The last few weeks have been eventful for the biotech company in Columbia, Md. On Sept. 23, a jury returned a guilty verdict against Labcorp for infringing upon Ravgen’s intellectual property. Labcorp now owes Ravgen $272.5 million dollars as part of the verdict.
Then, on Oct. 7, Quest Diagnostics settled a similar lawsuit from Ravgen for an undisclosed amount just days before the trial was to begin. By all appearances, Quest did not want to risk a negative jury verdict and the publicity surrounding it.
Ravgen lead attorney Robert Desmarais, Founding Partner of Desmarais LLP in New York, did not return a request for comment from The Dark Report. However, in a statement, Desmarais said the Labcorp verdict brings back a measure of credit to Ravgen that it lost for its testing development work.
“The verdict demonstrates the originality of Ravgen’s patent, which was foundational for the creation of non-invasive prenatal genetic testing,” Desmarais stated.
Labcorp is ‘Disappointed’
In a statement sent to The Dark Report, Labcorp said it is considering appealing the verdict.
“We believe that Ravgen’s claims are wholly without merit and, therefore, we are disappointed with the jury’s verdict and are reviewing our options for an appeal,” Labcorp wrote. “In addition, Labcorp has instituted proceedings before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office challenging the validity of the Ravgen patents, with decisions on validity expected in November and December 2022.”
The lawsuit contended that Ravgen Chairman and CEO Ravinder Dhallan, MD, PhD, developed and patented a test for cell-free fetal DNA screening. Patent No. 7,332,277 is titled “Methods for Detection of Genetic Disorders.” The patent was issued in February 2008.
Ravgen claimed Labcorp and its subsidiaries were aware of the patent since at least 2011. Nonetheless, Labcorp marketed two of its own DNA tests—MaterniT and informaSeq—that borrowed intellectual property from Ravgen’s work, according to Desmarais.
“Despite its knowledge of the patents-in-suit, and of its infringement of those patents, Labcorp has continued to willfully infringe the patents-in-suit so as to obtain the significant benefits of Ravgen’s innovations without paying compensation to Ravgen,” the lawsuit argued.
Labcorp sold more than 2.7 million of these tests. The jury awarded $100 in royalties to Ravgen for each of those tests, totaling $272.5 million.
Quest did not respond for comment about its settlement. The Ravgen lawsuit against Quest centered on the latter’s QNatal Advanced genetic tests, according to Reuters.
Ravgen also filed similar lawsuits against other companies over their DNA tests, including Illumina, Natera, and Roche’s Ariosa Diagnostics, Reuters reported.
Past Royalty Demands
What happens next with Ravgen will be of interest to laboratory and pathology managers given the history of genetic test litigation over the past two decades.
In 2004, upon receiving a patent verdict in its favor (also against Labcorp), Competitive Technologies, Inc. sent royalty demand letters to hundreds of labs. The letters requested that the labs pay for performing past homocysteine tests, which were the subject of its suit against Labcorp. Such royalty payments financially impacted many labs and hospitals.
At the time, The Dark Report wrote that hundreds of biotech companies were researching molecular markers for drugs and diagnostic tests. (See TDR, “Facing Down the Lab Assay Patent Monster,” Nov. 1, 2004.)
“Patent protection of their discovery is the end goal,” we noted. “At some future point, the laboratory industry will have to square off with the patent/royalty monster. It remains to be seen whether the monster can be tamed, or whether it will wreak havoc on the financial condition of the nation’s laboratories.”
Since then, genetic testing development has flourished. There are an estimated 175,000 genetic tests on the market today from U.S. labs, according to Concert Genetics. (See TDR, “Coverage, Reimbursement Still Difficult for New Lab Tests,” Aug. 8, 2022.)
Bill Would Amend Patent Law for Some Diagnostics
Should the Patent Eligibility Restoration Act of 2022 (S.4734) currently before Congress be passed, it would amend current patent law, including for diagnostic tests.
The bill, introduced by U.S. Sen. Thom Tillis (R-NC) in August, makes exceptions for areas that would not be covered by patents, including human genes.
However, genes that are altered or enriched by scientific methods would be eligible for patents under the proposal, according to the National Law Review.
“One of the goals of the bill is to override case law that has made it difficult to receive patents on diagnostics inventions,” the National Law Review noted.
Some aspects of the bill come from the U.S. Supreme Court’s 2013 decision that natural genes cannot be patented.
At the time, that decision was a blow to Myriad Genetics in Salt Lake City. Myriad sold a molecular diagnostic test that analyzed the BRCA1 and BRCA2 genes to assess a woman’s risk for hereditary breast and ovarian cancer. Myriad held a patent on the genes.
Following the Supreme Court decision, competitors swooped in with their own versions of the test, which lowered prices and reimbursement. (See TDR, “CMS Cuts BRCA Price by 49% in Response to Competition,” Jan. 13, 2014.)