"Diagnostics Update"

Court Rules Against Roche In PCR/Taq Patent Dispute

California judge finds that Roche’s patent was based on incomplete data and fraud

DECEMBER 7, 1999 WAS NOT an auspicious day for Hoffmann-LaRoche. One of its patents related to the PCR testing process was ruled invalid by a Federal District Court.

The ruling involved Roche’s ’818 Taq patent, an enzyme used in the PCR process. The Court found that the patent holder had intentionally withheld material information and distorted important facts in obtaining the patent.

“We obviously were pleased with the court ruling,” stated Brenda Furlow, Corporate Counsel for Promega Corporation of Madison, Wisconsin. “Prior to this decision, it was impossible for us to sell Taq to the diagnostic market in a price-competitive environment. Roche will now have to charge the same royalty for PCR, regardless of the source of the Taq it uses.”

Will Appeal Court’s Ruling

This lawsuit was originally filed by Promega after it was sued by Hoffman-LaRoche in 1992. Roche had sued to overturn Promega’s license agreement to sell Taq. Hoffman-LaRoche announced that it would appeal the Federal District Court ruling.

PCR (polymerase chain reaction) was invented by Kary Mullis at Cetus Pharmaceuticals. Patents were granted in 1989. Hoffman-LaRoche paid $300 million to Cetus in 1992 to acquire the PCR and Taq patents.

It is still too soon to evaluate whether Promega’s legal victory against Roche will have much impact on the diagnostics and clinical laboratory industry. This court ruling might affect related PCR patents held by Roche. But that has yet to be determined.

Patents Cover Taq and PCR

Roche holds patents on both Taq and the PCR process. Laboratories must buy Taq from licensed vendors. Labs pay a royalty for the PCR process. PCR royalties can be as much as 15%.

Since small amounts of Taq are used in the testing, potential savings from reduced Taq prices are not great. In fact, annual world sales of Taq are estimated at about $40 million for Roche, $35 million for Perkin-Elmer, and $4 million for Promega.

“The only thing that would make this an earth-shaking decision is if the courts subsequently overturn Roche’s patents covering the basic PCR process itself,” stated David Hillyard, M.D., Co-Medical Director of the Core Molecular Lab at ARUP Laboratories in Salt Lake City. “At this time, that’s an unlikely probability.”

Pathologists and lab executives should keep a closer eye on this legal fight. Future decisions may set important legal precedents on a variety of issues involving the licensing of diagnostic-related patents.

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