Friday, June 19, 2015

Agilent and Tecan Sued for Infringement of Patents Claiming Microarray Technology: The Back Story of an Apparently Non-Practicing Entity

On June 18, 2015, Gene Reader LLC sued Agilent and Tecan in the Eastern District of Texas, alleging infringement of United States Patent Nos. 6,545,758 (the "'758 patent") and 6,567,163 (the "'163 patent"), both entitled "Microarray Detector And Synthesizer." The allegedly infringing products include Agilent’s SureScan Microarray Scanner and Tecan’s PowerScanner.  According to the complaint, product features that contribute to the infringement include “a spatial light modulator capable of selectively optically interrogating a patterned microarray [,] a synchronous detector capable of detecting an optical signal obtained from the patterned microarray [and] a processor capable of performing repetitive comparative measurements of the optical signals from one or more sites on the patterned microarray.”

The patents have an interesting back story. Both patents issued from applications filed in 2000, and the sole named inventor is Perry Sandstrom. According to this article, Sandstrom was electrical engineer for the Wisconsin Center for Space Automation and Robotics at UW-Madison who first became interested in biotechnology in the 1980s based on “social contacts with graduate students in genetics.”  This interest led him to invent the SynchroGene Reader, described as a “simpler, faster, more cost-effective way of analyzing hybridization microarrays, otherwise known as DNA chips or biochips.”  He built his first DNA-chip readers in a “quiet basement electronics shop.” He eventually started a company called Able Signal LLC to commercialize the technology , and in 2003 he was awarded a $100,000 prize called the Wallace H. Coulter Award for Innovation and Entrepreneurship, which he used to fund the company.

Flash forward to 2015, and it appears that Able Signal LLC never succeeded in commercializing the technology, and the patents have been assigned to Gene Reader LLC.  By all indications, Gene Reader is a non-practicing entity established solely to license, and if necessary, enforce the patents. An Internet search revealed no other information about the company other than that it had filed these two lawsuits, and the complaint states that Gene Reader is a Texas LLC with a place of business located on the same street as the Eastern District of Texas courthouse (Preston Road). The Eastern District of Texas is a popular forum for patent litigation, and is perceived by many to be a relatively friendly venue for patent owners. These two lawsuits appear to be the first filed by Gene Reader, but future lawsuits would not surprise me.

Nonpracticing entities, sometimes referred to as patent trolls, are often maligned, and have been the target of certain "patent reform" efforts.  But the inventor of these patents seems to have invested time, effort, and money in an attempt to commercialize the patented technology, and the activities of Gene Reader might be characterized as an attempt to salvage some return on that investment. The ability of an innovator to sell its patents to a nonpracticing entity like Gene Reader could provide an additional incentive to invest in commercialization, since it provides an additional opportunity to recoup investment even if the startup company does not succeed in bringing its own product to market.

Kristen Osenga, a professor at the University of Richmond School of Law, and (along with myself) a Senior Fellow at the Center for Intellectual Property, recently published an interesting article on a related topic entitled “Formerly Manufacturing Entities -- Piercing the 'Patent Troll' Veil,” which uses case study analysis to focus on one type of patent troll – the formerly manufacturing entity, i.e., patent trolls that “used to make or do something in commerce, but now derive all or a significant portion of their income through licensing their intellectual property.”





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