A Diagnostics & Imaging Week

Genetic Technologies (GTG; Melbourne, Australia) reported that it has reached a final settlement of its patent dispute with Applera (Norwalk, Connecticut), saying that the settlement calls for it to receive about A$15 million, payable partly in cash and partly “in kind,” including agreements supplying GTG with certain Applera equipment, reagents and intellectual property rights.

GTG said it expects to record about half the benefits from these contracts as revenue in the current year.

Genetic Technologies develops applications for “non-coding” DNA in genetic analysis and gene mapping across all genes in all multicellular species.

In another case involving Applera, the company and Bio-Rad Laboratories (Hercules, California) reported that they are in discussion concerning the patent infringement lawsuit brought by Applera and Roche Molecular Systems (Pleasanton, California) against MJ Research in the U.S. District Court for the District of Connecticut.

Applera and Roche Molecular Systems filed the lawsuit in June 1998 against MJ Research concerning certain polymerase chain reaction (PCR) patents owned by Applera and Roche, and a jury decided in favor of Applera and Roche in 2004.

The court also issued a permanent injunction in September prohibiting Bio-Rad, as the successor of MJ Research, from manufacturing, selling or servicing infringing thermal cycler products in the U.S. Various post-trial motions remain pending in the case.

No details of the discussions are being made public, according to Applera.

Applera consists of two operating groups: the Applied Biosystems Group (Foster City, California) and the Celera Genomics Group (Rockville, Maryland).

Varian Medical Systems (Palo Alto, California) reported that the U.S. International Trade Commission (ITC) has launched an investigation into whether Resonant Medical Systems (Montreal), a 3-D ultrasound image-guided adaptive radiotherapy products maker, is importing medical devices and associated software products for sale in the U.S. in violation of patent protection that Varian holds.

The investigation is based on a complaint filed by Varian and French-based SAS Praxim, alleging violations of section 337 of the Tariff Act of 1930. Section 337 prohibits importation of products that infringe on a U.S. patent.

Varian and SAS contend that Resonant’s importation and sale within the U.S. of the Restitu ultrasound imaging platform for radiation therapy violates Varian’s patent covering patient positioning systems such as its SonArray product.

“Varian will pursue vigorously any infringements of our intellectual property rights,” said Keith Askoff, associate general counsel, intellectual property.

Varian’s SonArray patient positioning system is designed to enhance the quality and safety of radiation therapy treatment by enabling radiation oncologists to pinpoint cancerous tumors precisely so they can be accurately treated with radiation therapy while surrounding healthy tissues are protected.

Under an order that has been issued by the ITC administrative law judge, a hearing on the merits of the investigation will begin on or about May 22, 2006, and the full ITC will make a final decision by Dec. 4, 2006.

If the ITC determines that Resonant engaged in unfair methods of competition such as patent infringement it can order that the Restitu product be excluded from future entry into the U.S. and also prohibit the sale or other disposition of Restitu products already in the U.S.

In other news:

• Third Wave Technologies (Madison, Wisconsin) reported that the federal judge overseeing the company’s successful patent infringement suit against Stratagene (La Jolla, California) has tripled the damages awarded to it to $15.9 million and ruled that Stratagene must pay Third Wave’s attorney fees, in an amount to be determined.

A federal jury in September ruled that Stratagene had infringed two Third Wave patents covering its proprietary molecular methods and found it liable for willful infringement, awarding Third Wave $5.3 million in damages.

The judge in late September also entered an injunction that prohibits Stratagene from selling its FullVelocity QPCR and QRT-PCR products and any other products that practice Third Wave’s patented Invader methods.

Kevin Conroy, president and CEO of Third Wave, said the ruling is “a strong signal to others who would infringe Third Wave’s unique and valuable intellectual property.”

Third Wave offers a number of clinical products based on its Invader chemistry for genetic testing. Stragene develops molecular-based research tools.

• Richard Scrushy, founder and former chief executive of HealthSouth (Birmingham, Alabama), has filed suit against the company, claiming breach of contract for being fired in 2003 and seeking $70 million in compensation.

Scrushy was ousted as chairman and CEO of the company after being accused of directing a multi-billion-dollar overstatement of income. He was found not guilty of a range of charges associated with the fraud by a Birmingham jury earlier this year.

He still faces civil charges brought by the Securities and Exchange Commission, and that case will go to trial sometime in 2007.

Scrushy’s suit, filed in State Circuit Court in Jefferson County, Alabama, seeks recovery of pay, bonuses, unreimbursed business expenses, severance pay, fringe and retirement benefits and the value of vested stock options, as well as legal fees and expenses.

HealthSouth declined comment, citing a policy of not commenting on ongoing or pending litigation.

A spokesperson for Scrushy issued a statement, citing opinions from Scrushy’s attorneys that he could only be terminated from his positions at the hospital group “for cause” and citing the acquittals by the Birmingham jury.

“Notwithstanding HealthSouth’s desire to create maximum distance between its founder and the current management, the entire history of American civil justice dictates that this company recognize its contractual obligations, pay what it owes and move on with its business,” Scrushy’s attorney said in the statement.

Earlier this month, Scrushy announced his resignation from HealthSouth’s board. In his letter of resignation, he said the company had denied him all the powers, authority, duties and responsibilities usually attached to the position of director.

HealthSouth has been involved in a process of recovering from the scandal, the after-effects including a payment of $100 million to resolve civil actions brought by the SEC. Last week it mapped out a three-phase strategy designed to improve operations and pay down debt over the next four years.

• Biosite (San Diego) reported that is in discussions with Roche Diagnostics (Indianapolis) intended to settle, and thus avoid, pending litigation.

Biosite and Roche filed joint requests to stay the litigation in the U.S. District Courts in the Southern District of California and the Southern District of Indiana for a period of 120 days.

In the case pending in Indiana, Roche is alleging that Biosite is infringing its U.S. patents no. 5,366,609 and 4,816,224, owned by Roche. In the case pending in California, Biosite is alleging that Roche is infringing three of its patents – nos. 6,174,686, 5,795,725 and 6,939,678.

Biosite develops proteomics technologies for medical diagnostics, its flagship product being the Triage rapid test. Roche is a broad-based developer of diagnostic products.