Legal Tussle Over cDNA Libraries May Stall Gene Sequence Efforts

Efforts Author: KAREN YOUNG KREEGER Sidebar: Sequence of Events A $20 million federal civil suit filed by a biotechnology startup charges that a Columbia University researcher associated with the company breached his duties as a corporate official by helping to place complementary DNA (cDNA) libraries he developed into the public domain rather than with the firm. The case, which at press time had been scheduled for trial November 17, adds another chapter to the often-tumultuous saga of these genomic resources, which enable researchers to quickly locate specific genes. If the firm is completely successful in the lawsuit, it could tie up a crucial component of the worldwide human-genome sequencing effort. The multimillion-dollar case underscores the vast scientific-and commercial-potential believed to be contained in these cDNA libraries. The suit also raises important questions about conflicting obligations for academic scientists who enter into relationships with the corporate world, say attorneys familiar with the case. In late March, Genome Technologies Inc., a biotech firm incorporated in Delaware, filed suit in the United States District Court for the Southern District of New York against Bento Soares, an assistant professor of neurogenetics at Columbia University and one of the company's scientific cofounders. The suit alleges that Soares, also Genome Technologies' former executive vice president of research and a director, neglected his fiduciary responsibilities to the company by negotiating to share the technology with Merck & Co. Inc., a pharmaceutical firm in Whitehouse Station, N.J., and then quitting his Genome posts. cDNA CONFLICT: The suit against Bento Soares raises important conflict-of-interest questions. This action, the company claims, deprived Genome of the use of his libraries of normalized cDNA clones and his expertise in producing them, which would have given the firm an edge over its competition. Genome's complaint states that it had plans to locate human genes of biomedical importance using the libraries, developed over the last several years by Soares while employed at Columbia. In general, cDNA libraries facilitate the search for new genes, with the development of new drugs and therapies the ultimate target. "What we're saying is that [Soares] diverted a corporate opportunity from Genome," asserts Daniel Conti, the Hempstead, N.Y.-based attorney for Genome. According to Conti and the complaint he filed on behalf of Genome, Soares's libraries and the technology to make them were "Genome's corporate assets," and the basis "upon which outside investors" took a "substantial" risk. Soares, in an answer to Genome's complaint, denies that he had a proprietary interest in any technology or gene libraries, and states that any technology or gene libraries referred to in Genome's legal statement were not assets of the firm "at any time." Soares declines to comment directly on any aspect of the case until after the litigation has ended; however, he does maintain that "I have nothing to fear." In addition to asking for $20 million in damages, Genome seeks to keep Soares from lending the cDNA libraries and the technology to make them to any third parties. Based on allegations in the complaint concerning Soares's negotiations with Merck, these parties likely refer to a project undertaken by Merck and Washington University (WU) to sequence human cDNAs and deposit the information in the public domain. In fact, the project began sequencing, using Soares-generated cDNA libraries, in January. The lawsuit is the latest episode in several competing efforts to quickly and easily obtain information on biomedically important genes to develop therapies and drugs to fight genetic diseases. What makes Soares's cDNA libraries so desirable is that these "normalized" collections reduce the number of multicopy cDNAs, so that rare and potentially biomedically useful cDNA types can be found more quickly. In general, cDNA libraries represent the portion of the genome that encodes for the estimated 50,000 to 100,000 human genes. Because of this, these libraries are thought to signify the genome's most biomedically important parts. COMMON KNOWLEDGE: "I cannot see how [Genome] would prevent anyone who uses a technology like Bento's [from making] the library again," says NIH's Mihaelis Polymeropoulos. "Someboyd could normalize [the libraries] too." Around January, Columbia donated the libraries, through Lawrence Livermore National Laboratory (LLNL), to an ad hoc international cDNA clone-sharing effort called the Integrated Molecular Analysis of Genome Expression (IMAGE) Consortium (K.Y. Kreeger, The Scientist, May 15, 1995, page 1). Soares; LLNL senior scientist Greg Lennon; Charles Auffray, research director at the Centre National de la Recherche Scientifique in Villejuif, France; and Mihaelis Polymeropoulos, a researcher with the National Center for Human Genome Research (NCHGR) formed the consortium in November 1994 to support their own research, but eventually became a conduit for dispensing cDNA libraries around the world. The four Soares libraries donated to IMAGE so far are derived from infant brain, liver and spleen, placenta, and breast tissues, representing an estimated 20,000 to 40,000 clones. Columbia retained the right to license other Soares libraries to biotech companies if, "for the sake of time, they are not willing to wait until they become available in the arrayed configuration [an efficient organization scheme for cDNA clones]." The university also has a patent pending on Soares's normalization technology. IMAGE clones-the bulk of which are based on Soares's libraries-are being used by the nonproprietary Merck-WU project, which commenced last January (F. Hoke, The Scientist, Dec. 12, 1994, page 1). The Merck-WU project was primarily launched as an angry response to access restrictions to another cDNA database started more than three years ago by former National Institute of Health researcher Craig Venter, president of The Institute for Genomic Research (TIGR) in Gaithersburg, Md., a nonprofit research institute. TIGR developed the database along with Human Genome Sciences (HGS), a Rockville, Md.-based biotech firm. The TIGR/HGS database restricts access to noncommercial researchers, and even these users are subject to terms that have raised concerns among them, including the right to preview papers and retain control of patents that may emerge from the libraries. "We've taken the position that research tools should be shared amongst everyone who wants to make an impact on drug research or any therapeutic application to benefit mankind," Alan R. Williamson, vice president for strategy worldwide at Merck, told The Scientist last December. "They should not be proprietary." Conti says that "right now, Genome has chosen not to bring an action against" either Merck or Columbia, but concedes that may "change in the future." "I'm not surprised that this [technology] could have been an important commercial issue. Obviously, we knew it was an important technology," says Roy Whitfield, president and chief executive officer of Palo Alto, Calif.-based InCyte Pharmaceuticals Inc. In the past, InCyte had expressed interest in Soares's cDNA libraries and the normalization technique. Indeed, TIGR has a contract worth about $100 million with HGS for patent options on discoveries from its cDNA database; and Philadelphia-based SmithKline Beecham has agreed to pay HGS about $125 million for development rights to those discoveries. In its complaint, Genome alleges that the libraries would allow the firm to "reduce the redundant sequencing of frequently represented genes tenfold when compared to prevalent industry rates, giving [Genome] significant cost and speed advantages over its competition in the discovery of rare genes." Soares denies the details of this claim, but acknowledges that the libraries, if used by Genome, would indeed reduce redundant sequencing. "As I see it, the case is essentially a conflict-of-interest situation rather than an intellectual-property one," says Rebecca Eisenberg, a professor of law at the University of Michigan and a member of the Human Genome Project's working group on ethical, legal and social implications. She also holds a grant from the Department of Energy (DOE) to study the role of patents in technology transfer associated with the Human POSING QUESTIONS: Michigan's Rebecca Eisenberg says issues of incompatible obligations are brought up by allegations made int he suit: "What promises did Soares make to Genome and its investors?" "It's obvious that Genome didn't acquire any rights in this technology by virtue of an employee-employer relationship," says Eisenberg. "It seems like everybody agrees that Soares was an employee of Columbia when he made the relevant discoveries." She adds: "I don't see how Genome is entitled to anything other than a remedy for breach of fiduciary duty, which is going to be limited to what Soares has within his power to do. He doesn't have it within his power to convey any intellectual property rights to anything he doesn't own." Columbia retains those rights, Eisenberg explains, because of the Bayh-Dole Act of 1980. "Under the act, if Soares made these discoveries using federal funds, Columbia retains the rights to them." DOE and NIH are the principal backers of Soares's work. Eisenberg sees this case revolving around the point that Soares was a servant of at least two masters. She says that determining his exact relationship with Genome is critical to establishing legal liability: "What promises did he make to Genome and its investors? What written documentation is there? What conversations can people testify to?" She asserts that this aspect of the case raises many questions important to the multitude of academic scientists who enter into relationships of various sorts with commercial firms: "What are the obligations of scientists toward those firms? How can they balance those obligations with their obligations toward their universities and toward their community of scientists?" The nature of negotiations among Genome, Soares, and Columbia are indeed under contention in the suit. Genome maintains that Soares's involvement with the company was the primary focus of its plans. Soares denies this allegation. Because of Soares's involvement in meetings and representations he made, Genome contends that investments were made or committed to by outside individuals and companies. Soares denies this. Details about negotiations that took place involving Genome and Soares, Columbia, and Merck are also being disputed. In January 1994, two months after both Genome and IMAGE were founded, the biotech firm began licensing-agreement negotiations with Columbia, a fact on which both parties agree, according to papers filed in court. Genome's complaint, however, states that the negotiations were to license Soares's technology "on an exclusive basis," while Soares's answer denies its claims of exclusivity. Columbia declines to comment on this or any aspect of the case. Genome also claims in its complaint that later, on Aug. 4, 1994, Soares met with Merck on behalf of the biotech firm, with the "express purpose of developing a collaboration between the two companies." Genome also alleges that shortly thereafter, in the fall of 1994, Soares, while negotiating for Genome with Columbia, entered into discussions with Merck about his and Columbia's participation in Merck's sequencing project. In the answer to Genome's complaint, Soares acknowledges having discussions with Merck with the knowledge and approval of Genome, but does not elaborate as to when the discussions occurred or what these conversations were about. In a mid-August statement issued by Merck in response to queries by The Scientist, the company acknowledged its awareness of the case, but noted that it is "not a party to the action." The reply also stated that "as a technology-based company, we will be interested in its impact, if any, on organizations involved in biomedical research." In criticizing TIGR's database restrictions back in December, Merck's Williams said, "We could have taken a private position [on cDNA data], too, but we decided to take a public position." It is unknown, however, if he was referring to negotiations with Genome Technologies. Soares's colleagues who are willing to speak on the record are sympathetic to his situation. "According to what I know from Bento, there is some kind of misunderstanding on the part of the investors. Apparently they thought they had 'bought' some kind of access to technology that he had developed, for which Columbia has applied for a patent," IMAGE cofounder Auffray says. "I suspect that when they get to the point of looking for the legal documents, they will find no basis for the affair." "It sounds like what is going on here is that Soares was motivated not to divert this profitable opportunity to another corporation, but to dissipate the profits by dedicating the information to the public domain," speculates Eisenberg. "Maybe that's for his profit in some sense. Maybe he gains as a scientist for adhering scrupulously to scientific norms of free exchange of materials and information, but it's not like he's gaining in a monetary sense." Scientists and lawyers maintain that Genome lost its opportunity to stake any claim to intellectual property. "They had already missed the boat by March 30 [the day Genome filed the complaint]," comments Eisenberg. "Genome could enjoin the use of the normalization technology as an infringement if they had a license, which they don't," she adds. "I cannot see how [Genome] would prevent Soares or anyone who uses a technology like Bento's to make the library again," says NIH genome mapper and IMAGE cofounder Polymeropoulos. "I mean, it's not such a big deal; somebody could normalize [the libraries] too." Chris Fields, vice president for scientific affairs at the Santa Fe, N.Mex.-based National Center for Genome Research, a nonprofit organization that houses the Genome Sequence Data Base, also notes that the methodology for producing the libraries has already been published (M.B. Soares et al., Proceedings of the National Academy of Sciences, 91:9228-32, 1994). What's more, he says, "data [from the libraries] is flowing into [public] databases at a rate of 1,000 sequences a day." Richard Murad, Soares's lawyer, and Linda M. Distlerath, a representative of Merck, confirm that sequencing projects using the libraries have not been affected by the suit. WU representatives decline to comment on the implications of the case for their project. "The [prospect of] licensing of the libraries was the only real asset of Genome," says Genome attorney Conti. "There is no other business that Genome engages in. When Genome did not receive the licensing agreement, it was, in fact, dead in the water." In a news release, Conti summed up his clients' case: "After Dr. Soares co-founded the company and encouraged outside investors to invest in the company, he stopped working for the company, took his clone libraries, and gave them to IMAGE. He has basically destroyed Genome Technologies Inc., and there are some very angry investors out there." According to Conti, several companies had expressed interest, including InCyte, but all discussions are "dead for all intents and purposes." "We were very interested in the [cDNA] technology, but then Merck announced at industry conferences that they were going to put all of the results from the technology into the public domain," confirms InCyte's Whitfield. Conti reports that Genome's board of directors and investors "wish to be made whole. They want either to be compensated financially for their loss of business opportunity or be given back their business opportunity," which likely means that they wish to be given an exclusive license to the normalization technique. A BASELESS CASE? "I suspect that when they get to the point of looking for the legal documents, they will find no basis for the affair," says Charles Auggray, CNRS director. Eisenberg surmises that awards made because of the case are likely to turn on bringing to light the reasonable expectations of the investors, based on Soares's representations to them: "Presumably that's what they're seeking from Soares, but it's not clear; I mean, does Soares have $20 million? "It seems like Genome's best legal argument is not: 'This is our intellectual property.' Instead, they thought this was something that Soares [had] a duty to try to procure for them, and at a certain point in the process he changed his mind." Sidebar: Sequence of Events (The Scientist, Vol:9, #19, pg.1, 6-7, October 2, 1995) (Copyright © The Scientist, Inc.)

Legal Tussle Over cDNA Libraries May Stall Gene Sequence Efforts

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