Monday, December 27, 2004

Transgenic/Avner sue Allerca/Brodie over trade secrets to hypoallergenic cats

One company, Transgenic (principal David Avner) is suing another company Allerca (principal Brodie) over improper use of trade secrets to hypoallergenic cats. Avner had sought out Brodie for financial backing for his ideas, so this is an example of a funding deal gone bad. The case is complicated by the fact that the trade secrets are within U.S. patent applications, at least one of which is published, US application no 20030177512.

from MSNBC:

Transgenic claimed breach of a nondisclosure , non-use agreement, deceptive trade practices, misappropriation of trade secrets and tortious interference.

Plus, it asked for injunctive relief to prevent Allerca and Brodie from further disclosure of Transgenic's trade secrets, from taking any further deposits from the public, from competing with Transgenic, and from representing that it's entitled to the transgenic cat technology and patents.

The lawsuit said Highlands Ranch resident Avner, who's an emergency room physician, revealed trade secrets and proprietary information to Los Angeles resident Brodie because he viewed Brodie as a potential investor in Transgenic. Brodie signed a nondisclosure and non-use agreement in February 2004, the lawsuit said.

In that agreement, Brodie and Geneticas, of Miami, promised to not use the trade secrets for their own purposes, not compete with Transgenic Pets, and not disclose Transgenic Pets' trade secrets, including gene-suppression processes covered by Avner's patent applications in 1996, 1999 and 2000, the lawsuit said. <--

U.S. patent applications have been published since 2001. (Non-foreign filing applicants may request non-publication.) A review of the application database reveals no. 20030177512 (published September 18, 2003, prior to the non-use agreement of February 2004), which states:

->This application is a continuation of U.S. application Ser. No. 09/227,873, filed on Jan. 11, 1999, which in a continuation-in-part of U.S. application Ser. No. 08/657,905, filed on Jun. 7, 1996, which claims priority to provisional U.S. application Ser. No. 60/000,189, filed Jun. 13, 1995, each incorporated in its entirety by reference.<--

Thus, Avner filed a provisional in 1995, a non-provisional in 1996, a continuation-in-part in 1999, and a continuation 2002.

The abstract of the '512 application states:

A transgenic cat with a phenotype characterized by the substantial absence of the major cat allergen, Fel d I. The phenotype is conferred in the transgenic cat by disrupting the coding sequence of the target gene with a specialized construct. The phenotype of the transgenic cat is transmissible to its offspring.

The first four claims of the '512 application recite:

1. An isolated polynucleotide sequence encoding a disrupted Fel d I gene.

2. A sequence according to claim 1, wherein said Fel d I gene has been disrupted by sequence replacement.

3. A sequence according to claim 1, wherein said Fel d I gene has been disrupted by sequence insertion.

4. A sequence according to claim 1, wherein said Fel d I gene has been disrupted by deletion of all or a part of said Fel d I gene.

Claims 8-10 recite:

8. An embryonic cat stem cell comprising a sequence according to claim 1.

9. An embryonic cat stem cell comprising a vector according to claim 7.

10. A transgenic cat comprising a disrupted Fel d I gene.

The summary of the invention states:

[0006] This invention is a new alternative to traditional treatments for allergies. Rather than recommending avoidance or immuno-therapy, this invention eliminates the allergen at its source. In the case of the cat, sensitivity has been attributed to one major cat allergen (Fel d I) (Ohman, JACI, 1977). Using, newly developed gene targeting techniques it is possible to "knock-out" the Fel d I genes in an embryonic cell ie. Embryonic Stem (ES) Cells. These modified ES cells can then be introduced into a developing blastomere. During normal embryonic development the ES cells will then be incorporated into part of the germ line (Capecchi, Science, June 1989), (Robbins, Circulation Research, July 1993).

[0007] The resulting chimeric offspring will be heterozygous for the inactive Fel d I gene. When cross-bred with another heterozygous cat, one fourth of the progeny will be homozygous to the inactive Fel d I gene. These homozygous cats are major allergen free and are a revolutionary alternative to immuno-therapy for allergic cat owners (FIG. 1).

The various discussions in the '512 application are in the present verb tense, not in the past tense, suggesting that they may be prophetic, rather than examples actually carried out. Applications that rely on prophetic examples may issue as patents, but there can be issues of enablement under 35 USC 112, first paragraph.

This lawsuit illustrates the divergence between trade secrets and patents. The whole point about trade secrets is that one must keep them secret. Patent applications now are (generally) published, and once the information in an application is published, it cannot be considered a trade secret. If the application ISSUES as a patent, competitors whose product/process falls within the scope of issued claims may be liable both for pre-grant AND post-grant damages. HOWEVER, if the published application (or continuing applications therefrom) does/do not issue, the information therein is dedicated to the public. One suspects that information in a patent application published in Sept. 2003 would not be considered a trade secret (under, for example, the definition in the uniform code) in the context of an agreement signed in Feb. 2004.

Assuming (contrary to fact) that there were no applications in the Transgenic v. Allerca matter, Transgenic would face a tedious, lengthy legal battle in enforcing its trade secret rights, especially for a prophetic concept relying on analysis of the published literature. Thus, in some sense the Transgenic v. Allerca matter speaks to Judge Posner's comments about the relative value of trade secrets and patents, and is another example wherein trade secret rights are markedly inferior to rights that might be secured by patent.


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