In an incredibly poorly timed move, on March 9, 2020, an alleged patent troll holding the rights to two Theranos patents sued a company attempting to develop and deploy tests around the COVID-19 coronavirus pandemic. Specifically, the defendant is currently iterating SARS-CoV-2 tests to address COVID-19. Predictably, a general uproar ensued with Mark Lemley, director of the Stanford Law School Program in Law, Science and Technology, tweeting, “This could be the most tone-deaf IP suit in history.” Thereafter, the plaintiff quickly took steps to mitigate the fallout.
What’s really going on here?
The term patent troll is a pejorative applied to an entity, usually a non-practicing entity like a holding company, that hoards patents in a patent portfolio with the express purpose of enforcing patent rights against accused infringers. This is generally done with no intention of manufacturing and commercializing technologies or services associated with the portfolio patents. The patent troll makes money by demanding hefty licensing fees from accused infringers and filing federal lawsuits against them in attempts to force substantial damage settlements. Of course, there is blurring of the line between patent troll and other non-practicing entities (patent owners who don’t manufacture but do enforce patent rights through licensing and litigation, like universities).
So who are the main players?
Labrador Diagnostics LLC (“Labrador”) brought suit asserting U.S. Patent Numbers 8,283,155 (“the ‘155 patent”) and 10,533,994 (“the ‘994 patent”). These patents were filed by Theranos IP Company, LLC, were at one time assigned to Theranos, Inc., and list Elizabeth Holmes as an inventor. We won’t dive into the story of Theranos and Holmes, but suffice it to say that they likely never had “possession” of this invention, neither before filing nor at any point.
The ‘155 and ‘994 patents were ultimately acquired by Fortress Investment Group LLC (“Fortress”), which owns Labrador through its investment funds. Fortress is a subsidiary of SoftBank, a multinational conglomerate holding company that owns stakes in a bunch of companies, including the recently beleaguered WeWork. Of note, Apple and Intel filed an antitrust lawsuit against Fortress in late 2019, alleging business practices amounting to patent trolling, among other things.
Labrador brought suit against BioFire Diagnostics LLC (“BioFire”) and its parent company bioMérieux S.A. (“bioMérieux”). On March 11, 2020, bioMérieux announced the launch of 3 tests to address the COVID-19 pandemic, including a real-time PCR test and two tests based on the BIOFIRE® FILMARRAY® technology to run on the FILMARRAY® 2.0 and FILMARRAY® TORCH platforms. The latter two tests are based on technologies described at length by Labrador in their complaint for patent infringement. Of course, there is no mention of SARS-CoV-2 or COVID-19 in the lawsuit. At face value this supports Labrador’s claim that the lawsuit wasn’t directed to testing for COVID-19, but is that really the case?
Is this just bad timing, malintent, or both?
Let’s review the timeline:
- March 9, 2020: Labrador brings suit against BioFire and bioMérieux
- March 11, 2020: the World Health Organization recognizes the pandemic, bioMérieux announces launch of tests
- March 17, 2020: Labrador announces grant of royalty-free licenses to third parties to use its patented technologies for COVID-19 tests
Food for thought:
- While Labrador may or may not have had this particular virus in mind when it filed suit, does it matter with respect to the general principle?
- If this outbreak had been more limited in scope or geography, would Labrador have granted these royalty-free licenses?
- If there had been no general outcry against this particular lawsuit, would Labrador have done anything?
- Does Labrador’s response really resolve the root issue?
It may be challenging to define patent trolling, but it’s a practice where the phrase “I know it when I see it” seems to apply. We as a society should care what patent trolls are doing when they encumber companies with frivolous or vexatious litigation, and we should be aware of and speak out about the chilling effect these practices have on technology development and commercialization.
In this case, the public backlash against Labrador as an alleged patent troll was driven by a global interest in widely distributing any and all technologies to assist in COVID-19 detection and treatment, and the perception that Labrador was unjustly interfering with that interest. While patent litigation is usually the nerdy, dry, technical member of the litigation family, the intensely odd cousin that went to CalTech, the circumstances surrounding this case serve as a reminder that patent portfolio strategists and litigators must account for public sentiment in their actions, as their actions can be colorfully connected to cultural norms as much as any constitutional issue.
About Andrew Lerner
Andrew Lerner joined RVL® as a registered patent agent upon completing his PhD in Biochemistry and Biophysics at the University of North Carolina, Chapel Hill. His practice areas include clearance & patentability analyses, patent prosecution, and due diligence; strategic IP portfolio development; and IP diligence for life science venture funds.
Andrew has supported faculty, researchers, and staff involved in innovation and commercialization across broad disciplines at top tier universities, and has led IP and market diligence activities for life science, biotechnology, and medical device seed funding. He serves as a reviewer for several seed stage funding mechanisms and regularly advises entrepreneurs as a mentor through Veterati, a platform that connects veterans/mentors with Service Members, Veterans, and Military Spouses.
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