Already in 2018, the disgraced biotech company Theranos sold its patent portfolio to the Fortress Investment Group, a division of Softbank. Now two of these patents have come into the hands of a little-known company called Labrador Diagnostics – and Labrador is suing a company called BioFire Diagnostics that makes medical test equipment.
And not just any medical tester: BioFire recently announced that it has developed three tests for COVID-19 using its hardware – tests that are slated to be released later this month. However, Labrador is asking a federal court in Delaware to prevent the company from using its technology – presumably including the new corona virus tests.
Mark Lemley, Stanford patent scientist, says: "This could be the deafest IP suit in history."
((To update: Faced with an avalanche of poor advertising, Labrador announced on Tuesday that it would grant license-free licenses to companies that develop COVID-19 tests. The company also claims that it did not know that BioFire was working on a coronavirus test when it filed its lawsuit last week. The company appears to be driving the lawsuit forward.)
Gun patents from Theranos
One of the peculiarities of the patent system is that you don't have to prove that your technology works to get a patent on it. This explains why Theranos – who is known to have been unable to get his technology up and running – still managed to get a number of patents. This included Patent No. 8,283,155: "Point-of-care fluid systems and their use".
This patent describes a generic architecture for a machine that automates testing for the presence of substances in body fluids. In the system described by the patent, an operator inserts a "test device" (which contains both the body fluid to be tested and the reactants required to perform the test) into a "reader". The reader then triggers the chemical reactions required to perform the test and reports the results. The Theranos patent is not limited to any particular body fluid, reactant, or test protocol.
While Theranos has never made such a machine work, BioFire has done so. The BioFire product line includes the BioFire film array, a machine that automates the detection of a wide range of pathogens. BioFire has added the new corona virus to the pathogens that its devices can detect and expects this feature to be made available to customers later this month.
However, Labrador Diagnostics argues that the FilmArray violates two of its Theranos patents. And, as is common in this type of lawsuit, Labrador doesn't just charge royalties. It also asked the court to issue an injunction against further infringement of its patents. This would apparently mean stopping the sale or use of the BioFire film array product line – including the upcoming coronavirus testing.
Fortunately for BioFire – and for patients who need coronavirus testing – a landmark 2006 Supreme Court ruling raised the bar for issuing injunctions in patent cases. Since then, it has been fairly rare for judges to issue this type of injunction, rather than awarding monetary damages to just one victorious plaintiff at the end of a case.
Labrador also filed his lawsuit last week. Given how slowly patent cases are heard in court, it will take many months for a judge to make the first decisions. With any luck, the coronavirus crisis will be over long before the courts rule on the merits of the lawsuit.