Sequenom ($SQNM) suffered a stinging defeat in its patent battle against Roche's ($RHHBY) Ariosa Diagnostics unit, as a U.S. appeals court ruled that the company's patent for its noninvasive prenatal test was invalid.
The U.S. Court of Appeals for the Federal Circuit in the District of Columbia tossed out a patent for Sequenom's fetal DNA screening test, saying the DNA's presence fell under the U.S. Supreme Court's rule against patenting natural phenomena, Reuters reports. The decision upholds a ruling by a lower federal court in California and lets Ariosa off the hook for infringement–a potentially costly blow for Sequenom as it vies for a piece of a prenatal testing industry set to grow to $3.6 billion by 2019.
San Diego, CA-based Sequenom's test uses DNA from previously discarded maternal blood samples to look for fetal characteristics such as gender, avoiding the need for more invasive testing. While the appeals court deemed the test "a positive and valuable contribution to science," it still didn't think its technology warranted a patent, according to the Reuters story. One of the three justices on the appeals panel said he thought Sequenom should have been allowed to keep the patent, but broad wording in one of the Supreme Court's precedents forced him to invalidate the patent.
But Sequenom is not going down without a fight. The company "is considering its options for further appeal" and "believes that the ruling has little business impact," it said in a statement, especially in light of its pooling agreement with rival Illumina ($ILMN). In December, the companies settled the score in their ongoing patent feud, agreeing to resolve all pending infringement claims and pool their resources to develop noninvasive prenatal tests. Sequenom got $50 million up front as part of the deal, and royalty payments on sales of the companies' in vitro prenatal diagnostic kits.
Meanwhile, Ariosa faces patent woes on another front. Last month, Illumina slapped the prenatal testing giant with a patent infringement suit for technology used in its Harmony Prenatal Test. Harmony screens for Down syndrome, Edwards syndrome and Patau syndrome in cell-free DNA, a method unique to that used by other companies, Ariosa claims. But Illumina struck back, saying the company's tests directly infringe on its technology.