Implications of CRISPR Dispute on Licensees

Introduction

A decision in May from the Federal Circuit Court of Appeals has extended the long-standing and well-publicized dispute over inventorship of use of CRISPR-Cas9 technology in eukaryotic cells. When final resolution comes, it will have important implications for users of this technology. Companies currently licensing CRISPR-Cas9 from one of the two groups claiming ownership rights to the fundamental patents covering this technology and those considering licenses or investment in users of the technology should review existing or proposed licenses to better prepare for the potential outcomes of the dispute.

Background

The use of the CRISPR-Cas9 enzyme to edit DNA is one of the most exciting innovations in life sciences of the past decade. This technology has a wide range of potential applications as promising therapeutic candidates to treat, and sometimes cure, a wide range of diseases. In 2023 the FDA approved the first CRISPR-Cas9 therapeutic, an ex vivo cell therapy for sickle cell disease, and several other candidates are currently in mid to late stage clinical trials.

Commercial license and exploitation of this technology is complicated by an ongoing dispute between two groups over inventorship of use of CRISPR-Cas9 to edit DNA in eukaryotic cells: the Regents of University of California, University of Vienna and Emmanuelle Charpentier (the “UC Group”); and the Broad Institute, Massachusetts Institute of Technology and Harvard University (the “Broad Group”). A Federal Circuit decision in May overturned the Patent Trial Appeals Board’s (“PTAB”) finding that the Broad Group had priority over the UC Group. The Federal Circuit remanded the matter to the PTAB for re-evaluation of whether the UC Group’s descriptions of the invention in its patent filings were sufficient to demonstrate priority over the Broad Group’s claims.

Many companies developing therapeutic products that use gene editing have licensed CRISPR-Cas9 rights, either directly or through a licensee, from either a UC Group entity or a Broad Group entity, and many others are in licensing discussions. While the ultimate resolution of this dispute may well take several years because of likely future appeals, licensees of the losing group may need to obtain a license to the prevailing group’s patent rights.

Be Prepared

While the dispute may be resolved in many possible ways, a key question is whether resolution includes the grant of a license under the prevailing group’s patents to the losing group and its downstream licensees.  Under either scenario, companies that do not already have a license to the prevailing group’s patents face challenges to continued use of CRISPR-Cas9 technology.

If final resolution does not include a grant of a license under the prevailing group’s patents to the downstream licensees of the losing group, those licensees may need to negotiate a new license with little leverage, and may struggle to secure the same license scope (field of use, geography, exclusivity, etc.) and financial terms from the prevailing group as in their existing license.

Even if final resolution does include a license under the prevailing group’s patents, it may have similar scope issues, and likely will come with additional financial costs (including royalties and milestones) which the losing group will certainly seek to shift to its downstream licensees.  Additionally, a downstream licensee of the losing group may find that its sublicensor is unwilling to amend the current sublicense to incorporate these additional patents, and instead insists on requiring a new, separate sublicense under the prevailing group’s patents.

Accordingly, any company with an existing or contemplated CRISPR-Cas9 license should review that agreement to determine its contractual rights, and to develop a plan in the event its ultimate licensor is part of the losing group. That plan should consider what license scope may be required under the prevailing group’s patents, the likely additional financial obligations for this license, together with potential mitigation provisions--like a royalty anti-stacking clause—to offset some portion of these additional costs.  While the magnitude of these costs is uncertain, licensees should expect that some negotiation will be required to reach a mutually acceptable arrangement on sharing of these costs.

Conclusion

This continuing inventorship dispute—now nearly a decade old—over the use of CRISPR-Cas9 technology in eukaryotic cells poses a continuing challenge to companies using or intending to use this technology to develop their products and may have significant consequences for companies that do not obtain license rights from the prevailing group in this dispute.

Crowell Life Sciences attorneys have extensive experience counseling clients on licensing considerations for CRISPR-Cas9 and other complex technologies and working with them to develop practical solutions to obtain the desired intellectual property rights to advance their business.