Brandon Chan – Duane Morris Life Sciences Law

On June 24, 2024, the Department of Commerce’s Bureau of Industry and Service (BIS) imposed an administrative penalty on Indiana University (IU) as part of a settlement agreement following IU’s discovery and self-disclosure to BIS that its Bloomington Drosophila Stock Center engaged in the export of materials that violated the Export Administration Regulations. IU’s violations stemmed from its export of biological and genetic material without the proper license under the BIS.

The exports at issue involved genetically modified drosophila expressing transgenes that encode a component of the toxin ricin known as ricin toxin A chain. Drosophila, or the fruit fly, is a common model organism in genetic research because of its simple genetic makeup that consists of only four chromosomes and a short life cycle allowing for rapid reproduction for studies. Ricin is a ribosome inactivating protein that halts protein synthesis to produce its toxic effects. The toxin is comprised of two separate protein chains, the ricin toxin A chain and the ricin toxin B chain. By themselves, ricin toxin A chain and ricin toxin B chain are harmless; both components must be present in the form of a heterodimeric complex to exhibit toxicity. However, exports of ricin and its subunits ricin toxin A chain and ricin toxin B chain are regulated under the Australia Group to mitigate against proliferation of chemical and biological weapons, and thus fall under the Commerce Control List.

The Proposed Charging Letter cited 42 export shipments of the genetically modified drosophila classified under Export Classification Control Number (ECCN) 1C353.b.2 (until April 2, 2018) and 1C353.a.3 to countries listed on the Commerce Country Chart under CB Column 1 relating to Chemical and Biological Weapons. Because each destination country was listed under the CB Column 1, pursuant to 15 C.F.R. § 742.2(a)(1)(ii), a license is required for the export of genetic elements (i.e. ECCN 1C353) that encode for toxins and their subunits identified under ECCNs 1C351.d.14 and .15. Ricin is specifically named in ECCN 1C351.d.14. See Commerce Control List, Category 1 – Special Materials and Related Equipment, Chemicals, “Microorganisms” and “Toxins.”

Under the terms of the settlement agreement: i) IU is subject to a suspended denial of its export privileges for ECCNs 1C351, 1C353 and 1C354 for one year; ii) IU must train the appropriate personnel in export compliance; iii) IU must deliver a presentation as to the circumstances of the instant violations and self-disclosure on export controls of biological materials to stock center directors and at the Association of University Export Control Officers conference or another related forum.

The suspended denial of export privileges for ECCNs 1C351, 1C353 and 1C354 may be modified or revoked if IU commits another violation or fails to comply with the terms of the settlement agreement. Revocation of the suspension of the denial would prevent IU from applying for, obtaining or using a license for the export of items under ECCNs 1C351, 1C353 and 1C354; prevent IU from partaking in deals or the handling of items designated as ECCNs 1C351, 1C353 and 1C354; and benefitting from transactions involving items designated as ECCNs 1C351, 1C353 and 1C354.

This recent incident demonstrates the importance of understanding the nature of any exported genetic material despite the genetic material and the encoded material ultimately being harmless. Export of genetic material falling under, currently, ECCN 1C353.a.3, even if the genetic material encodes for a harmless substance, such as ricin toxin A chain, to destination countries listed under the CB Column 1 without the appropriate license is still a violation. Universities, research institutions, stock centers, or other exporters who engage the export of biological and genetic should take heed to understand the background and make up of its exports regardless of whether the genetic material or encoded material is harmless and apply for and obtain the necessary licenses for exporting the material. The last thing a world renowned research university wants is to be accused of engaging in the proliferation of chemical and biological weapons via the export of benign genetic material without the appropriate license.

The full order, terms of the settlement agreement, and Proposed Charging Letter are publicly available from the Department of Commerce.

October 21, 2022 by Duane Morris

Broad Patent Prosecution Bars Risk Effectively Decoupling Complementary Patent Litigation and Prosecution Practices

Parties in the discovery phase of litigation often exchange confidential documents and information, which may contain proprietary information such as the technical aspects and know-how behind a party’s intellectual property. To facilitate the exchange of confidential information and prevent its misuse by parties to the litigation, courts often use an agreed protective order, which outlines the disclosure and dissemination of confidential information, proper use of such information (e.g., prosecuting or defending the instant action) and the return of confidential information following the conclusion of litigation and any appeals taken.

To read the full text of this Duane Morris Alert, please visit the firm website.

May 26, 2021 by Duane Morris

Parent Companies Can Be Liable for a Subsidiary’s Alleged Infringement Under Rule 12(b)(7)

What liability does a parent company have when a subsidiary’s actions allegedly constitute patent infringement?

That is the question answered in a recent patent infringement case, Akoloutheo, L.L.C. v. System Soft Technologies, Inc., No. 4:20-cv-985, 2021 WL 1947343 (E.D. Tx. May 14, 2021). In particular, Akoloutheo sheds light on the application of Rule 12(b)(7) in a situation where a subsidiary of the defendant parent company is the primary participant in the acts giving rise to the infringement action and could not be joined to the present infringement action. Based on the court’s determination, parent companies should not expect to escape infringement liability by pinning the blame on a subsidiary and seeking a dismissal via a 12(b)(7) motion when the subsidiary cannot be joined due to it being viewed as a joint tortfeasor and thus does not need to be joined to the present action under Rule 19. Further, the infringement statute may impute infringement liability on the parent through an inducement or contributory theory. Thus, despite the protection offered through the creation of separate corporate entities, parties should be aware that infringement liability may extend to both the parent and subsidiary under the theories of induced infringement or contributory infringement, even if the subsidiary is the primary participant in the alleged infringing acts.

View the full Alert on the Duane Morris LLP website.

December 8, 2020 by Duane Morris

Patent-Eligible Subject Matter in Biotech Should Recite More Than a “Telescope”

In Abbott Laboratories v. Grifols Diagnostic Solutions Inc., the U.S. District Court for the Northern District of Illinois opined as to patent-eligible subject matter in the context of a biological invention. The case presents another situation in which the law of nature and natural phenomenon judicial exceptions have come to the forefront in the analysis of patent-eligible subject matter.

To read the full text of this Duane Morris Alert, please visit the firm website.

February 27, 2020 by Duane Morris

Numerical Ranges: More Than Just Endpoints in Patent Process

On February 11 and 12, 2020, the United States Patent and Trademark Office held a series of webinars covering the interpretation of ranges during the prosecution of patent applications. The following is a brief report and summary of the covered material.

Numerical ranges provide more than just two particular endpoints for a set of data within patent applications. The interpretation of a claimed numerical range when compared with disclosed numerical ranges in the prior art, assuming the claimed invention recites the other limitations of the prior art, can form the basis for an anticipation rejection based on 35 U.S.C. § 102, an obviousness rejection under 35 U.S.C. § 103, or an alternative grounds rejection under both 35 U.S.C. §§ 102/103.

View the full Alert on the Duane Morris LLP website.