[Ip-health] deCODE sues former employees

[James Love]

* Tension between academic research and the commercial sector bubbled
over yesterday in Federal Court in Philadelphia as the chief
executive of deCODE Genetics testified against five former employees
who left the Icelandic genetics firm earlier this year.

* Lawyers for CHOP argued deCODE's interpretation of the agreements
is overly broad and would prevent the scientists from ever working in
genetics research after leaving the company. They also stressed that
institutions receiving National Institutes of Health grants,
including CHOP and deCODE, are obligated to try to turn their
discoveries into cures under the Bayh-Dole Act.

* deCODE CEO Kari Stefansson testified that CHOP's plans to collect
genetic data on 100,000 patients in order to develop commercial
treatments puts the academic institution in direct competition with
his firm, which has genotyped 100,000 Icelanders.


http://www.the-scientist.com/news/daily/25040/

By Susan Warner
deCODE sues former employees

CEO Kari Stefansson testifies against employees who left to work for
a new genomics program at The Children's Hospital of Philadelphia

[Published 11th October 2006 02:47 PM GMT]

Tension between academic research and the commercial sector bubbled
over yesterday in Federal Court in Philadelphia as the chief
executive of deCODE Genetics testified against five former employees
who left the Icelandic genetics firm earlier this year.

deCODE contends the employees, four of whom are now working in the
new Center for Applied Genomics at The Children's Hospital of
Philadelphia (CHOP), violated two-year non-compete clauses and
confidentiality agreements in their deCODE employment contracts. The
director of CHOP's new genomics center, Hakon Hakonarson, had been
deCODE's vice president, business development.

Lawyers for CHOP argued deCODE's interpretation of the agreements is
overly broad and would prevent the scientists from ever working in
genetics research after leaving the company. They also stressed that
institutions receiving National Institutes of Health grants,
including CHOP and deCODE, are obligated to try to turn their
discoveries into cures under the Bayh-Dole Act.

deCODE CEO Kari Stefansson testified that CHOP's plans to collect
genetic data on 100,000 patients in order to develop commercial
treatments puts the academic institution in direct competition with
his firm, which has genotyped 100,000 Icelanders.

Stefansson said he was aware Hakonarson was departing to join CHOP
this spring, but it was not until he read a July press release
describing the new genomics center that he began to view CHOP as a
commercial competitor. "The whole press release connotes a
description of an entity that is in competition with us," he testified.

One quote from Hakonarson in the release was particularly alarming,
Stefansson said: "Our goals for the Center are to generate new
diagnostic tests for childhood diseases, to use this diagnostic
knowledge to guide physicians to the most appropriate therapies. In
addition, we plan to form strategic partnerships with
biopharmaceutical companies to develop novel therapeutics."

Stefansson, who testified that he and Hakonarson had once been close
friends, said there is a "fine line" between academic work and the
mission of commercial firms. In his view, CHOP is intent on crossing
the line.

deCODE has submitted evidence as part of its suit that Hakonarson
told executives at other drug development companies that the CHOP
center would also be doing research projects involving adults.

The company is seeking a court injunction to prevent the researchers
from working at CHOP because it says they signed agreements not to
compete against deCODE for two years after leaving. The suit also
alleges that Hakonarson took confidential computer files and software
from deCODE and filed competing grant applications with the National
Institutes of Health with both CHOP and deCODE.

deCODE also alleges Hakonarson used deCODE computers to recruit
deCODE employees for CHOP, then wiped out files and e-mail that might
have indicated violations of the employment contracts from his hard
drive. In addition, deCODE's suit cites instances in which Hakonarson
allegedly asked employees still at deCODE to go into his computer
files and delete e-mails relating to CHOP from others, including e-
mails sent to and from his wife.

CHOP's response to the deCODE suit claims Hakonarson innocently
copied some computer files, but never stole key software developed by
deCODE.

The hospital argues that Stefansson knew for months that Hakonarson
intended to resign and attempted to work out a plan in which
Hakonarson would move to Philadelphia to run the CHOP center but
retain at least a part-time position at deCODE. Eventually, the two
sides worked out a settlement agreement, until deCODE reopened the
matter with its lawsuit, which was unsealed Sept. 26.

William Hangley, a lawyer for CHOP, asked why Stefansson struck
Hakonarson's name from a research paper during this period.
Stefansson said he felt he had to hold Hakonarson to a higher
standard in the company because of his close friendship with him.
Stefansson also said he did not want Hakonarson to leave because he
was concerned it was a rash decision.

In addition to Hakonarson, the suit also names former deCODE
employees Struan Grant, Robert Skraban and Jonathon Bradfield as
defendants in the case being heard before U.S. District Court Judge
Jan E. Dubois. Attorneys said the hearing and legal arguments are
likely to continue through November and into December.

CHOP has pledged $40 million toward the new center, which is expected
initially to focus on diseases prevalent in pediatric populations,
including asthma, obesity, ADHD and childhood cancers.

Susan Warner
mail@the-scientist.com

Links within this article:

deCODE Genetics
http://www.decode.com/

The Children's Hospital of Philadelphia
http://www.chop.edu/consumer/index.jsp'

Bayh-Dole Act
http://www.law.cornell.edu/uscode/html/uscode35/
usc_sec_35_00000200----000-.html

Kari Stefansson
http://www.decode.com/Company/Management.php'

R. Lewis, "Iceland's Public Supports Database, But Scientists
Object," The Scientist, July 19, 1999
http://www.the-scientist.com/article/display/18638

"Large-scale genomics project will hunt genes behind common childhood
diseases," CHOP Press Release, June 7, 2006
http://www.eurekalert.org/pub_releases/2006-06/chop-lgp060606.php

---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040

"If everyone thinks the same: No one thinks."  Bill Walton