Myth:

Gene testing tells you the future, and I don't want to know.

Truth:

Nothing can predict the future. Your DNA only indicates your predispositions, and genes interact with your lifestyle and environment. Knowing your risks puts you more in control of prevention.

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Our policy regarding gene patents

We believe that individuals have a right to understand their genetic information and what it has to say about their health and that patents can serve as an important incentive for investment in scientific and medical research and development. We have developed an intellectual property policy that reflects both of these goals.

We believe that:

  • You own your genome.
  • You have the right to understand your genetic risk for diseases and other health conditions, based on the latest scientific discoveries, so that you can take action sooner.
  • No one should stand in the way of your health.

We also recognize that patents can serve as an important incentive for investment in scientific and medical research, and in the development and commercialization of new technologies that use genomic discoveries.

Therefore, we believe gene patents should be licensed for risk assessment and other non-therapeutic uses:

  • On a non-exclusive, non-discriminatory basis
  • Subject to commercially reasonable financial and other terms
  • According to a royalty model that appropriately reflects the relative contribution of the licensed SNP or other DNA variation to the overall value of the service and information provided

If you have any questions about patent licensing or this policy, contact:

General Counsel
Navigenics, Inc.
(650) 585-7700
licensing@navigenics.com

Details of our policy regarding gene patents

Our service requires a new approach to gene patent licensing

In the past, biotechnology and diagnostic companies have taken exclusive licenses from universities and other patent holders to patents (commonly referred to as "gene patents") that claim the use of a single, specific gene or DNA variation (such as a single SNP), or a limited number of specific genes or DNA variations, for commercialization as a test for a single, specific disease or other health condition, subject to a royalty (typically in the 1 percent to 5 percent range) collected by the licensor on the licensee's net sales revenue from the test. Such licenses also typically include large one-time fees, payable up-front or upon achievement of certain commercialization milestones, and may also include minimum annual royalties that are paid to the licensor whether or not the licensee successfully commercializes the test.

The Navigenics Health Compass service includes a whole-genome scan, which allows us to simultaneously estimate your genetic risk for many different diseases and conditions based on the latest scientific discoveries, using many different SNPs. This Web-based information service will provide our members with knowledge of their genetic predispositions and encourage them to act on the information to prevent the onset of disease, seek earlier diagnosis, work with their physician to appropriately manage disease, and otherwise lessen its impact. We believe that we can fundamentally improve health across the population by helping people understand their genetic predisposition for developing certain health conditions so that they can take action today. We foresee a world in which people can access their genetic information and take steps to live healthier and longer.

Because our service uses multiple SNPs to assess your genetic risk for a variety of conditions, it requires a new kind of licensing approach for gene patents. For example, if we obtain licenses from third parties to 10 patents, each covering the use of one SNP included in our service, and each subject to a royalty of between 1 percent and 5 percent of our net sales of the service, we would be required to pay between 10 percent and 50 percent of our net sales revenue — just for gene patent licenses! Now consider that the whole genome scanning platform currently utilized in the Navigenics Health Compass service analyzes approximately 900,000 SNPs, and that for certain health conditions included in our service we look at more than 10 SNPs. Also note that this example does not include any up-front or milestone fees or annual minimum royalties, which make the traditional gene patent licensing approach even more untenable for this type of service.

Additionally, as the number of whole genome association studies continues to grow, and the quantity and ethnic diversity of participants in such studies increases, the relative contribution of any single SNP or group of SNPs to the overall value of our service and the information that we provide to our members is likely to diminish. For example, we may determine as a result of the latest SNP-association findings that:

  • There are new conditions that we feel are appropriate to add to our service, at no additional charge to our members.
  • We must add new SNPs to our risk estimate calculations for a particular disease or condition.
  • The effect size (or risk contribution) of one or more SNPs associated with a particular disease or condition is significantly less than previously thought.
  • A previously identified SNP association may turn out to be incorrect.
  • Any of the foregoing may be true with regard to individuals of a particular ancestry.
  • Chromosome copy number variations, which may affect how many copies of a gene or SNP you have, may also play a role in accurately estimating your genetic risk for certain conditions.

Alternatively, there may be particular diseases or other conditions included in our service for which the SNP associations do not change over time. In such cases, a member's risk estimate for that disease or condition will not change from the initial result and, therefore, it may not be appropriate to apportion any value to such SNP or SNPs from subsequent fees paid by the member to renew his or her subscription to our service.

Our approach to gene patent licensing

We believe that, to the extent they are valid and enforceable, patents covering the use of specific, naturally occurring SNPs or other DNA variations to assess risk for particular diseases, health conditions or other traits should be licensed non-exclusively, on commercially reasonable and non-discriminatory terms and according to a royalty model that appropriately reflects the relative contribution of the licensed SNP or other DNA variation to the overall value of the service and information provided.

We have developed, with input from third parties, a universal royalty model for licensing gene patents for services such as the Navigenics Health Compass. In this model, royalties payable to a hypothetical Party X for a license to patents covering one or more SNPs used by the service to assess risk for hypothetical Condition Y would be calculated as follows:

Formula

In the above formula, "Net Sales" refers to the licensee's net sales revenue from the licensed service. Any royalties payable under this model would be subject to the following:

  • Royalties would not be paid to Party X on any portion of net sales revenue attributable to laboratory charges, products or services that are sold in combination with the licensed service, or the intellectual property of Navigenics (the licensee) or third parties.
  • Royalties payable to Party X would be reduced (known as "royalty stacking") based on amounts payable for other in-licensed patents that also cover the licensed SNP or SNPs or that cover any related genes, DNA variations or the condition (to the extent not adequately addressed by the formula above), and for in-licensed patents that cover the licensed service in general, to ensure a commercially reasonable overall royalty burden for the service.
  • Net sales revenue from members that elect not to receive their risk assessment for Condition Y would be excluded from royalty calculations relating to Condition Y.
  • The license agreement would not include up-front, milestone or minimum annual royalty payments.
  • The license agreement would include other commercially reasonable, industry-standard patent license terms and conditions, consistent with the foregoing.

Please note that this model is specifically intended for gene patents and is not meant to address the licensing of patent claims covering DNA analysis algorithms, single- or multi-SNP risk estimation algorithms (such as those we use to calculate your estimated lifetime risk) or whole genome scanning technology generally except to the extent such patent claims specifically cover the use of particular SNPs or other DNA variations to assess genetic risk for specific diseases or conditions. We intend to revisit this model periodically, and it is subject to change without notice.

We welcome your feedback on our approach toward gene patent licensing. If you wish to learn more, or if you have a licensing proposal that you would like us to consider, please contact our general counsel via email at licensing@navigenics.com.

We will apply the same approach to any gene patent rights that we obtain

We have filed patent applications covering the use of multiple SNPs (including the particular SNPs currently analyzed by our service) to calculate an individual's estimated risk for the specific diseases and conditions included in our service. From time to time, we may also acquire, or obtain sublicensable rights to, gene patents owned by third parties. To the extent we are legally able to do so, we will license or sublicense (as applicable) these patent rights with respect to the use of the particular SNPs to assess genetic risk for the specific diseases or conditions to all interested third parties on a non-exclusive, non-discriminatory basis according to the same royalty model. However, we will not be obligated to do so where the prospective licensee is engaged in litigation or other adversarial proceedings with us. As stated above, such a license would not include rights to use any DNA analysis algorithms, single- or multi-SNP risk estimation algorithms (such as those we use to calculate estimated lifetime risk) or whole genome scanning technology in general.

Please contact our general counsel via email at licensing@navigenics.com if you are interested in obtaining such a license from Navigenics.

We support the creation of patent pools for the licensing of gene patents

Numerous commentators and experts in the field, including the United States Patent and Trademark Office, the Organisation for Economic Co-operation and Development (OECD) and the Human Genome Organisation (HUGO), have suggested that the creation of one or more patent pools or patent clearinghouses to administer the licensing of gene patents may have significantly positive and pro-competitive benefits for patent licensors, biotech and diagnostic companies, other interested stakeholders and society in general.

We would be happy to participate in the creation of a patent pool regarding the use of SNPs and other DNA variations for risk assessment and other non-therapeutic purposes that is compliant with applicable law, including applicable antitrust/competition laws, that is open to all interested parties, and that is consistent with our licensing policy and approach described above.

For more information on patent pools and clearinghouses, please visit: