Patent Infringement Suits Hit EDC Industry

September 26, 2006

Two leading electronic data capture (EDC) providers have settled patent infringement lawsuits with a little-known Maryland firm, in one case for a multimillion-dollar amount. Datasci, the triumphant plaintiff, is now suing three other firms.

Datasci’s patent (U.S. Patent No.6,496,827, dated Dec. 16, 2002) covers “methods and apparatus for the centralized collection and validation of geographically distributed clinical study data” via “existing wide area networks, such as the internet.”

Leading EDC provider Phase Forward announced Feb. 16 that it agreed to pay $8.5 million to Datasci to settle a patent infringement lawsuit filed in June 2004 over three of Phase Forward’s products and related services — InForm, Clintrial and Clintrial Integration Solution. The lawsuit also named Phase Forward client Quintiles as a defendant.

Phase Forward did not admit any liability when it made the one-time payment, which gave the firm “a fully paid-up, nonexclusive license to the patent on a going-forward basis,” according to a company press release. Phase Forward spokeswoman Gretchen Dock told PIR the company is barred from commenting further as part of the settlement.

On Aug. 31, Datasci scored another victory in a lawsuit against DataLabs, which agreed to settle in exchange for “a nonexclusive licensing arrangement on a going-forward basis,” according to a DataLabs press release. Financial terms were not disclosed. “DataLabs’ primary concern was the possibility of our customers being drawn into the suit,” William Maya, CEO of DataLabs, said in a statement. “By quickly settling this pending litigation, each of our valued customers can be assured that all DataLabs products are free of any … patent issues.”

Three New Lawsuits

Datasci is now suing three other EDC providers for patent infringement in federal court in Baltimore — Datatrak, etrials and DSG — according to the plaintiff’s attorneys, Mark Wasserman and Stanley Fisher of law firm Reed Smith.

The attorneys disclosed few details about Datasci to PIR, declining to discuss whether it is actually engaged in providing EDC services. “They don’t market systems,” Fisher said.

Two people are listed on Datasci’s patent: Mark Kozam and Louis Korman. “Dr. Kozam is the co-inventor on the patent along with another doctor,” said Wasserman. Both doctors are apparently gastroenterologists; Kozam is listed as a committee member of the website editorial board of the American Society for Gastrointestinal Endoscopy. His office referred all questions to his lawyers. Korman is listed as a medical staff member at George Washington University Hospital.

“Datasci’s patent is the pioneer patent in this technology and is way ahead of any of the defendants,” said Wasserman.

The CEO of one of the new defendants begged to differ. Datatrak “has been doing electronic trials since 1993, so it has a fair amount of prior art,” Jeffrey Green told PIR, using a technical patent-law term that means his company was using the technology first. “It’s well-known that we are the longest historical company — their patent was issued in 2002,” Green added.

Etrials issued a statement Aug. 8 saying, “the company believes the complaint is without merit and intends to vigorously defend the action.”

“We believe complaints of this nature are just a cost of doing business in our industry,” etrials CEO John Cline said. “We will aggressively defend our right to deliver all elements of our eClinical suite and will work diligently to prevail successfully in this case.” A spokeswoman told PIR that the firm cannot comment further.

DSG officials could not be reached for comment by press time.

Broader Implications

It is somewhat surprising that Phase Forward and DataLabs settled with Datasci, Ed Seguine, CEO of eclinical company Fast Track Systems, told PIR. “I would have expected them to fight.”

The patent infringement lawsuits “won’t limit EDC adoption” because it is too far along, Seguine said. However, clinical trial sponsors “will require their EDC vendors to indemnify them so they’re not at risk.” This may have been a major factor driving the settlements, he said.

The fact that Datasci holds a patent for doing EDC over the internet is controversial in itself. Seguine said it was analogous to Amazon.com’s patent for its “1-click” online shopping system, which was also controversial because of what many saw as the obviousness of the technique. “There is a question about what is patentable as a business process,” he said. — Martin Gidron