Roche hit with new breed of patent suit

Roche Diagnostics Corp. has been hit with a new kind of patent lawsuit that attorneys are calling “the latest menace to business.”

Roche Diagnostics, a Swiss company that keeps its U.S. headquarters in Indianapolis, has been sued for marking its Accu-Chek blood glucose monitors and accessories with patents that are expired. Illinois resident David O’Neill has sued on behalf of the U.S. government to recover damages of $500 per infraction.

Since Roche sells millions of monitors and test strips—a kit of both ranges from about $15 to $30 a pop—a penalty of $500 each could be huge. If O'Neill recovers any damages from Roche, he would split them with the federal government.

Roche’s total U.S. revenue from diabetes monitors was about $670 million last year, according to San Francisco-based Close Concerns, a diabetes market research firm based in San Francisco.

“Roche is a sophisticated company and has many decades of experience applying for, obtaining and litigating patents," O’Neill’s attorneys allege in the lawsuit, adding, "Roche knows, or reasonably should know, of the requirements of [the law.]”

O’Neill’s lawsuit against Roche is one of several “qui tam” lawsuits he has filed this year against companies for marking their products with expired patents. In fact, 50 similar lawsuits were filed against companies during the first three months of the year, according to a National Law Review article written by attorneys at Chicago-based law firm Vedder Price P.C.

These suits began after a federal circuit court decision on Dec. 29, which said improper patent marking on products could be punished not as one continuous act, for a maximum penalty of $500, but for each instance, with every instance carrying a maximum fine of $500.

“This is the perfect storm for the marking trolls [such as David O’Neill],” wrote the Vedder Price attorneys, “since their end game is a quick, large settlement, not protracted litigation. Either way, the patent owner could be on the hook for a considerable sum.”

O’Neill’s case against Roche Diagnostics was filed in Feburary in federal court in Illinois, but in late July was moved, at Roche’s request, to federal court in Indianapolis.

Calls to O’Neill’s attorneys, who are based in Chicago, were not returned.

Roche Diagnostics spokesman Mike Weist said the company regards the lawsuit as “without merit.”