After 18 months of jostling and three victories, Datasci lost a patent lawsuit against DataTrak, a Cleveland, Ohio electronic data capture (EDC) company.

“Under the terms of the settlement agreement, no payment is required and Datasci has agreed to dismiss its claims with prejudice. Datasci has further agreed that DataTrak may continue to market and sell its DataTrak EDC and eClinical products without incurring any royalty obligations,” a DataTrak press release stated. “With prejudice” means Datasci can’t file another case against DataTrak.

DataTrak CEO Jeffrey Green is relieved. “We prevailed,” he told ClinPage. “This suit had no merit. The claims were dismissed. DataTrak EDC and DataTrak eClinical did not infringe their patent. We did not pay any money. We did agree to accept a license from them on technology we may develop in the future that would violate their patent. It is not our intention to do that.”

Brewing Storm

The litigation by Datasci alarmed the world of technology suppliers to clinical trials. For some, it is an ordinary example of capriciously granted patents and, more broadly, unsavory aspects of the U.S. judicial system. For others, it threatened to cripple five clinical trial technology firms and, under a worst-case scenario, halt important scientific research.

The Datasci patent was filed in 1998 by two gastroenterologists, Marc L. Kozam and Louis Y. Korman.

Our Legal Process

The U.S. Patent and Trademark office allowed Datasci to claim that it invented using the internet in clinical trials. In fact, several firms had already been doing just that. But the patent, awarded in 2002, permitted Datasci to pursue technology companies that had been serving the industry for years, but without patents.

Green said DataTrak is now considering its own patents. The goal is to protect the company from those who may stumble upon a special type of lottery ticket called a U.S. patent.

The most notorious patent-lottery jackpot was the well-publicized case against the Blackberry’s manufacturer, RIM. The award: $613 million, paid to a so-called “patent troll” that never competed in the industries of handheld computers, cellular phones or wireless email. The U.S. Patent Office eventually ruled that two of the troll’s patents were worthless. But its decision arrived too late to help RIM. RIM was obliged to pay the troll half a billion dollars to keep a federal judge from shutting it down. Palm now faces a similar threat.

$10.5 Million War Chest

In the clinical trial landscape, Datasci scored two impressive wins. In February of 2006, industry leader Phase Forward paid $8.5 million to settle with Datasci. (To ratchet up the pressure on Phase Forward, Datasci had sued one of its marquis customers, Quintiles, the world’s largest contract research organization.)

Two other EDC firms, DataLabs and DSG, were sued by Datasci. The size of DSG’s settlement, if any, is unknown. The $2 million DataLabs settlement was disclosed in securities filings in the United Kingdom, the headquarters of ClinPhone, which acquired DataLabs late last year.

The biggest remaining question relates to another EDC concern, etrials, which said it would contest Datasci’s lawsuit when it was first filed. It is unknown whether other EDC firms will also face Datasci in court.

Who’s Next?

Green declined to speculate on whether other competitors would be dragged into the party. Theoretically, the financial war chest and knowledge from the four settled cases could put Datasci in a strong position.

But Green noted that the technology patented by Datasci is now outdated. The internet has progressed since 1998, Green said, and so has clinical trial software: “The platform that the Datasci patent was awarded on and architected on never became a standard approach.”

It’s not clear why the case was settled. We can only guess. Datasci patented clinical data capture based on a web browser and Java.RTM. Datatrak does its work on the server side of the IT equation.

Patent Absurdities

Datasci did not exist until 2004 or 2005, when the legal machinations were well under way. It is not clear whether the company has ever supported any clinical trials. It does have a fine lawyer, however.

Datasci is represented by Reed Smith, a large, international firm that counts 10 of the top 12 pharmaceutical companies as clients. Ironically, Reed Smith often helps defend the intellectual property of drug companies. For Datasci, in our opinion, Reed Smith has been stooping to exploit defects in the patent system—and attack the real-world franchises of entrepreneurs who are creating a newly electronic clinical trial landscape. In the long term, making a joke of the American patent system will benefit neither the life sciences nor the software industry.

Editor’s note: Reed Smith and Dr. Kozam declined our requests for comment.