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Bluestar Genomics Sues Former Consultant, Ludwig Institute for Cancer Research Over IP Ownership

NEW YORK – Bluestar Genomics on Friday filed a lawsuit against a former consultant and the Ludwig Institute for Cancer Research for breach of contract and other alleged misconduct.

The complaint focuses on a recently filed patent by the consultant, Chunxiao Song, and the Ludwig Institute regarding a sequencing method for modified DNA called TAPS. Bluestar alleges that the patent falls within the terms of Song's contract with the company and belongs to Bluestar.

In the filing, San Diego-based Bluestar asked the court for a trial by jury and to be declared the true owner of Song's patent application and any TAPS patents or patent applications.

Bluestar was founded in 2017 by Stephen Quake, a bioengineering professor at Stanford University and scientific adviser to the firm. Its DNA methylation-based assay tracks 5-hydroxymethylcytosine, or 5hmC, modifications linked to gene regulation in a patient's blood sample. While the firm has received US Food and Drug Administration Breakthrough Device Designation for the assay in patients with newly diagnosed diabetes, it is further improving the assay to detect methylation markers in breast, colorectal, lung, and ovarian cancer.

According to the complaint, Song initially worked with Quake as a postdoctoral researcher to develop technology central to Bluestar's platform, which led to several published studies, patent applications, and one issued patent. However, as a consultant to Bluestar, Song separately developed technology based on his work with Quake and "filed patents that closely tracked the work" that he had performed at Stanford.

Bluestar said that the patent filing, published on July 16, 2020, as US Patent Publication 2020/0224190, includes the "same chemistry based on the use of beta-glucosyltransferase to covalently label hydroxymethylated DNA with a chemoselective moiety, to which a biotin moiety can then be affixed," as the original Stanford patent. "This process enables the capture of hydroxymethylated DNA, which can then be identified via DNA sequencing," the complaint reads.

According to the document, Song also filed for patent protection for the TAPS technology in January 2018, which Bluestar claims falls under the terms of his contract with the firm because "TAPS pertains to a modification and enhancement of the Stanford sequencing technology." In addition, the complaint said that Song assigned the rights to TAPS and his patent filings to the Ludwig Institute, thus breaching a contract with Bluestar from October 2016.

Bluestar also noted that Song only listed himself and Ludwig postdoctoral research scientist Paulina Siejka, who the firm said has no connection to Stanford University or Bluestar, as the technology's co-inventors.

"The patent in question does not represent our core technology or impact our current priority development efforts and pre-commercialization strategy," a Bluestar spokesperson said in a statement. "We can confirm that ... Song was involved in early research of one of the steps in the methylation pull-down process and identification of modified DNA bases, and he should have assigned any work product, including IP, to Bluestar."

Bluestar pointed out that the Ludwig Institute, as Song's current employer, had knowledge of the Bluestar contract and employed him in a "subject matter inconsistent and incompatible" with the contract.

The company asked the court to declare it the lawful owner of the Ludwig patent application, as well as any TAPS patents and patent applications. In addition, it asked to be assigned all rights and interest in the Ludwig patent application and all other intellectual property related to the TAPS technology.

As part of the complaint, Bluestar argued that Song should be enjoined from breaches of the firm's contract, in addition to enjoining the Ludwig Institute from further intentional interference with the contract. The firm believes that both parties should also be ordered to pay damages to Bluestar.

A spokesperson for the Ludwig Institute declined to comment.