A nasty court battle between rival U.S. companies over a genetic test for breast cancer has now dragged in Toronto's prestigious SickKids Hospital.

At issue is the ability of competing companies to provide cheaper access to testing for the susceptibility to breast and ovarian cancers. At stake also is a revenue stream that has generated as much as $57 million in royalties for a series of public institutions, including SickKids, according to the patent-holding company that launched the suit.

Court documents filed last week in Utah reveal that the Toronto hospital is co-owner, with Myriad Genetics, of some of the patents on BRCA2, a key tumour suppressant gene associated with breast cancer. And now SickKids has become involved in a new legal fight by Myriad to protect that patent.

A list of plaintiffs in Myriad Genetic's lawsuit includes HSC Research and Development Limited, which acts as the licensing arm for the commercialization of intellectual property at the Hospital for Sick Children. (CBC)

"I don't understand it. It seems to be counterintuitive to how I view Canada," said Charles Dunlop, the CEO of Ambry Genetics, the company seeking to offer a cheaper test for the breast cancer susceptibility genes. Dunlop was shocked to discover a Canadian children's hospital was one of the plaintiffs seeking an injunction to prevent Ambry from moving forward.

So how did a publicly funded Canadian hospital end up in the middle of a U.S. fight that some say could end up reducing access to a potentially life-saving genetic test?

Court documents filed in Utah District Court last week revealed a little-known Canadian fact: that two Canadian researchers were on the winning side in the race to discover the BRCA2 gene mutation back in 1995, and their research institutions share ownership of several U.S. patents with Myriad Genetics.

The Salt Lake City-based company has fought to protect its claim over the gene mutation all the way to the U.S. Supreme Court. But that was a fight Myriad lost last month, when the U.S. Supreme Court ruled against the patenting of human DNA.

The decision seemed to settle a long-simmering debate over the ethics of claiming ownership over human genetic material.

But when, days later, two small genetic testing companies jumped into the market, offering tests for BRCA1 and BRCA2 that were much cheaper than Myriad's, a new round of lawsuits followed.

Dunlop's company, based in Aliso Viejo, Calif., was one of the two that is offering a cheaper test and last week he was served with an injunction from Myriad's lawyers alleging that some of Myriad's patent claims over the DNA used in the genetic tests are still valid, despite the U.S. Supreme Court ruling.

Dunlop was shocked to discover that he wasn't only fighting Myriad. On the list of plaintiffs claiming "substantial damage" by the loss of a monopoly on the genetic tests, there is "HSC Research and Development Limited," a legal entity controlled by SickKids in Toronto. It acts as the hospital's licensing arm for the commercialization of intellectual property.

Also on the list of plaintiffs:

Trustees of the University of Pennsylvania.

University of Utah Research Foundation.

Endorecherche Inc., a Quebec City-based research company.

Those institutions are now part of a fight to protect their patents and prevent other companies from offering cheaper tests to women who, like actress Angelina Jolie, learned they carried a gene mutation that dramatically increases the risk of developing breast and ovarian cancer. In Jolie's case, she decided to have both breasts removed as a precaution.

Angelina Jolie raised awareness of gene patents after she revealed she has had a preventive double mastectomy after learning she carried a gene that made it extremely likely she would get breast cancer. (Evan Agostini/Associated Press)

Dunlop says he finds it odd to be fighting to give women better access to the test, and at the same time be fighting against universities and hospitals. "It's weird for me, a private company, sort of holding the water back for all humanity and for a free market, against universities trying to block that off. It seems backward to me but I guess that's the way it is," he said.

As for SickKids, it "likely had no choice but to lend their name to this," said Richard Gold, a law professor at McGill University in Montreal and an expert on the U.S. gene patent case. "But they look bad here because they look like they're just as much of a bully as is Myriad."

SickKids Hospital refused to comment on this new suit except to say in an email: "The lawsuit is being led by Myriad. SickKids is a co-owner of one of the patents and, as party to the suit, we are unable to comment."

Financial damage?

"I think it is outrageous for any publicly funded research institution to be put in this situation," said Luigi Palombi, an Australian lawyer and author of a book about the race to discover and patent the BRCA gene mutations.

"But it is inevitable once they have come to this sort of arrangement with a commercial entity, and Myriad's modus operandi from the very beginning was, 'We are going to patent these genetic mutations because we want to make money out of it.'

"Once you have publicly funded institutions getting into bed with these guys, well then that raises a whole series of other questions and issues," Palombi said."I think the Canadian public and tax payers have the right to question and find out how this happened, why and what it means for them."

What does it all mean? The Utah court documents suggest that SickKids and the other universities will lose "significant amounts of revenue" from royalties, a revenue stream that "to date amounts to approximately $57,000,000."

That money is "critical to these institutions, the majority of which are publically funded research universities and a children's hospital, the Hospital for Sick Children located in Toronto, Canada," the documents allege, adding that if SickKids and the universities lose royalties from the company's monopoly on the cancer gene tests, it will "impact their ability to fund ongoing programs and new endeavors".

How much does SickKids receive from its share of the BRCA2 patent? Without a comment from SickKids it's impossible to say.

The hospital signed an exclusive license agreement with Myriad in 1995. The document was filed with the U.S. Securities and Exchange Commission, but the amount of the royalty payments was blocked to protect confidentiality.

Myriad's 2012 Annual Report stated that, under those license agreements "we pay each of the BRCA2 Licensors royalty based on net sales of our BRCA Analysis test."

A technician loads patient samples into a machine for testing at Myriad Genetics in Salt Lake City. The company alleges two other companies are infringing on its BRCA1 and BRCA2 patents. (Douglas C. Pizac/Associated Press)

Although Myriad is emphasizing the potential damage to SickKids in the injunction, Gold says the company might be overstating the impact on the Toronto hospital.

"You can get away with a lot in your complaint, you can say whatever you want. You don't have to bring any evidence at this point," Gold said. "Myriad will have to prove that later on, but this is probably more of a PR piece. My guess is that, to the extent that that number is true, and I really don't know, most of that money would go to the University of Utah."

Some legal observers believe Myriad filed the injunction to intimidate other competing companies who might become hesitant to enter a costly legal battle over cheaper tests for BRCA1 and BRCA2.

In the U.S., Ambry charges $2,200 US for the test. Myriad's test runs about $4,000 US. Last week, Myriad offered lower prices for American women who are under-insured.

"All Myriad really needs is for people to be afraid and not provide the test," said Gold.

But Ambry's Dunlop says he intends to fight back. "I know what I'm getting into, I know it's going to cost millions of dollars, it means we're not going to be able to do some things, launch some products.

"But I've been on a collision course with this for 14 years since I started this company. And I feel like it's high noon, let's do it. We're committed, we have the resources to do it, and we will."

Myriad refused to comment, saying, "We're not going to try the case in the media."