INSTITUTIONAL RESPONSE TO THE HIV BLOOD TEST PATENT DISPUTE AND RELATED MATTERS

IX. THE FRENCH/AMERICAN DISPUTE: LITIGATION

A. Overview of the Proceedings

By mid-December, the IP attorneys apparently had decided they had no choice but to proceed with formal litigation to obtain redress for the wrongs they believed had been done. Eventually, the IP would initiate four separate legal actions: a lawsuit in the United States Court of Claims alleging breach of contract; a patent interference proceeding at the USPTO; a tort claim alleging damages in the amount of $200 million; and a lawsuit under the Freedom of Information Act (FOIA). All four proceedings were ended pursuant to the terms of the March 1987 settlement agreement, but while they were still active, the proceedings involved three law firms for the IP, with the United States represented by the Department of Justice, HHS' top attorneys, and two outside law firms hired by HHS to augment its expertise.

The first legal action, the breach of contract suit filed in the U.S. Claims Court on December 12, 1985, attracted considerable media attention. Lowell Harmison professed surprise that the IP had gone to court; Harmison was quoted as saying he was "a bit amazed" to learn of the lawsuit (12/14/85 AP story, "French Sue Over AIDS Research." In a masterpiece of irony/sarcasm, Harmison also said this:

"I think there has been a very sound and constructive dialogue between the parties over time, and everyone involved has been extremely concerned about the sensitive matters being raised" (op cit.).

"'... the French exaggerated their contributions ... We helped them a lot more than they helped us.' In an interview with The New York Times, Dr. Robert Gallo of the National Cancer Institute said the French didn't receive a patent for their work 'because they didn't have a working blood test.'"

"... called their bid for royalties and damages [the IP scientists'] 'irrational' and 'obscene.'"

"... Dr. Gallo misappropriated the French virus and presented it in his work, which later was patented."

"Dr. Gallo refutes this, saying that the LAV and HTLV-III strains, although related, aren't identical, differing by 2% of their genetic building blocks. Besides the single LAV sample was too small to be of practical use, he argues; moreover, he had isolated 48 virus samples of his own on which to base his publications and patent."

Concerning the process of the legal actions, following is an overview of each:

1. Lawsuit in the Court of Claims: The complaint filed by the IP in the U.S. Claims Court was centered on the charge that Gallo et al. used the IP virus to make the LTCB HIV blood test, and thereby contravened the terms of the noncommercialization transfer agreement (the "contract") signed by Mikulas Popovic on September 23, 1983. HHS officials, to this day, argue that the actual identity of the virus Gallo et al. used to make their blood test is inconsequential. But the reality is that the identity of the virus was at the very center of the Claims Court suit. This is the reason U.S. Government attorneys argued so strenuously in the court that the viruses were indisputably distinct. But HHS officials knew there was good reason to believe the LTCB's putative prototype virus was the IP virus; these officials must have understood that their defense of the Claims Court suit was a very precarious one indeed.

According to the IP complaint, the LTCB scientists' use of LAV to make their HIV blood test and the subsequent patenting, manufacture, and sale of that test:

"... constitute breach of the express contract wherein defendant agreed to use the LAV strain received exclusively for biological, immunological and nucleic acid study research purposes, and agreed not to use said specimen for any industrial purpose and not to disseminate the virus without the prior written consent of Pasteur" (Institut Pasteur v. United States of America, Case No. 730-85; p. 9).

• "... the Court should order, adjudge and decree that plaintiff was the first to isolate the viral agent of AIDS named and known as LAV or HTLV-III ... and to recognize the significance thereof in the development of methods of detection of AIDS and pre-AIDS conditions, and accordingly that plaintiff is entitled to all rights and benefits which legitimately flow therefrom";

• "... that defendant be directed and ordered to pay all future royalties pursuant to any said license agreements over to plaintiff";

• "That plaintiff be awarded its damages, an amount which plaintiff cannot presently ascertain but which exceeds one million dollars ...";

• "That this court order, adjudge and decree that defendant correct all applicable records concerning the discovery, research and development relating to the viral agent of AIDS named and known as LAV or HTLV-III ... and regarding the recognition of the significance of said viral agent in the development of methods of detection of AIDS and pre-AIDS conditions" (op cit., pp. 11-12).

"Neither of these inventions [the Gallo et al. blood test and cell lines] depended on or is derived from LAV" (6/11/86 Defendant's Motion for Summary Judgment; p. 8).

"The full story of defendant's scientific accomplishments has been told in the scientific literature ..." (op cit., p. 10).

"... an outrageous attempt to impugn the reputations of one of the world's foremost virologists and his coworkers" (11/13/86 Brief for Appellee; p. 5).

In May 1986, the Judge in the Claims Court case raised the question of the Court's jurisdiction, i.e., whether a valid IP/LTCB contract actually existed and, if so, if it fell within the scope of the Contract Disputes Act (CDA). The CDA stipulates that a prerequisite for Claims Court jurisdiction is the presentation of a certified claim to the relevant U.S. Government agency and a decision (or failure to decide) by that agency.

In July 1986, the judge ruled that the LAV contract did fall under the CDA. Because the IP had not previously submitted a claim to HHS, the judge declared the Claims Court did not have jurisdiction over the matter, and he dismissed the IP complaint. But the IP appealed, and in March 1987, just days before the signing of the settlement agreement, the Court of Appeals ruled in IP's favor. The Appeals Court ruled that on multiple grounds, the Claims Court erred in its finding that the CDA was applicable to the IP/LTCB LAV transfer agreement. Accordingly, the Appeals Court reinstated the lawsuit and remanded it to the Claims Court for consideration of whether a breach of contract actually did occur. The signing of the settlement agreement, however, ended the Claims Court suit.

(2) Interference Before the USPTO: The first discussions between the IP attorneys and PTO concerning the Gallo et al. patent recorded to have taken place occurred in August 1985. The first formal request that PTO declare an interference between the IP application and the Gallo et al. patent was made in early October 1985. Yet it was not until April 29, 1986, that PTO finally granted the IP request (see Appendix A for details about the delay).

When the interference finally was declared, it embodied several elements that augured well for the IP case. First, Montagnier et al. were named "Senior Party," while Gallo et al. were named "Junior Party;" this was a formal recognition of the IP's priority in filing its patent application.

Second, and more significant, were (1) the contents of the interference count (PTO's definition of the invention) and (2) PTO's determination that all pending claims of Montagnier et al. and importantly, all pending claims of Gallo et al. save one corresponded to the invention that was the subject of the interference. The definition of the invention, as formulated in the interference count, was as follows:

"A method for the detection of antibodies in samples of the body fluids of patients with Acquired Immune Deficiency syndrome or pre-AIDS which comprises contacting antigenic material selected from the group consisting of HTLV-III, LAV, IDAV1, IDAV2 and antigenic fractions thereof with said samples and measuring the formation of antigen-antibody complexes by an immunoassay selected from the group consisting of strip radioimmunassay based on Western Blot technique, enzyme-linked immmunosorbent assay, indirect immunofluorescence assay and radioimmune precipitation assay."

PTO's determinations concerning the interference were widely seen as favorable to the position of IP. In London, the Times said the PTO determinations,

"... appeared to give the Pasteur a prior right, and an out-of-court settlement looked likely."

"would also seem to favor the French application by narrowing the case to a determination of which group has precedence in patenting the detection technology alone."

The first such request sought to delay the initial deadline from July 29 to September 29, 1986. The IP opposed this request for extension, which PTO nonetheless granted. The contents of the June 30, 1986 HHS motion for extension of time are very revealing. They show the heavy reliance the U.S. Government placed on Dr. Gallo in preparing its motions. Thus, in its June 30, 1986 motion, the U.S. Government argued at some length that the extension was necessary to ensure Dr. Gallo's personal involvement in preparing the Government's case.

The June 30 motion stated that:

"Dr. Gallo has been out of the country on official travel from May 21, 1986, until at least June 27, 1986 ... Moreover, Dr. Gallo's current schedule for the months of July, August, and September includes substantial time away from his laboratory." (pp. 3-4).

"The complex nature of the subject matter of this interference and the voluminous experimental work which led to the development of the patented invention also require the personal participation of Dr. Robert C. Gallo ... Only Dr. Gallo is thoroughly familiar with the records relating to these developments and with the details of any communications with Institut Pasteur" (Emphasis added; op cit., p. 3).

"Recently, a preliminary investigation has revealed new information which may have an important bearing on the contents of the preliminary statement to be filed by Gallo et al. and which may necessitate the filing of one or more preliminary motions ... Further and more extensive investigations are needed to assess fully the significance of this information. Again, the personal assistance of Dr. Gallo is of the utmost importance in pursuing these investigations" (emphasis added; op cit., pp. 4-5).

To comprehend the significance of these documents, and the statements they embodied, as well as the strength of the IP case, it is necessary to comprehend why the opposition and declaration were written, i.e., to what they were responding, namely, the principal arguments in the Motion for Judgment of Montagnier et al. The IP arguments were straightforward, i.e., that the claims of Gallo et al. were "unpatentable to Gallo et al. on the following grounds:

• "... anticipation by or obviousness from prior public knowledge of the LAV virus and its use in the detection of antibodies to that virus in blood samples"
  
• "...obviousness from the above-described prior public knowledge relating to LAV in view of the LAV virus itself which was prior art to Gallo et al...."
  
• "...a culpable breach of the duty of disclosure defined by 37 C.F.R. section 1.56 in failing to disclose adequately to the U.S. Patent and Trademark Office (PTO) the above-described prior art" (Motion of Montagnier et al. for Judgment; p. 1).

"... the prosecution history of the Gallo patent is devoid of any substantive consideration of the effect of the well publicized French work on LAV on the patentability of Dr. Gallo's claims" (op cit., p. 6).

"It appears from the records of the involved applications that the PTO's lack of awareness of the substantial identity of the LAV and HTLV-III viruses and of the significance of earlier public disclosures relative to LAV resulted in the improvident issuance of the Gallo patent in the first place. That lack of awareness appears to have been the direct result of a failure on behalf of representatives of DHHS to apprise the PTO during pendency of the Gallo application of the existence and significance of prior art describing the LAV virus and its use to detect antibodies to the virus in blood" (op cit., p. 6).

• Montagnier's presentation at the July 1983 NCI Task Force meeting;

• Montagnier's presentation at the September 1983 CSH meeting;

• the July and September 1983 LAV shipments from the IP to the LTCB.

For their part, Gallo et al. attempted to argue in their Motions for Judgment that the LTCB and IP blood tests were different inventions because Montagnier et al. did not specify the requirement that the blood test antigen be obtained from virus grown in a permanent cell line and because the Montagnier et al. blood test focused on the p24 (core) protein rather than GP41 (the envelope protein).

Gallo et al. went further, charging that the IP blood test was "fatally defective" and "not useful." Gallo et al. even alleged, contrary to the LTCB's own data from the Spring of 1984 (see above), that,

"... Montagnier's p25 protein might not even be a viral protein" (Motion by Gallo et al. for Judgment ...; p. 2).

The arguments that Gallo et al. proffered to support these tenets were as follows:

• The "disclosures" of Montagnier et al., including the transmittal of LAV virus to the LTCB,

  "... are not prior art against Gallo. Priority evidence which Gallo will submit in these proceedings will antedate the Montagnier disclosures ... Gallo can and will show dates of invention at least as far back as December, 1982" (emphasis added; Opposition by Gallo et al. to "Motion for Judgment of Montagnier et al. p. 2; Appendix; p. 1).

• "... Gallo correctly felt that nothing in Montagnier's publications in 1983 or the LAV samples was prior art to Gallo who clearly was in possession of more information regarding his invention than Montagnier disclosed. The LAV samples added nothing to what Gallo had already learned from his own isolates containing novel retroviruses, which subsequently were named HTLV-III. Likewise the publication by Montagnier in May, 1983 and his presentation at Cold Spring Harbor in September, 1983, did not in any sense teach Gallo anything more than he already knew. Clearly, in the circumstances, there was no need for Gallo to disclose the Montagnier 'disclosure' to the Examiner" (emphasis added; op cit., Appendix; p. 20).

• "At no time prior to the filing of the Gallo application, was it appreciated by anyone that LAV and HTLV-III were the same or even similar viruses" (emphasis added; op cit., Appendix; pp. 21-22).

• Prior to the filing of the Gallo blood test patent application, neither Gallo nor any of his colleagues believed LAV and "HTLV-III" were even substantially the same virus (see above);

• Prior to the issuance of the Gallo et al. patent, Dr. Gallo saw no evidence that the IP virus was the cause of AIDS (see above);

• July LAV contained no useful virus (see above);

• September LAV grew only "transiently" in T-cell lines (see above);

• Dr. Popovic "discovered" H9 in November 1983 (see above);

• The LTCB scientists possessed EMs of HIV as early as February 1983 (see below).

"I should point out that, of course, this is a statement like any affidavit, but I am sure was prepared largely by lawyers, not by Bob ..." (8/3/90 OSI interview; transcript p. 153).

The PTO interference proceeded through motions, oppositions to motions, and replies to oppositions before it -- like the other legal proceedings -- was terminated by the 1987 settlement.

(3) Tort Claim: The tort claim by the IP against the U.S. Government is the least-known of the IP actions during the French/American dispute. Submitted on April 24, 1986 by the law firm of Townley & Updike, the claim was based on allegations of:

"... tortious and malicious conversion of Pasteur's property, i.e. samples of the virus LAV and other scientific and biological materials, as well as willful misappropriation of Pasteur's valuable trade secret information" (Swire-to-Bowen; 4/24/86).

"... various agents of the Department converted and misappropriated same [LAV, etc.] in order to gain for the United States and/or themselves scientific recognition, valuable patent rights and other pecuniary rewards rightfully belonging to Pasteur" (op cit.).

"The claim of Institut Pasteur is denied. The evidence of record does not substantiate that the alleged injury was due to the negligence, wrongful act or omission of a federal employee. Moreover, the claim is excluded from coverage under the Federal Tort Claims Act, see, e.g., 28 U.S.C. section 2680(h)."

(4) Lawsuit Under the Freedom of Information Act (FOIA): Frustration of the IP's efforts to obtain documentary evidence relating to the LTCB scientists' work was a constant theme of much of DOJ/HHS' efforts throughout 1986. The IP sought to obtain documents both under FOIA and under "Rule 34" discovery in its suit for breach of contract in the Claims Court. No documents were ever provided to the IP under discovery. A substantial quantity of documents was provided to the IP under FOIA, but many documents were withheld. The documents that were released under FOIA -- very belatedly -- were produced in a haphazard, piecemeal fashion, were frequently photocopied in such a manner that they were illegible, and in the case of certain critical documents, were obscured and surreptitiously redacted to remove references to the IP virus. The resulting information deficit significantly disadvantaged the IP, because it never knew the strength of its case, nor conversely, how vulnerable were the claims of Gallo et al.

Only recently has the full extent of the damage become known. IP attorneys and officials have told Subcommittee staff that their inability to obtain documentary proof for what they believed happened at the LTCB was a key factor in their agreeing to the French/American settlement. These same individuals told Subcommittee staff that had they possessed certain key documents -- documents only recently revealed -- during the French/American dispute -- they would not have agreed to the negotiated settlement.

Because of the significance of the document production issues to the entire dispute, the issues are dealt with in some detail here. On December 12, 1985, the same day as the filing of the Claims Court suit, IP attorney James Swire resubmitted to HHS the massive FOIA requests he earlier submitted and then (pursuant to the informal negotiations then underway) withdrew. A companion request to the Department of Commerce was filed on December 23.

The FOIA request to HHS was a broad one, encompassing the following:

"... all records relating to the work of the Department and/or the Institut Pasteur in recognizing, conducting research on, detecting, isolating, discovering, identifying, growing, cloning, developing, commercializing, or otherwise working with: the HTLV-III and/or LAV virus; antibodies to the HTLV-III and/or LAV virus; kits, medical devices, or other means of detecting, recognizing, diagnosing, or identifying the HTLV-III and/or LAV virus and/or the antibodies thereto in laboratory animals and humans, as well as the patent and/or patent applications thereon" (12/12/85 Swire-to-HHS FOIA Officer letter; p. 1).

From the outset, HHS attempted to commingle its responses to Swire's FOIA request and his "Request for Production of Documents and Things," filed on December 30, 1985, as part of the Claims Court litigation. By April 7, 1986, Swire had received no documents in response to his Claims Court request; on this date, he filed a Motion to Compel Document Production. The U.S. Government, on April 24, filed an opposition to the IP Motion to Compel Production. The U.S. opposition, filed by DOJ, argued that the IP motion was "totally unjustified" and it asserted Pasteur had "... already received the vast majority of the documents requested..." DOJ also said the IP discovery and FOIA requests were duplicative and amount to "over-discovery."

DOJ further argued that "A large number of the files requested are active files..." and it argued that by deferring the discovery request,

"... confusion and disruption of ongoing work, including the highly important scientific research and experimentation done at HHS, could be greatly lessened ... At the price of a minor compromise regarding timing..."

"As long as the Motion to Dismiss is pending, discovery ... should be stayed."

"The scientific claims that plaintiff has advanced to support this discovery, I think, are flawed."

"... there are significant differences between the structure of HTLV-III and LAV and you just can't say that HTLV-III is LAV by another name."

"... the production of documents pursuant to FOIA has been so inadequate and so incomplete, and is so much narrower than what we are entitled to and they are obligated to give us ... that it makes no sense at all to defer this discovery."

"... the standards of discovery, the rights of the parties and obligations of the parties are quite different under FOIA and under Rule 34."

Meanwhile, document production under FOIA proceeded, but the quality and quantity of the documents that were produced continued to be significantly deficient. Finally, on August 28, 1986, attorney James Swire filed a suit in the U.S. District Court of the District of Columbia. The Subcommittee staff's detailed examination of legal papers filed in the District Court, plus examination of the actual documents provided to the IP under FOIA shows the following:

• HHS produced fewer than half the documents it originally estimated were responsive to the IP FOIA request; in numerous instances, clearly responsive documents bearing on issues central to the Claims Court suit and PTO interference were withheld from the IP;

• Dr. Gallo was personally involved in screening documents before they were provided to HHS FOIA officials; on several occasions, Dr. Gallo reportedly transported original laboratory notes with him on his overseas travels. HHS attorneys, behind the scenes, sought repeatedly to persuade Gallo et al. to cooperate and provide the requested documents. The HHS attorneys ultimately were forced to raise the issue with NIH Director Dr. James Wyngaarden.

• The documents that were produced to the IP were produced in a scattered, haphazard fashion, with documents from several different scientists co-mingled, in no particular order, and without regard to dates (many of the laboratory notebook pages were undated; few if any were numbered);

• Many documents were reproduced in such a manner that they were entirely illegible; at the same time, HHS adamantly refused to permit the IP attorneys access to document originals, asserting such access would disrupt ongoing work, particularly at the LTCB, even though the documents in question related to experiments performed up to 3 1/2 years earlier;

• Key entries in laboratory notes and related documents were obliterated, with the result that highly significant data showing the success of the LTCB in growing LAV in permanent cell lines were eliminated.

B. The U.S. Government Strategy

1. Major Players: With the onset of formal litigation, the cast of characters acting on behalf of the U.S. Government changed in several key respects. DOJ's Thomas Byrnes remained actively involved; however, HHS' Lowell Harmison's role was greatly diminished, at least with respect to the litigation, although Harmison continued to be actively involved with patent-related matters. Darrel Grinstead remained with the HHS team throughout the litigation period, but his role was diminished as his superior, Deputy General Counsel Robert Charrow, began to take a very active role in early-1986 . The HHS General Counsel, Ronald Robertson, also became more actively involved, although to a lesser extent than Charrow with respect to the hands-on management of the HHS defense.

Also at HHS, Secretary Margaret Heckler was replaced by Dr. Otis Bowen. After a brief transition period to assist the new Secretary, Mac Haddow departed HHS. At the PHS level, Dr. James Mason returned to the CDC, to be replaced by another Acting ASH, Dr. Donald Ian (Mac) MacDonald. In mid-1986, MacDonald in turn was succeeded by a new Assistant Secretary, Dr. Robert Windom.

2. Litigation Strategy: Numerous sets of notes exist from meetings of the attorneys acting for the United States, particularly notes of attorneys Darrel Grinstead and Robert Charrow (Charrow's notes were identified by HHS to the Subcommittee; Mr. Grinstead identified his own notes, which are in a distinctive hand; many of them bear distinctive drawings. No attorneys' notes were provided by DOJ to the Subcommittee.)

The attorneys' notes, plus a number of internal HHS memoranda and other HHS/DOJ documents, as well as interviews with the relevant parties, permit insights into the overall strategy the U.S. Government attorneys pursued during the French/American litigation. The framework for the U. S. strategy was crafted at a crucial meeting on April 8, 1986, during which the attorneys discussed the arguments HHS would make, both in the Claims Court and in the anticipated PTO interference. The April 8 meeting notes reflect vividly the dilemmas the attorneys recognized they faced.

Two sets of notes from the April 8 meeting were provided to the Subcommittee, one set recorded by Darrel Grinstead and one by Robert Charrow. The notes indicate that, at least, Charrow, Grinstead, Robertson and a DOJ attorney were present. Darrel Grinstead's meeting notes show both the significance of "early isolates" to the Gallo case and the pitfalls of arguing that LAV and "HTLV-III" are different viruses. The notes also show the attorneys' awareness of the relevance of the Gallo et al. "follow-on" (CIP) patent applications to the fate of the Gallo et al. blood test patent.

A Grinstead document headed "Agenda for 4/8/86 Lawyer's Meeting" indicates the lawyers planned to discuss both the pending case in the Claims Court, as well as the anticipated interference. The notes then say:

"What do we need.

1. Further evidence of early EMs

2. Other documentation of early identification.

Can we establish these are different viruses. Can we say there is no enabling discovery under section 112. What are implications of follow-on patents. What strategy should we follow in the infringement matter."

"Suppose an interference is declared - If we can show that there are two viruses we are in good shape - But if the viruses are separate species of the same then our position is less clear... Pasteur data are frightening if the two viruses are in fact one virus...

If interference to succeed must show reduced count (claim) to practice first...We can attack basis of interference. Strongest defense - French application is deficient because it doesn't teach you how grow virus...

Saying the viruses are different is a two-edged sword - i.e., you have narrowed scope of claim to apply only to HTLV-III. Thus, must say the viruses are similar but sufficiently different to preclude derivation ...

Issue of priority: September '83 is French date. Need data re: Gallo's isolation of HTLV-III. If we assume given benefit of 9/83 filing date because can't use anything happened outside U.S. Gallo doesn't keep lab notebooks that are witnessed and dated. Gallo says kept their findings to themselves."

"If we can show that there are two viruses, we are in good shape...by saying there are two viruses, is a two-edged sword. Would substantially narrow the scope of the patent to make it almost useless. Narrowing claims may make the patent unenforceable..."

Even more notable is the attorneys' evident awareness of the inherent dangers on either side of the argument concerning the identity of the IP and LTCB viruses. Charrow's notation,

"... must say the viruses are similar but sufficiently different to preclude derivation ..."

During the first half of 1986, besides planning the themes and tactics of the U.S. Government response to the IP's legal challenges, the U.S. Government attorneys also contemplated a number of offensive actions against the IP. Among the tactics given active consideration by the U.S. Government attorneys were the following:

1. Disadvantaging Genetic Systems (GS), the U.S. manufacturer of the IP blood test, by stringent enforcement of import restrictions on the IP virus;

2. Suing GS for infringement of the Gallo et al. blood test patent. Several of the HHS licensees pressed HHS to initiate an infringement suit, even to the point that they threatened to stop paying blood test royalties to HHS unless an infringement suit was filed. But HHS' attorneys recognized the "two-edged sword" inherent in suing for infringement, i.e., such a suit could be seen as an admission that LAV and "HTLV-III" were the same virus. No infringement suit was ever filed.

3. Adding Dr. Gallo as an inventor of a patent application on a generic ELISA. This application was submitted to PTO by Dr. Gallo's close colleague, Dr. Robert Ting, in August of 1983, and thus would predate the September 1983 Great Britain filing of the IP blood test patent application. However, Dr. Ting's attorney wrote to Lowell Harmison that the addition of Gallo to the Ting application would make,

   "... Gallo and Ting ... the true inventors of the interference subject matter as pertains to the ELISA methodology" (emphasis added; 6/3/86 Harvey Jacobson-to-Harmison letter).

   Dr. Ting's attorney further said that:

   "... consideration obviously must be given to the effect these proposed papers [on the "correction of inventorship" of the Ting ELISA] have on the inventorship of Gallo U.S. Patent No. 4,520,113 [the Gallo et al. HIV blood test patent] and perhaps the corresponding foreign patents and patent applications" (op cit.).

   The possible addition of Dr. Ting as an inventor of the Gallo et al. blood test, and its many spin-offs, obviously would not have been a desirable development for the U.S. Government. In addition, according to notes of a June 27 telephone conversation between Robert Charrow and Harvey Jacobson, the attorneys recognized the existence of a "... serious credibility problem because waited so long" [to consider adding Dr. Gallo as an inventor of the Ting blood test]. So far as is known, HHS did not pursue this strategy.

4. Consideration of possibly illegal acts (i.e., covertly intercepting and recording employees' conversations) to stop or circumvent suspected contacts of Pasteur attorneys with HHS employees . It is not known if surveillance was actually implemented. Evidence that the tactic was actively contemplated by HHS attorneys was found in Robert Charrow's files, which included, in a file labelled "Criminal Investigation," copies of Federal statutes and regulations governing wiretaps and other covert surveillance strategies. Notes in Charrow's hand show that DOJ told HHS the matter was a,

   "Hot potato. High visibility case - have to be extremely careful with such."

5. In addition to considering a frontal assault via an infringement suit on the GS blood test, U.S. Government officials also lobbied against the test behind the scenes at FDA. Yet at the same time, according to attorneys' notes, HHS was considering if it would be possible for HHS' licensees to adopt the technology of the GS test, which was demonstrably superior to that of the Gallo et al. test.

As for Harmison's contribution, the notes indicate he stated he,

"... fears that GS test may have more false negatives that aren't being detected ... Inherently, if the test is more specific it is less sensitive."

"FDA says GS tests were more complete than any of the other licensees."

Other notes, also in Grinstead's hand, apparently written about the same time, said the following about the Genetic Systems test:

"Widely regarded as superior because it is more specific. Approaches the bench mark criteria - Western Blot. Because it uses the CEM cell line, which lacks DR-4 (sic.) antigens which cause some false positives [see above for more information concerning this matter] ...

"Regulated community likes the test because it causes less waste in blood - i.e., destroying false positive bloods. Can Abbott or other licensees adopt the GS test kit?"

Following are salient items from the attorney's notes and related documents, with limited commentary on their contents. The documents themselves vividly tell the story of the U.S. defense of Gallo et al.:

December 1985 (approximate): Handwritten notes by Darrel Grinstead are headed "AIDS Patent Briefing." Salient points from these notes include the following:

"(Claims Court suit is the first reasonably well articulated statement of their claim.)

Essentially claim is

1. We used the French virus to produce our test kit, or

2. Their (sic.) was an implied agreement for mutual cooperation and sharing of all the proceeds thereof.

We have not found nor have French indicated any evidence that we misused the samples...

A significant part of this dispute is whether LAV and HTLV-III are the same virus. NCI is very firm in its view that HTLV-III is different. However, they are very similar viruses and this is a weak thread to rely on ..." (Emphasis supplied).

1/6/[86]: Handwritten notes written by Grinstead seem to reflect consideration of a possible settlement of the dispute. The notes are transcribed below in their entirety:

"1/6 approach

(1) From some past date

(2) From current date

(3) From date of license

G/S Royalties only.

Sliding scale up or down to a certain amount--

2nd Generation Patent

Will they need license

How long until marketed

How much have French been hurt by our patent and early marketing

--Where would they be if we weren't in the picture

*Vice Versa

How about waiting until interference issues and then negotiating

-- That would give them more leverage

-- We might better settle now

Some intergovernmental cooperation - grant/cooperative agreement with $" (Emphasis added).

1/24/86: HHS/OGC draft document is titled "Possible Points of Agreement to Settle the Pasteur Institute Lawsuit." The draft proposes discussions during which "each party will hold in abeyance any further court proceedings including the lawsuit filed in the United States Claims Court or under the FOIA request..."

Several of the "possible points of agreement" in the January 24 document are similar to points in the document drafted in November 1985 (see above). Among the new items are an offer of a cash settlement from the United States to the IP, requiring certain commitments from the IP in return. The elements embodying these conditions in a January 24 typed draft are as follows:

"As full settlement of any and all claims the Pasteur Institute may have now or in the future regarding this patent ... and in recognition of the contributions which the Pasteur Institute made toward the isolation of the AIDS virus, the U.S. Government agrees to pay to the Pasteur Institute the sum of $______________" (Note: a handwritten note at this point reads "1^5 10^6." In the margin of the page is written by hand, "do we want to pay?")

"In return for the foregoing monetary settlement, the Pasteur Institute agrees to recognize the validity of the patent issued to the United State Government in the name of Gallo et al. ... and to withdraw any interference proceedings or any other proceedings challenging the right of the U.S. Government to the patent;

IP to issue a statement retracting any and all public statements made by officials or representatives of the IP stating or alleging that Dr. Gallo or any other scientist or official from the Department of Health and Human services engaged in any wrongful, unethical, or otherwise inappropriate conduct with regard to their research into the AIDS virus and the development of an (sic.) diagnostic test therefor."

(Note: brief handwritten notes accompanying the above draft are headed "deeper and deeper into debt.")

February 1986 (approximate): Undated, unsigned notes in Darrel Grinstead's hand, and appearing to have been produced in February, record a meeting with Weil, Gotshal's Nancy Buc and Pasteur's new patent counsel, Charles Lipsey, of Finnegan, Henderson, Farbow, Garrett, & Dunner. The Pasteur and HHS lawyers apparently were discussing terms of a possible settlement. Grinstead's notes indicate that "Nancy's outline" includes "Joint statement, $, joint ownership." Also noted is "Some payment for past royalties." The notes conclude with what appears to be a self-reminder: "Documentary evidence of reduction to practice"; "Documentation of earliest isolates"; "Documentation of November '82 isolates" (Emphasis added).

3/3/86: Buc, Odle, and Lipsey for the IP meet with Robertson, Charrow, Grinstead, and Riseberg, for HHS. Notes believed to be in Charrow's hand include the following significant points:

"Domestic patentee has advantage; however, there is large amount of activity within the U.S.A. Transmission of virus from Pasteur to NCI ... virus will be found to be prior art to Dr. Gallo; test kit is trivial step once you have virus - Gallo's patent will be vetoed ... Gallo claims that he had isolates 1982 but he didn't recognize what he had and hence not patentable ... (emphasis added).

Grinstead: Difficult to resolve interference proceedings without working a fraud on patent office ... Lipsey: Can't settle it arbitrarily...

Robertson: To what extent are we in position to lay all cards on table--what's going on in patent office. Buc: Claims court case and patent case will keep Gallo busy; bad faith on Gallo's part may exist. We need other information ... Buc: If Montagnier's name goes on patent and 1/2 all royalties past and future then we can settle + no cheap shots by Gallo" (emphasis in original).

3/20/86: Weil, Gotshal attorney Robert Odle writes to HHS General Counsel Ron Robertson enclosing a document prepared by Charles Lipsey based on Lipsey's March 3 presentation. The Lipsey memorandum presents the principal pieces of evidence, from the IP perspective, supportive of IP's priority of invention.

Among the salient points of the Lipsey memorandum are the following:

o Lipsey says that HHS,

"...has proffered no evidence, much less the corroborating evidence from non-inventors required in interferences, which would show that Gallo et al. completed the invention claims in their patent before September 15, 1983 ... in view of the widespread dissemination of information relating to the French invention in the United States even before September 15, 1983, it is Pasteur's contention that it can prove an even earlier date of invention in the United States."

o Lipsey cites a number of events that he says convey,

"...a sense of the magnitude of the French activities in the United States prior to September 15, 1983 ... It is extremely probative on the question of priority of invention that the LAV virus was made available by Pasteur to DHHS's own CDC ... in July of 1983 and again in February of 1984, while Dr. Gallo's HTLV-III ... was not made available to CDC until after May 3, 1984 ... The first word from Dr. Gallo's laboratory regarding isolation of HTLV-III as a virus distinct from HTLV-I and HTLV-II and its identification as the putative cause of AIDS was the publication of his work in the May 4, 1984 issue of Science."

Further, says Lipsey,

"It was only after the wave of adverse publicity in the wake of the attempts of DHHS to claim discovery of the AIDS virus that Dr. Gallo alleged in a letter to Dr. Chermann of the Pasteur Institute on June 15, 1984 that: 'our first identification of HTLV-III was November 1982. We had several more isolates in February 1983, but did not choose to report on our electron microscopy or reverse transcriptase studies until we had further characterized the virus.'"

o Lipsey notes Gallo's

"... protracted silence in the face of publication of the Pasteur work and ... Gallo's published statements ... [which] suggests (1) that any work which DHHS might have done in November of 1982 regarding the AIDS virus was perceived at the time as a failure due to inability to grow the virus in culture, (2) that this work resulted in abandonment of the experiments and relegation of the specimens in question to the freezer, (3) that the experiments which identified these specimens as containing the HTLV-III virus were not conducted until much later."

Importantly, Lipsey cites legal rulings to the effect that "A party cannot use later testing to prove an actual reduction to practice..."

o Lipsey asserts that for HHS to contest a potential interference between the Gallo et al. patent and the Montagnier et al. application, HHS must be able to prove that before September 15, 1983, Gallo et al. had,

"(1) isolated the HTLV-III virus; (2) recognized that virus as distinct from HTLV-I and II and as the putative causative agent of AIDS; and (3) demonstrated the utility of such a virus as a source of a diagnostic reagent for detection of AIDS or pre-AIDS."

Lipsey says it is "highly unlikely" that DHHS will be able to prove these events, and he asserts,

"It is apparent that the LAV virus is going to be deemed to be prior art to Dr. Gallo ... and will render Dr. Gallo's work unpatentable ... unless DHHS can prove an extreme early date of invention" (emphasis added).

o Lipsey asserts there was inequitable prosecution of the Gallo et al. patent. In particular, says Lipsey,

"... DHHS never disclosed to the PTO the nature and significance of the French work in isolating the LAV virus which was well known to Dr. Gallo."

o Lipsey cites a number of HHS documents that attest to the significance of Pasteur's work on LAV; he cites a number of instances in which HHS failed to disclose Pasteur's work; and he cites a ruling of the Federal Circuit Court that,

"...a patent is unenforceable in its entirety if any claim was procured by inequitable conduct."

3/21/86: HHS General Counsel Ronald Robertson meets with Dr. Gallo. A note to Robertson from Darrel Grinstead lists six topics that might be discussed,

"In addition to generally getting to know Dr. Gallo and building a degree of confidence between our offices ...

(1) Review current developments with the Claims Court litigation, negotiations with Pasteur's lawyers, and the potential for further action in the Patent Office.

(2) Try to convey a realistic assessment of what our positions are in the Claims Court litigation and the patent dispute.

(3) Obtain from Dr. Gallo a status report on any independent efforts to achieve a resolution of the matter. We might share with him a copy of the latest cable from the Embassy in Paris. [See entry immediately below.]

(4) Try to obtain from Dr. Gallo some programmatic input on the desirability of settling the matter and a discussion of what terms might be appropriate.

(5) We may want to discuss the question of the Genetic Systems infringement and what our options are in dealing with that.

(6) We need to discuss the lack of progress in producing documents under the Freedom of Information request" (Emphasis added).

3/86 (Precise date uncertain; believed to be the cable referenced in item #3 above): A confidential cable from the U.S. Ambassador to Paris to the Secretary of State (found in the files of OGC, HHS) includes the following points about the French/American dispute:

(1) The cable refers to statements made by NCI researchers to French colleagues,

"which are said to provide substance to Pasteur's claim and generally to be damaging to Gallo."

(2) Reference is made to statement by "Thomas" (probably Nobel laureate Lewis Thomas) who is said to believe that,

"... legal success by Gallo is at best uncertain, and that the suit, if not settled out of court, would go on for years, seriously damaging both many of the parties and prospects for collaboration on AIDS research."

Further, Thomas is said to believe that "a reasonable solution would involve sharing of royalties."

(3) The cable concludes by noting that although the Ambassador does,

"... not pretend to be able to sort out the substantive merits of the dispute .... we believe it is a mistake to underestimate the damage which can be done to a range of U.S. interests (scientific cooperation more broadly, reputation of USG [U.S. Government] medical research, progress on AIDS such as vaccine or treatment) ... if the suit continues to the bitter end, including airing of all shreds of evidence on both sides."

The cable also says it is the Ambassador's recommendation that,

"Department of State should be more than an interested observer of all this, in particular providing appropriate inputs to HHS/Justice as the situation develops."

3/31/86: Notes in Darrel Grinstead's hand record a meeting with Dr. Gallo on this date. Among the items of particular interest are the following:

"Mini trial - to determine the chronology of scientific events, difference in virus, etc.

Dedication of patent. (1) some sharing of past royalties (2) creation of pool, to be administered by third party (3) payment to Pasteur and agreement to admit GS to market...

Claims Court

Discovery difficulties

Indirect costs

Loss of control of events and ability to explain events.

Patent Infringement.

Other players may take control of the whole matter.

Justice ... State Department ... White House ... Congress.

Case may take on a life of its own...

French get data by end of 1983 that begins to indicate virus as cause of AIDS. French had no reagents to say that their various isolates were the same.

If French drop horseshit, sign communique, agree to primacy of Gallo isolates, Gallo would agree to certain things in the future.

Gallo has communicated to French - I cannot swear that he learned nothing from the French virus, but has no awareness of learning anything regarding the cause of AIDS...

"Montagnier - Deliberate, calculated; out of control

Science editor of Le Monde [Dr. Escoffier-Lambiotte] - high level person. B of D [Board of Directors] of Pasteur; closely connected; positive she is ethical and can be trusted. Embarrassed by Montagnier - thinks he is mediocre... Schwartzenberger - convinced that Montagnier was a nut...

Nov. 1983 Gallo was mass producing. 150 nucleotide differences between LAV and HTLV-III.

They can bring pressure on Pasteur to agree to this statement.

Can we provoke interference on Elissa (sic.)."

Grinstead's notes conclude with several items identified as "Questions," reflecting Grinstead's recognition -- possibly shared with Dr. Gallo -- of the significant challenges Gallo et al. faced in the event an interference is declared:

"Questions:

With change in law, priority is not only issue.

How could Gallo issue without consideration of prior French publication?

Patent applicants - 102(f) inventability starts with the prior art.

Subject matter of Gallo claims may be found invalid.

Proofs of priority may not depend on practicability of the invention.

They believe they are strong on the initial invention. We are strong on the improvement technology.

Interference could be declared in next month (emphasis added)."

Just nine days later, PTO informed Gallo et al. that:

"... at least one claim from your above-identified patent (the blood test patent) has been copied by an applicant for purposes of an interference."

PTO says that by regulation, the identity of the applicant for the interference will not be disclosed "... unless and until an interference is declared."

4/10/86: Notes in Darrel Grinstead's hand recount a convoluted message from the U.S. State Department: the Science Attache at the U.S. Embassy in Paris was told by U.S. businessman John Crawford that Vincent DeVita contacted Lewis Thomas, on behalf of James Wyngaarden, to say that Wyngaarden wanted Thomas to mediate the patent dispute - "and that money was no object."

4/17/86: Notes in Darrel Grinstead's hand describe a telephone call from Ira Millstein, senior partner in Weil, Gotschal. The notes say that Francois Jacob, a senior scientist and Nobel Prize winner at Institut Pasteur, has received a call from Lewis Thomas saying that Thomas and Dr. David Baltimore, another Nobel Laureate,

"... have been receiving calls from Gallo saying that we must settle. Basis of 50-50 on royalties and 'sharing the science.'"

Further, according to the notes,

"Gallo says he is willing to settle on that basis but that lawyers are complicating it."

According to the notes, the Acting ASH MacDonald,

"sees no basis for 50/50 split - will get his people (Wyngaarden, DeVita, & Gallo) under control."

Following the notes of the telephone conversation is another of Darrel Grinstead's reminder lists. The contents of the list reflect the ongoing difficulties at HHS in obtaining NCI's cooperation with the IP FOIA requests.

"What do we need from NCI/PHS.

1. Full compliance with FOIA request.

2. Someone to carefully go through with the lawyers all the documentation relevant to the identification of virus and development of test kit - follow-up on Gallo's chronology.

3. Determination by PHS that all other info relevant to FOIA request has been made available.

4. Full accounting of all contacts with French Government, Pasteur, and intermediaries ..."

"What guidance we need from client

How badly do they want to settle.

What are they willing to pay.

What terms are acceptable."

4/86: Undated notes, believed to have been made in April, in Robert Charrow's hand, document behind-the-scenes debates at HHS at this time. Among the salient points in these notes are the following:

"How can we equate payout as ... something other than admission of culpability: Randall thought NIH had 60/40 chance of winning ... @ at this time the client is opposed to settlement!" "Suggestion that DG call Bob Gallo; clients object to settlement and prefer to stall..."

4/28/86: Notes in Darrel Grinstead's hand record a conversation with an official of the U.S. State Department. Among the notable points are the following:

"No one in U.S. understands how desperate Pasteur is for cash. Of course we all support the altruism, but ... they need cash" [attributed to French Ambassador DeMargerie].

"DeVita message to Thomas - money is no problem. We agreed that all parties should be directed to not discuss this matter with any one other than lawyers. At some point this may become more of a diplomatic issue."

Attached to these notes, but appearing to record a different conversation, are notes, which include these items of information and misinformation:

"Montagnier placed too much reliance on morphology. Turns out they were right...

We need to interview these people

- Curran knows in March '84 that Gallo has the cause based on 100 percent positive test on CDC sera [in reality, the LTCB test scored 48% positive in AIDS patients].

- Did he tell Mason? Did he tell Dowdle?

- Why did Mason give credit to French in April of '84 just before Gallo/Heckler announcement.

Activities in Summer of '83

Popovic

1. To rule out HTLV-I - done in 1983, August - September

2. Next step was to attempt to grow in a permanent cell line October 20, 1983 [N.B. This is the date on which Popovic infected five T-cell lines with LAI/LAV.]

"3. Did the pool experiment in 1983. Did EM on this and it was positive." [There is no evidence an EM on the "pool" was ever done; moreover, by Dr. Popovic's own account, the "pool" experiment, if it was done, extended well into 1984.]

4/30/86: Dr. Gallo sends the HHS General Counsel's office a package of documents, including the following: (1) "Recommendation from Robert C. Gallo ... concerning the Dispute on the HTLV-III Blood Test Patent;" (2) "Ideas and format for the Speech;" (3) "Summary of History;" (4) "History of the Key Scientific Contributions;" (5) "Assets-Liabilities;" and (6) "Evidence of Dr. Gallo's Cooperative Spirit with Montagnier-Pasteur."

The "Recommendation" document reflects Dr. Gallo's support of the concept of a trust to receive and administer the blood test patent royalties, under the direction of a nine-person board, headed by, "an eminent scientist from the U.S...." Concerning the board, Gallo says he should not be a member, but should have a position in the trust, "a carefully defined position for science and medicine outside the monetary and political aspects." Gallo says neither Montagnier nor any of his (Montagnier's) IP colleagues should be on the board, but, says Gallo, it is a good idea that the five companies licensed under the Gallo et al. patent "be visibly included as part of the trust." Gallo says "the Secretary or the President (or whoever) should present this in a very visible way."

The "Ideas and Format for the Speech" document (the "speech" apparently was to be presented by "the Secretary or the President") includes the following notable passages:

"In the tradition of great American discovery and exploration of the unknown, Dr. Robert Gallo and his colleagues at the National Cancer Institute of the National Institutes of Health, has unraveled the mystery of a disease that has terrorized the world since its recognition only five years ago. In the tradition of the greatest of all microbiologists, the great French innovator Louis Pasteur, the work of Dr. Gallo and his colleagues and of Luc Montagnier and his colleagues ... has led to information on a new type of virus ... as the cause of this global public health menace...

The progress made to date is based on the strong support the American government has given to scientific and medical research over the last two decades. The scientific experience and technology developed over the past decade by Dr. Gallo and his colleagues has directly resulted in the discovery of this virus and the rapid application of this technology to the development of a test that would allow the world blood supply to be made safe" (emphasis in original).

The "History of Key Scientific Contributions" document contains many of the statements, previously discussed, that appear in other documents, previously discussed, that cannot be substantiated and are at odds with the facts. Noteworthy statements of this sort from the "History" document include the following:

• the assertion that in the Gallo laboratory,

  "the first detection of a new virus was ... made in December 1982 with electron micrographs as early as February 1983."

• the assertion that between September and December 1983, HTLV-III was grown in a permanently growing cell line and,

  "... becomes available for scientific work and clinical application all over the world."

• the claim that,

  "48 different isolates were analyzed and definitely demonstrated to be a single virus and linked to the cause of the disease."

The "Assets - Liabilities" document is written entirely in the first person; its style and content suggest it was written by Dr. Gallo himself. Notwithstanding the title, no liabilities are listed, only assets. Among these are the following:

"They call virus an HTLV in only 1983 paper...

I push publication of their 1983 paper...

Todaro (sic.) in my office vows to 'get NIH and Fischinger' because of not accepting Gen. Systems...

Proof we didn't grow LAV except transient..."

4/30/86: Dr. Gallo sends a document titled, "History of Key Events and Side Issue of the HTLV-III/LAV Discovery" to numerous officials and attorneys involved in the French/American dispute. Copies of the document were found by Subcommittee staff in files of the NCI Director, HHS officials and OGC and DOJ attorneys, and outside patent counsel, showing the document had wide circulation.

The "History of Key Events" document contains many elements later incorporated into Dr. Gallo's sworn declaration. The document is written almost entirely in the first person; several items are written in the first person singular, suggesting Dr. Gallo was the principal, possibly the sole author.

The document contains numerous statements that are misleading and/or at variance with the facts. Many of these statement were incorporated into the pleadings of the U.S. Government attorneys. The evidence at variance with these statements, in most instances, has previously been described in this report . Where this is not the case, the evidence is described below.

The most striking false statements in the "History of Key Events" document include the following:

"... First detection of HTLV-III in Gallo lab (not called HTLV-III until mass produced and characterized and proven to be cause of AIDS) was December 1982...

First detection of HTLV-III in Gallo lab with above data plus electron microscopy was February 1983" (emphasis in original).

"Many more detections, several with electron micrographs, prior to Montagnier sending us virus particles on September 23, 1983."

There is no evidence that Gallo had any EMs of suspected AIDS viruses before his September 1983 receipt of the IP virus. The first LTCB EM positive for a new retrovirus was received on October 3; this was the EM of July LAV.

"It is important to note that on (sic.) that 1983 paper the Pasteur group report a significant cross-reaction with HTLV-I. Later they conclude that this was a mistake"

"July 1983: Montagnier sends us a sample of 'LAV.' No virus was present by: EM, RT, or nucleic acid analyses."

Both the documentary record and Dr. Gallo's own OSI testimony [7/18/90 interview; transcript p. 65] show that he knew well July LAV contained particles of a novel retrovirus.

[Concerning September LAV]: "... There were only two things we could do: a) EM & b) RT. We did both and confirmed it was a retrovirus and immediately told them so ... Popovic transmitted it to human cord blood T-cells, to a T-cell line - HUT-78 and another T-cell line. All transmissions were transient. The virus was never mass produced ... we could not keep LAV growing..." (See above).

"November 1983: Our laboratory succeeds in the first mass production of the AIDS virus HTLV-III. Because of this, reagents are available for the first time. Because of that we can type all previous samples we suspected from the past (48 stored in the freezer; including 6 with positive electron microscopy). Also, because of this we can get enough quality viral proteins to do real sero-epidemiology. These studies and the numerous isolates prove HTLV-III is the cause of AIDS by Christmas 1983 to February 1984. Because of this we can also make virus and reagents available all over the world and, of course, have the first workable blood bank test."

This passage contains numerous false and misleading assertions. Among others, there is no evidence that 48 "previous samples we suspected from the past" were ever tested with HIV-specific reagents, much less that they were tested in November 1983. Moreover, Dr. Gallo did not have six EM+ samples until well after the end of 1983.

"We mass produced two immediately. One is called HTLV-IIIb; the second is called HTLV-IIIRF or HAT..."

RF was not "mass produced" or anything near "mass produced" for well over one year following its isolation (see above). Note that Dr. Gallo failed to mention the "mystery virus," MOV.

"Following publication of the papers ... the cell lines producing HTLV-III are made available to people all over the world. CDC and the Pasteur group are the first to receive them."

This is not true; several of Dr. Gallo's close colleagues received the virus-infected cell line well before the CDC and IP scientists; none of these colleagues was forced to agree to the highly restrictive conditions imposed on the CDC.

5/7/86: Notes in Robert Charrow's hand record a meeting with DOJ attorneys as well as several representatives of the Department of Commerce concerning "Pasteur." Salient items from the notes mention the significance of the forthcoming "Preliminary Statement," in the PTO interference, due July 29, 1986. The notes say that the statement must set forth,

"... when we first described invention, disclosed invention, reduced to practice .. Requires us to interpret carefully. Whatever date set forth is earliest date that you use."

5/12/86: HHS writes James Swire concerning his FOIA request. HHS says that to date, a total of 8,961 pages have been released to Swire. 210 pages are acknowledged to have been withheld. The withheld documents acknowledged by HHS are listed; they include some of the most important documents in the French/American dispute. Numerous additional documents are withheld, but contrary to law, their existence and the reason for their being withheld is not revealed to the IP.

HHS tells Swire that,

"The records we have released or withheld constitute our full response to your FOIA request."

5/15/86: Notes written by Darrel Grinstead record "Gallo's Lab Meeting." The notes reflect many of the same arguments as appear in Dr. Gallo's "History of Key Events" document. Among the additional points are the following:

"Both we and Pasteur published the entire sequence of their respective viruses, but one year later Mal Martin tried to say they were the same using the enzyme slicing technique..."

5/30/86: HHS meeting on the proposed AIDS foundation, part of the settlement plans under discussion at the time. Meeting participants include Donald MacDonald, Ronald Robertson, Robert Charrow and Edward Brandt. (Dr. Brandt had been mentioned as a possible trustee for the foundation.) Meeting documents and notes in Charrow's hand show HHS was attempting to define a rationale for the foundation and identify the activities in which the foundation might engage. Under a worksheet heading "Possible Activities to be Undertaken," handwritten entries include: "doubt if needed," "network already exists," "doing this already," "may be difficult if not impossible," "waste of $."

The handwritten notes further reflect HHS' anxieties about the rationale for the foundation:

"Agreement on funding - $2 - 5 10^6 but Abbott labs are saying they may not pay us if our patents look weak ... Breakfasts of key figures at Cypress Mg. help keep it on track and avoid attacks that Foundation is a subterfuge. Are we setting up an alternative PHS. Nervous about it."

6/19/86: Notes apparently in Charrow's hand record a telephone call (apparently) from Dr. Gallo, from Copenhagen. Points recorded in the notes include the following:

"... from Luc - agree that we should go together via trust. Gallo: nothing without scientific history ... Luc: patent problem still proceeding."

Other items indicate there will be a meeting in Paris on June 25 involving Gallo, Montagnier, Millstein, Dedonder, and Wyngaarden.

6/23/86: Notes in Robert Charrow's hand record a conversation with DOJ's Byrnes. The notes are important because of what they reveal about the U.S. attorneys' doubts about the arguments they subsequently would make in the PTO interference. The notes are transcribed below in their entirety:

"... section 112 - Doesn't teach you how to make the invention because absence of cell line -- test kit that only ... 30% is not useful. Unless you have permanent cell line can't do much better than that.

"Tough argument to make -- facts -- Need to know all scientific reasons why you need perm. cell to get good result. All of papers!!!

"We say LAV & HTLV are different ... therefore no interference in fact--what you are saying every strain is patently distinct entity..." (emphasis in original).

6/24/86: Notes in Robert Charrow's hand say that James Wyngaarden called from Paris. Wyngaarden apparently reports on meetings with the French Minister for Health, who "doesn't want to get involved," and with Professor Dedonder. Significant items in Charrow's notes of Wyngaarden's call include the following:

"IP has a hard position/confrontational. Their position - they are going all out for share of patent. The trust is elegant. They want money. His point on patent is that it is open and shut - must go all out because it is a bell-weather patent case - can prove that HTLV was cultivated from LAV.

Reject out of hand the present form of trust. They want an equal share of patent, i.e., their names on patent plus the royalties...

Life or death" (emphasis in original).

6/27/86: Notes in Robert Charrow's hand describe a conversation with attorney Paul Kokulis of Cushman, Darby & Cushman. (Cushman, Darby was retained in early-June 1986 to assist the U.S. Government attorneys in responding to the PTO interference.) Significant points from Charrow's notes include the following:

"Haven't been able to see any evidence - Met with Tom Byrnes last Friday - Preliminary statement & motions - need evidence re: priorities from our notebooks....

Would patent office allow broadening of subject matter to including HTLV re = generic virus? He doubts it. Probability is low -- less than 50%. Must show that there is common ... so that I, II, and III are linked together."

The notes then appear to reflect several alternative strategies the interference counsel were contemplating:

"Motion to dissolve interference on grounds that 1) IP's disclosure doesn't disclose operative & useful invention; or Motion to dissolve for no interference in fact, i.e., LAV and HTLV-III are so different that..." [this sentence is not completed. "Broadening interference count to include Ting application" (emphasis in original).

6/30/86: Notes in Charrow's hand describe a "Meeting AIDS - patent dispute." According to the notes, attendees at the meeting include James Wyngaarden, James Mason, Robert Windom, Ronald Robertson, Darrel Grinstead, and Richard Riseberg.

Significant points from Charrow's notes include the following:

"6/24/86 - Jim met with Dedonder - started with chronology - ... As he talked about patent and the money - we would fight to the end. They view this as best case that they will ever have to get into U.S. market.

D: If this gets into court it will be devastating to Gallo and NIH.

JW: Said reverse could occur.

Trust is elegant proposal with our (Pasteur) money. But that would have nothing to do with patent. Time is short - He would be in U.S. Sept to talk again...

LH is meeting with Gallo, Slisky, Kokulis, et al."

Notes appearing to be in Grinstead's hand describe the same meeting. Items additional to those recorded by Charrow say the following: "Dedonder - Sanofi [the IP commercial arm] bearing the cost of litigation. $2-5M very important to Pasteur. Dedonder was adamant that they must have the patent."

6/30/86: Notes in Charrow's hand appear to describe a telephone conversation with Gallo. The notes are reproduced in their entirety:

"1) Gallo wants to meet.

2) Package -- re AIDS virology

Luc was wining and dining
PR relations course
Luc is wearing makeup

Scientific Prize - Lasker Prize - Biology/

1982 - Gallo won it
1986 - Gallo will win
Essex got it

NIH nominated him and he's getting Dec; it will be announced in Sept/Oct.

Nobel Committee -- complete deliberation

Jim Wyngaarden spoke with Pompidue (sic.) that day Gallo had lunch with Luc + Pasteur patent + Harmison + Ann Rose. Luc said..." [sentence not completed].

3) We shouldn't make move without clear rectify insults - will call off dogs

4) Can I get some ... (?) within department" (emphasis in original).

7/1/86: (Undated but believed to be approximately 7/1): Dr. Gallo sends Charrow a document headed, "Statement for use by Bob Charrow." Dr. Gallo's handwritten cover note says,

"Bob, if you approve this let me or Ann Sliski and Howard Streicher know so we can give it to a few others. Bob Gallo."

Dr. Gallo's "statement" contains numerous claims that are at variance with the facts and/or cannot be substantiated. The fate of the statement is not known, but it is notable as an example of the dubious quality of information provided by Dr. Gallo to the attorneys involved in the French/American dispute.

Among the many questionable assertions in Dr. Gallo's statement are the following:

"This virus [the IP virus] was not called LAV in the Montagnier et al. 1983 paper [Barre-Sinoussi et al.]. It was called an HTLV ...

No one knew the cause of AIDS until Gallo et al. six papers were published in the Spring of 1984 ...

In those papers Gallo et al. published not on one isolate but on 48 ...

[LAV] was never used for commercial purposes and never grown by Dr. Gallo's lab in the single cell clone (called H9) for mass production even for scientific approved studies."

7/1/86: Robert Charrow prepares an analysis titled: "Reliability of Pasteur Test Kit." The analysis is sent to Gallo, Byrnes, and Terry Scott. A memo prepared by Charrow describing the analysis says it was prepared,

"... to provide a basis for discussing the issue of 'utility' during our scheduled meeting of July 2, 1986."

(No notes of a July 2 meeting are known to exist.)

The analysis, described by Charrow as a "Baysian analysis," is based on the data presented in Pasteur's patent application. Charrow concludes that in a blood bank setting, the Pasteur test,

"... would be of little use and would pose serious problems in terms of false positives"

(An ironic observation, considering the widely-demonstrated serious problem with false positives with the U.S. blood tests.) Yet, says Charrow,

"... it could be argued that the test kit does provide useful information in the strictly mathematical sense..."

Charrow also provides an analysis of the efficacy of the Pasteur test in "assisting a physician in diagnosing AIDS." Here, says Charrow,

"... the Pasteur test would appear to be more efficacious than in the blood bank setting ... in this setting, the test does dramatically alter the anterior estimate."

7/25/86: HHS General Counsel Ronald Robertson sends Secretary Bowen a memorandum titled "Patent Dispute Between the United States and Institut Pasteur -- Briefing Paper." The memorandum, signed by "Robert Charrow for" Robertson, apparently was written to prepare Secretary Bowen for an upcoming meeting, noted in the upper right corner of the memo: "Meeting Mon, 4:30: Sen. Mathias; Dr. Jonas Salk." (From the beginning of the French/American dispute, Senator Charles Mathias had made clear his interest in a speedy, equitable resolution. By the Summer of 1986, Mathias and his staff had become actively involved.)

Robertson's memorandum, which is significant because of what it reveals about the priorities and level of knowledge at the top echelons of HHS, begins with the observation that the United States "anticipates earning approximately five million dollars per year in royalties" from the Gallo blood test patent. Following this statement is a summary of the various formal and informal proceedings that have been underway during the previous year, as well as an itemization of the major issues in dispute. The memorandum makes a number of assertions about these issues that cannot be substantiated. These include the assertion that the IP patent application is "seriously defective -- legally and scientifically."

Concerning the Claims Court suit, the memorandum makes the impossible assertion, traceable to Dr. Gallo's false assertion in the Summer of 1984, that,

"... the LAV specimen was genetically different from the HTLV-IIIb specimen incorporated into the HHS test kit."

7/28/86: Charrow handwritten notes record a telephone conversation with Cushman, Darby attorney Terry Scott in which Scott expresses significant concerns about the "Salk Proposal" (a plan developed on his own initiative by Dr. Jonas Salk, with pro bono legal assistance, for settling the French/American dispute, described below)." Charrow's telephone notes include the following:

"C..D..C.. [Cushman, Darby & Cushman] feel may be set up. 1. Proposal founded on certain factual assumptions that may not be accurate

(a) assum. that Gallo discovered 9/15 - 12/3 (sic.)

(b) no other issue re. patentability."

The same day as the Charrow/Scott telephone conversation, Jonas Salk met with HHS Secretary Otis Bowen to present the outline of his proposal, which Salk submitted in writing the following day. The main elements of the proposal were these: creation of a Franco-American AIDS Foundation (FAAF); concurrent existence of both the French and American patents for AIDS blood test kits with ownership of both patents by FAAF; equal annual disbursements from the pooled patent royalties to Pasteur and NIH/NCI, with an equivalent amount being used by FAAF,

"...for collaborative research on AIDS control and prevention, primarily directed to the specific needs of the developing countries."

The central element in the Salk Proposal was a plan titled, "Coexistence of U.S. Patents to Gallo et al. and Montagnier et al." The plan laid out the parameters of a "window of opportunity" which, if met, would permit the coexistence of both the Gallo and Montagnier patents for the AIDS blood test. The fundamental premise of the "window of opportunity" concept was this:

"Because the date of invention provided by Montagnier's British priority application is not based on activity in the U.S., the Montagnier invention appears not to be prior art against the Gallo patent under 35 U.S.C. section 102(g)."

This was a dubious premise, given the use that was made of LAV in the United States by Gallo et al. themselves, not to mention the information disseminated in the United States by Dr. Montagnier concerning LAV and the LAV antibody blood test. But according to the Salk Proposal, assuming the premise was valid:

"... if Dr. Gallo's legally cognizable date of invention is between September 15 and December 5, 1983, neither Gallo's invention nor the Montagnier application constitute prior art against the other and the only remaining impediment to the issuance of the Montagnier application as a U.S. patent is the pending interference."

In other words, providing that Gallo et al. could prove a date of invention between September 15 and December 5, 1983, then patents to both Gallo and Montagnier could issue.

This passage embodied the "window of opportunity."

8/7/86: Notes in Charrow's hand describe a conversation with Steve Metalitz of Senator Mathias' staff concerning the Salk proposal. According to the notes, Charrow advised Metalitz that,

"... it would take our patent counsel approximately 2 weeks to ascertain whether or not we fit w/in the so-called window of opportunity ...

"He [Metalitz] seemed disturbed by the length of time, since he assumed that patent counsel had been working on the matter for quite some time. I advised him that council (sic.) weren't retained 'til June and that June was a down month since all/most scientists were in Europe ... only following receipt of the Salk proposal were they asked to alter their order of preparation and begin examining the factual materials to see if the Salk proposal was consistent with the facts of our case..."

One week later, there was another Charrow/Metalitz conversation. According to Charrow's notes of this call:

"Advised him that our investigation of facts is still on track and that we are also pursuing other avenues in an attempt to develop an appropriate framework should the Pasteur/Salk proposal not be supported by the factual predicate [the window of opportunity]."

9/3/86: Cushman, Darby attorney Terry Scott sends Robert Charrow a "Confidential Memorandum" concerning whether Gallo falls within the "window of opportunity," and thus "meets the factual predicate" of the Salk proposal. Scott's memorandum says that "... there are some important points to consider." He adds that

"These points take into consideration our review of Dr. Gallo's laboratory records prior to December 5, 1983."

Scott says he believes that,

"... a fair case can be presented that Dr. Gallo was first to conceive the invention prior to September 15, 1983, and was diligent up to the time when it was first reduced to practice on October 6, 1983 ... Gallo conceived first and Montagnier reduced first by the filing of his British application ...To accommodate this situation, the practice demands that Gallo prove diligence in the critical period of 9/15/83 to 10/6/83, i.e., immediately before the senior party Montagnier entered the field, up to the junior party Gallo reducing the invention to practice."

(Note: Scott's observations, once again, make clear how very important to the U.S. Government's case were the putative "early isolates" of Gallo et al., since these putative isolates supposedly represented "conception" of the blood test invention by Gallo et al. In addition, it is extraordinary that Scott formed the judgment that Gallo "reduced to practice" on October 6, 1983. The only relevant experiment known to have been performed on that date at the LTCB was the immunofluorescence assay (IFA) in which the only sample with a positive reaction to both AIDS patients' sera and a negative reaction to HTLV-I serum was a culture of LAV - July LAV at that. Moreover, one of the AIDS/pre-AIDS sera used for these assays was the serum from patient BRU, sent by the IP to the LTCB.

It is difficult to comprehend how Terry Scott could have contemplated producing this experiment as evidence of the LTCB scientists' "reduction to practice." Certainly Scott's determination did not last long, since within a few hours, it was reversed (see following entry).

9/4/86: Notes in Charrow's hand record a telephone conversation with Steve Metalitz (Charrow had attempted to reach Metalitz on September 3). According to the notes:

"I advised him that the Salk proposal was not factually viable - outside patent counsel informed us Tuesday evening 9/3 that the factual predicate underlying the Salk proposal is not met. I advised Steve that we are sensitive to the issues involved and are exploring a totally distinct approach; we will know by next week whether that approach is viable. He wanted to know why we believe the factual predicate has not been met. I told him that patent counsel had instructed me not to divulge the reasons and he would have to take it on faith. He wanted to know when I would get back to him on the other option and I advised him we would know whether that was viable by next week."

These notes show that by the evening of the same day Terry Scott wrote his memorandum to Robert Charrow, the determination that Gallo et al. fell within the "window of opportunity" had been reversed. It is not certain what factor(s) led to the reversal, but it must have involved one or a combination of these factors intrinsic to the Salk Proposal: (a) the assertion that Gallo et al. conceived the invention prior to September 15, 1983; (b) the assertion that Dr. Gallo "reduced to practice" on October 6, 1983, and was "diligent" from the time of conception to that date; (c) the assertion that the "legally cognizable date of invention" of Gallo et al. was between September 15 and December 5, 1983.

The determination that "the Salk Proposal was not factually viable" means one of the HHS attorneys had determined that one or more of the above assertions could not be supported. Yet notwithstanding this determination, the U.S. Government proceeded with a defense of Gallo et al. that included every one of the assertions -- or even more extreme versions thereof.

C. Defining Events

During 1986, while the U.S. Government attorneys were aggressively defending Gallo et al., always trying to balance what was legal with what was ethically defensible, what was necessary with what was true, at the same time, they were working toward a settlement that would minimize the appearance of an "admission of culpability." On several occasions, outside events occurred that threatened HHS' plans, doing significant damage to the claims of Gallo et al. Two series of events, occurring in the Spring and Summer of 1986, were particularly noteworthy, one involving a dramatic revelation about the LTCB scientists' use of LAV, the other involving PTO's adamant, if belated, finding that the IP scientists' work was prior art to Gallo et al. Because these events had a profound impact on the course of the French/American dispute, and may well have impelled the U.S. Government to intensify its movement toward a settlement, they are discussed in some detail below.

1. The LAI/LAV EM "Mix-up": In mid-April 1986, Dr. Gallo and several of his colleagues published a letter of correction in the journal Science, acknowledging that an EM labelled "HTLV-III," published in one of the LTCB's May 4, 1984 Science papers (Schupbach et al.) in reality was an EM of LAI/LAV (specifically, one of the December 14, 1983 EMs of the HUT-78/LAV permanent cell line).

The LTCB "error," said to have been due to "inadvertent" use of the LAV EM, could hardly have come at a worse time for the U.S. Government defense of Gallo et al. IP and U.S. attorneys were contesting vital procedural and substantive issues in the Claims Court, with the U.S. denouncing as groundless the IP assertion that Gallo et al. used LAV for their blood test. Meanwhile, PTO was on the verge of declaring an interference between the Gallo et al. and Montagnier et al. blood test inventions, based on PTO's belated understanding that the IP and LTCB prototype viruses were -- at least -- functionally the same virus.

A key U.S. argument throughout the dispute was that the IP virus had not been used for the blood test of Gallo et al., because (1) Gallo et al. had "other isolates" that could have been used and (2) the IP virus had not been grown at the LTCB. The revelation of the LAV EMs, dated many weeks after the LTCB scientists received the IP virus, showing "productive infection," and labelled in a scientific paper as "HTLV-III," threatened to demolish these arguments. It was, as the journal Nature called it, "damning new evidence" against Gallo et al.

The events that led to the public revelation of the LAV EMs began the previous December, when a former NCI scientist approached IP attorney James Swire, telling Swire that based on recent conversations with scientists at the Frederick Cancer Research Center,

"... he believes that Dr. Gallo and Mr. Fischinger are attempting to change records by altering references to 'LAV' to 'HTLV-III' and by altering the dates of receipt of virus samples. Specifically, [the informant] claims that the electron microscope reproduction of HTLV-III which appears in the May 4, 1984 Science magazine is actually a picture taken by Matthew Gonda of a LAV sample" (12/30/85 Swire-to-Montagnier letter).

Concerning the genesis of the Schupbach et al. EMs, Dr. Gonda reportedly told the IP attorneys he recalled a telephone request from LTCB scientist Zaki Salahuddin, during the early months of 1984, to reproduce an EM he (Gonda) previously had made. Dr. Gonda reportedly told the IP attorneys he did not believe the culture specified by Mr. Salahuddin was identified as "LAV." Moreover, Gonda reportedly told the IP attorneys,

"... he [Gonda] was not aware at the time that LAV was Pasteur's terminology for the AIDS virus."

According to Mr. Swire's record, Dr. Gonda denied both changing labels/records and receiving any specimen in which a "LAV" label apparently had been obscured or renamed.

Dr. Gonda gave OSI his own account of the meeting with the IP attorneys, as well as the initial request for the EM. Actually, Dr. Gonda gave two accounts to OSI -- one in a formal interview and one in an unsolicited follow-up letter. Dr. Gonda's two accounts differed significantly, on several key points.

The most significant discrepancy between Dr. Gonda's accounts to OSI concerned the key issue of whether, at the time he selected the LAI/LAV EMs later published in Schupbach et al. as "HTLV-III," there were EMs of authentic LTCB isolates that could have been used. In his August 13, 1990 OSI interview, Dr. Gonda repeatedly said that the only positive samples from which EMs could have been selected were a sample called "NO3" [believed to be a Salahuddin sample] and LAV (transcript p. 37).

At one point, Dr. Gonda said,

"I think that maybe in our lab, they didn't have anything else and someone may have said, 'take Mika's positive sample [LAI/LAV] and use that one and mount it'" (op cit., p. 25).

"... knowing my records now, there wasn't anything else positive around that time with the exception of that in our lab [LAI/LAV]," (op cit., p. 5).

"... there was also HTLV-A and MO-variant as well as the previously mentioned NO3B and LAV" (9/21/90 "Additional Comments; p. 3).

Dr. Gonda's accounts to OSI also were discrepant with respect to when and how he learned about a possible problem with the Schupbach et al. EMs. Dr. Gonda originally told OSI that in December 1985 (the same approximate time as the reported contact from the former NCI scientist to James Swire), he (Gonda) received a "frantic" telephone call from Dr. Popovic,

"... asking about a sample number which I then found out was labelled LAV" (8/13/90 OSI interview; transcript p. 45).

"... I never made anything of it at that point in time. I didn't know that there was any dispute going on or for any reason that I should be looking, other than the fact that he was anxious about something I had that was marked LAV" (op cit., p. 45).

"I couldn't understand Mika. He was mad at me for something. I had absolutely no idea what. He says, you know I want you to get some photographs for me or I want to know who you gave these photographs to. I can't remember what it was. I just know he was very upset about something at the time.

"... I just remember having a discussion with Gilden [Dr. Ray Gilden, Gonda's supervisor] and I think somehow or another it got to Berg Hampar [General Manager of the Frederick Facility] about it. I think I was brought there at that point in time to just explain to him what Mika was into. To me still it is just a sample that he was upset about, some sample that maybe we should have found a virus in, something about RF, something about another sample. That is what turned out to be the LAV picture. So, it was -- As I said, it is hard -- I can't remember much because Mika doesn't make a lot of sense when you try to talk to him. When he is mad, it is even worse" (op cit., pp. 48 - 49).

"I think he knew something was up. I think Berge Hampar knew. He was able to deduce from whatever information I gave them what was going on. But it still hadn't hit me. It didn't hit me -- I mean, that is two months later when the French lawyer -- brought me there, I had to come back and print up photographs and take a look at this thing, what really happened.

That is when I notified government officials, we have got a problem. These are LAV. I can't figure out how in the hell they got in there ..." (op cit., pp. 49 - 50).

"I didn't know that there was any dispute going on or for any reason that I should be looking ..."

"Since this [the putative March 14 date of Dr. Popovic's call] was after the meeting with the attorneys for the Pasteur Institute, I did know about the patent issue by now" (9/21/90 "Additional Comments").

"It wasn't until later, after discussions with Ray Gilden, that the thought occurred to me that they actually thought that the photo was of LAV. Gilden, intrigued by a frantic phone call from Mika to have me look to see if I had pictures of LAV, asked that I search for all photos of LAV and compare them to the HTLV-III in the collage" (op cit., p. 3).

In his revised account to OSI, Dr. Gonda also gave a different description of the contents of Dr. Popovic's telephone call. In the revised account, Dr. Gonda said this:

"Mika's phone conversation ... was to ask that I go and look at photographs of a sample marked LAV and see if I could find them, since his were missing or something about an editorial that was to come out in Nature about a misuse of EM photographs" (op cit., p. 4).

"Dr. Harmison referred the Task Force to a March 13 Nature magazine article on AIDS that incorrectly labeled two electron micrographs of the HTLV-III virus. He explained that an erratum has been prepared by NIH for publication in Nature."

The significance of the revelation of the Gonda-to-Popovic letter, as reported by Nature, was as follows:

"Pasteur sources claimed last week that the institute has new evidence, in the form of a letter describing research results, that Gallo's laboratory was making electron micrographs of the LAV virus in December 1983, three months after it was first received in a sample from the Pasteur. If this is confirmed, it would seem to contradict the NIH position that Gallo was unable to propagate LAV, and would strengthen at least the circumstantial evidence that HTLV-III is indeed derived from the French isolate. (HTLV-III and LAV have almost identical genetic sequences, but NIH have argued that this is merely because both viruses came from the same population of patients in New York)" (Nature, 320, 1986, p. 96).

"... in the composite micrograph of Schupbach et al. ... the panel labeled HTLV-III was inadvertently composed from photographs of a HUT-78 culture transiently infected with a sample of LAV1, provided by Dr. Montagnier's laboratory" (p. 307).

"The LAV preparation was used to transiently infect T cells in one of our laboratories to confirm that it was indeed a retrovirus" (op cit., p. 307).

"In the several months preceding preparation of the composite in question, electron micrographs of cultures infected with our HTLV-III isolates were available from specimens obtained from known ARC and AIDS patients," (op cit., p. 307).

"... the story the United States Government has put out is falling apart."

The Times story indicated Dr. Gallo had recently been interviewed about the LAV EM. Based on that interview, the Times reported the following:

"Dr. Gallo said that in September 1983 the Pasteur Institute had sent his laboratory 'a small amount of fluid' containing LAV, the qualities of which were still uncertain, for research purposes. At that time he said his group was also zeroing in on a possible viral cause of AIDS.

Yesterday Gallo said that his lab had been able to infect human cells with the virus sample received from France only 'transiently.' 'The first and only thing we could do was measure reverse transcriptase and take a picture of it,' he said. Dr. Gallo said that this established that the agent was definitely a type of virus called a retrovirus, but that further research with the French specimen had not been possible because it failed to infect additional cells."

The falsity of these statements is obvious from previous sections of this report (see above).

"The error can only be described as acutely embarrassing."

"Gallo has long maintained that he never succeeded in achieving more than transient growth of LAV, and that the blood test he developed was based on one of his own isolates; nevertheless, when a good micrograph of budding AIDS virus particles was called for in the Schupbach paper, the picture selected was of LAV."

"... they had other good electron micrographs of HTLV-III together with evidence of reverse transcriptase activity (and negative tests for HTLV-I and HTLV-II) dating from as early as February 1983, before Montagnier's first publication of a photograph of LAV..."

"These photographs ... are shortly to be submitted for publication in a recognized journal in an attempt to lay to rest the suggestion made by Montagnier's lawyers that Gallo used LAV simply because that was his best source."

"... is likely to raise a few eyebrows, ... could be more than a little embarrassing, ... could also have some legal ramifications."

"Gallo has consistently maintained that there was little virus in the sample (September LAV) and that his group could not get it to grow in culture for more than a short time ... The Pasteur sample arrived in Gallo's laboratory at a critical period in the U.S. group's research. Virus isolated from AIDS patients would not grow for more than a few days in culture because it killed the cells it infected. (The Pasteur group, which recognized this effect early on, propagated LAV on fresh cells.)" (Science, April 18, 1986; p. 308).

"Gallo said in interviews last year that his group infected fresh cells with the virus sent by Montagnier and detected reverse transcriptase activity ... After a few days, however, the cells degenerated and stopped producing virus, and Gallo said they put the culture fluids in the freezer.

"In fact, a few weeks after the sample arrived, Popovic thawed some of the material and used it to infect two cell lines ... He sent samples of these cultures early in December ... for electron microscopy. Gonda took photographs of virus particles and reported back to Popovic in a letter dated 14 December 1983 ... Gonda reported that only the two infected with LAV showed 'productive lentivirus infection'" (op cit., pp. 308-309).

"'It can be conclusively documented' ... that he [Gallo] had electron micrographs, taken by a different laboratory ... well before the sample of LAV arrived at his lab ... Popovic says that the cell lines infected with LAV were killed by the virus in two or three weeks and he again froze the material..." (op cit., p. 309).

"Early returns on composite photo are good ... Gallo has EM pictures of the virus from February 83."

Also included in the package of documents was a cover note written in the first person plural, presumably by Gallo. The principal theme of the cover note was the assertion that HUT-78/LAV grew only "transiently" at the LTCB. Relative to this claim, the cover note said the December 1983 Gonda-to-Popovic letter showed HUT-78/LAV,

"... was positive, but ... in February 1984, ... all cultures with LAV were negative ... This is clear evidence that any success we had in growing LAV was transient. We could never infect H9 and HUT-78 only produced virus for a short time."

The cover note to the EM package also contained this strong assertion:

"We could not mass produce LAV and really never tried to do so and this can be conclusively demonstrated."

"If you ask the question .... 'Could you have succeeded, I believe we could have with LAV and Ti7.4'" (4/26/90 OSI interview; p. 18).

In another OSI interview, Dr. Gallo said this to OSI:

"Retrospectively, we could have simply used LAV and solved the problem ... In other words, if you want to accept as the evidence of the cause of AIDS, the serology, we could have done it with LAV alone. Right. We could have said, 'Montagnier, we are going to use your virus, we solved the problem of growing it, we have reagents now, we could produce pounds of protein, we could go out and solve the problem serologically, develop a blood test, and we are getting linkage serologically...'" (5/16/90 OSI interview; p. 58).

The principal thrust of Dr. Gallo's counter-offensive to the LAV EM revelation -- a counter-offensive that rapidly became a vital element of the entire U.S. Government defense of Gallo et al. -- was the campaign to prove the existence of "other isolates," "early isolates," pre-dating the arrival of LAV at the LTCB, for which EMs supposedly existed that could have been used in the May 1984 Science papers. The argument concerning "other isolates" and the EM issue was the same as the argument Dr. Gallo would make vis-a-vis the LTCB HIV blood test; i.e., since I had other isolates I could have used, my use of LAV was clearly inadvertent, i.e., I had no motive to misappropriate LAV.

As the OSI Final Report noted, the mere existence of other isolates does not prove that misappropriation did not take place. Moreover, with respect to both the EMs and the blood test, the claims that other isolates were available for use when LAI/LAV was chosen are entirely wrong.

Two elements were central to Dr. Gallo's "early isolates" campaign: the putative "early isolate" known as "CC" and a letter to the journal Nature, featuring EMs of "CC" and other alleged LTCB isolates, titled, "First Isolation of HTLV-III."

(a) Counteroffensive: "CC": Early EM evidence of the AIDS virus at the LTCB, even the mere evidence of a novel retrovirus -- if it was recognized as such -- in AIDS patient samples would have been a vitally important element in the U.S. Government's attempts to "trace the lineage" of the LTCB's "discovery" of HIV to 1982/early 1983. As noted previously, until well into 1984, there were no HIV-specific reagents available to prove that a particular sample harbored the AIDS virus. The assays that did exist provided little information about the nature of suspected retroviruses beyond the fact that they were not HTLV-I and II. For this reason, contemporaneous EMs -- showing the presence of a novel retrovirus -- would have been very significant for strengthening the LTCB's claims to have "isolated" the AIDS virus in 1982-83.

For purposes of patent priority, it was not sufficient that an AIDS sample EM existed in 1983. Neither was it sufficient that a 1983 AIDS EM later was examined and found to contain HIV, or novel virus particles. Rather, it was necessary that at the time the "discovery" of HIV, or a novel virus, was claimed to have taken place, the LTCB scientists recognized the presence of the AIDS virus, or at least the presence of a new virus that they believed was associated with AIDS. These conditions the LTCB scientists could not fulfill.

During the heat of the patent dispute, EM evidence was frequently invoked by Gallo et al., in an attempt to buttress their claims of priority. (The fact that the IP scientists published an EM of LAV in Science in May 1983 was a further, specific impetus for Gallo et al. to attempt to establish EM priority before this date.) As early as November 1984, in a lecture in Tokyo, Japan (subsequently published in Retroviruses in Human Lymphoma Leukemia, 1985), Dr. Gallo said this:

"By November, 1982 transient RT activity was detected and suggestions (by electron microscopy) of a retrovirus different from HTLV-I or -II were found ... By February 1983 we had five such isolates" (p. 25).

Similarly, in the April 1986 "pre-declaration" document, "History of Key Events and Side Issue of the HTLV-III/LAV Discovery," Dr. Gallo wrote this:

"First detection of HTLV-III in Gallo lab (not called HTLV-III until mass produced and characterized and proven to be cause of AIDS) was December, 1982. Evidence: Reverse Transcriptase + particles, cytopathic, negative for HTLV-I and -II. No electron microscopy. First detection of HTLV-III in Gallo lab with above data plus electron microscopy was February 1983."

"By December, 1982, our group at NCI detected a new retrovirus in AIDS sera which appeared different from HTLV-I and HTLV-II. This retrovirus was ultimately called HTLV-III after we were able to mass produce it, characterize it and determine that it was the cause of AIDS ... in February 1983, a further detection of the virus which would later be called HTLV-III was made which this time included electron microscopy as well as RT, and negative reaction with HTLV-I and II reagents" (11/8/86 Gallo declaration; p. 6).

There is no evidence that there ever existed an HIV + EM of a late-1982 LTCB AIDS sample. The putative February 1983 EM evidence also did not exist. The only sample in culture at the LTCB in February 1983 for which an EM is known to exist is "CC." But the CC sample was not even sent for EM until April, 1983, and the report was not received at the LTCB until late May. More importantly, the EM expert's report, when it was received, said nothing about any novel particles in CC. The only description of virus particles reported in the sample was "C-type particles present" i.e., HTLV-I.

In fact, "CC" was doubly infected with both HIV and HTLV-I. Yet Dr. Gallo retrospectively claimed CC as an early LTCB HIV isolate, on grounds that he and his associates, in early 1983, informally observed novel particles in the CC EMs. Thus, in a written submission to OSI, Dr. Gallo said:

"Although no mention was made in the EM report ... of anything except type C particles, examination of the photomicrographs will show that in addition to typical type-C virus with the circular electron-dense core, particles with elongated cores can clearly be seen (emphasis in original). The presence of these unusual viral particles was noted at the time by all in the laboratory who reviewed them (Dr. Popovic, Ms. Richardson, and Dr. Gallo)" (5/10/90 "CC" submission to OSI, Exhibit list).

It also bears mention that by Dr. Popovic's own account, the double infection in CC made it useless for an HIV blood test and HIV-specific reagents; CC thus did not provide an alternative to the LTCB's use of LAI/LAV. Dr. Popovic said the double infection,

"... would obviously complicate tremendously any interpretation of findings and the virus derived from such source would most likely be inappropriate not only for industrial production of an antibody assay but particularly for generation of specific reagents ..."

"I decided to discontinue the work with CC at that time ..." (August 1983; 3/4/91 Popovic submission to OSI; p. 7).

In neither of the 1983-84 articles cited above was there any mention of a retrovirus other than HTLV-I in patient CC. Not until 1986 did Gallo et al. actually isolate HIV from CC and most relevant to the current discussion, not until late-1985 did Gallo et al. have an EM report showing the presence in CC of any virus particles other than HTLV-I. Gallo et al. solicited this report, which was a revision of an earlier report, and they did so just a few days before the IP filed its lawsuit in the U.S. Claims Court.

Dr. Gallo's solicitation resulted in a December 11, 1985 letter to Dr. Gallo from Dr. John Lemp, of the Electro-Nucleonics Cell Science Laboratory. The Lemp-to-Gallo letter referenced apparently recent conversations between Lemp and Gallo concerning "... early HTLV-III cultures..." received by Lemp from the LTCB. The letter said the laboratory's electron microscopist,

"... has found [emphasis added; a clear indication the discovery was a recent one] two thin, cell pellet sections ... which have aberrant morphology, neither HTLV-I nor HTLV-II."

It is evident that in late-1985, faced with the imminent prospects of litigation over the LTCB's AIDS/HIV research, Dr. Gallo realized he had to attempt to find evidence to substantiate his laboratory's putative early recognition of a novel retrovirus associated with AIDS. Dr. Lemp's December 1985 letter was far from ideal, since it made clear the identification of novel particles came long after the early-83 date Dr. Gallo wanted to claim. But the letter apparently said as much as Dr. Lemp was willing to say; the letter obviously did not inhibit Dr. Gallo's promotion of the early-83 claims.

(b) Counteroffensive: The "Early Isolates" Nature Letter: In fact, within a very few months of receiving Dr. Lemp's letter, Dr. Gallo was promoting CC as the centerpiece of his response to the LAV EM episode. The response took the form of a hastily-composed letter to Nature, the aforementioned "First Isolation of HTLV-III," which purported to show the existence of LTCB HIV isolates, including EMs, prior to the arrival of LAV at the LTCB. The letter is remarkable in many respects, not least of which is its evident political/legal purposes, as demonstrated by the involvement of HHS and DOJ attorneys in its preparation.

On April 14, 1984, Dr. Gallo sent a draft of the Nature letter to Darrel Grinstead and Thomas Byrnes (possibly others as well; these two are certain). Gallo's letter to Byrnes sought Byrnes' "input by Wednesday," and Gallo admonished Byrnes that "timing is essential." Byrnes' April 16 response to Gallo was remarkable. Byrnes made a number of significant changes to the draft of the Nature letter. The principal intent of Byrnes' changes was to draw a linkage between the LTCB scientists' earlier work and their later "discovery" of the AIDS virus. One addition Byrnes made to the letter, an addition included in the published version, was demonstrably false, i.e., the statement that,

"The experimental results [shown in the letter] were obtained shortly after receipt of the samples, usually a matter of weeks."

"... asked Dr. Sarin to find a sample where reactivity with AIDS sera was tested whether positive or negative. This is important because this test is the basis for the blood test" (emphasis added).

In his April 16 letter, Byrnes also told Gallo this:

"The dates set forth in this letter [the letter to Nature] will be perceived as our earliest dates; for this reason the dates must be as early as possible. Another sample before September 1983 showing by EM the presence of an HTLV-III particle would be highly desirable."

Yet these circumstances did not halt publication of the Nature letter, neither did they deter Dr. Gallo from describing his data in a manner that could not be substantiated. On April 17, 1984, Dr. Gallo wrote to Nature's Tim Beardsley, enclosing a copy of his (Gallo's) letter to Nature, which was styled as a response to Beardsley's April 18 story. Dr. Gallo's letter to Tim Beardsley made it clear that Gallo was claiming he had HIV+ EMs by February 1983. Thus, Dr. Gallo said:

"The enclosed information clearly shows that ... we had evidence for the presence of a retrovirus as early as December 1982 by identification of cultures showing reverse transcriptase activity with no cross-reaction with HTLV-I and II reagents and by electron microscopy by February 1983."

"Tim, please tell me when this is in press as soon as possible."

-- Table 1 of the letter was titled, "Summary of the Chronological Isolation of HTLV-III from Patients with AIDS and Pre-AIDS"; however, many of the samples listed in the table were never tested with HIV-specific reagents. Thus, they were not confirmed to be HIV. Concerning CC, one of the samples listed in the table, nowhere in the Nature letter was it stated that HIV was not isolated from the sample until 1986.

-- Table 1 of the letter stated that EMs on sample "SN" were "not done." But the OSI investigation confirmed EMs on SN were done, with negative results. An identical misrepresentation in Popovic et al., Science, May 1984, was the basis for one of the charges on which Popovic was found guilty of scientific misconduct. Yet OSI never took any action against Dr. Gallo for the identical statement in the Nature letter.

-- The letter said the LTCB scientists "... transiently transmitted LAV into the HUT-78 and Ti7.4 cell lines" (emphasis added);

-- The letter attempted to convey, by several devices, that the putative HIV+ EM of CC -- as well as the other HIV+ EMs -- were obtained far earlier than they really were. The letter stated that:

"Before receipt of LAV, we had detected reverse transcriptase activity in a number of cultures from AIDS and ARC patients which showed no cross-reaction with HTLV-I or HTLV-II reagents, thus indicating the presence of a new retrovirus. In a number of cases electron microscopic examination showed the presence of virus particules with a cylindrical core, characteristic of HTLV-III (Table 1, Fig 1)" (Gallo et al., Nature, 321, 1986, p. 119).

-- Figure 1 of the letter included the "CC" EM, with -- immediately above it -- not the date of the EM, but the date the sample was received at the LTCB, "2-15-83." The other five EMs in Figure 1 were similarly represented, although CC was particularly significant, since it was the only the sample for which an HIV+ EM was claimed prior to the LTCB's receipt of LAV.

Concerning LAV, the EM included in Figure 1 was the EM of September LAV. There was no mention anywhere in the Nature letter of the positive EM of July LAV, the sample that Dr. Gallo repeatedly asserted contained no detectable/useable virus.

-- The letter said the reported experimental results,

"were obtained shortly after receipt of the samples, usually a matter of weeks."

In addition to the numerous factual misrepresentations, another observation that needs to be made about the Nature letter is that the letter did not make the point Dr. Gallo apparently was attempting to make, i.e., that he,

"... had evidence for the presence of a new retrovirus in AIDS and ARC patients long before the LAV particles were sent to us and even before the publication of the results by Barre-Sinoussi et al. 1983."

One other event regarding the "CC" EM needs to be mentioned. On May 8, 1986, the same day as that on which the Nature letter was published, Dr. Gallo sent HHS General Counsel Ron Robertson a copy of the December 1985 Lemp-to-Gallo letter that said the EM specialist had found "aberrant morphology, neither HTLV-I nor HTLV-II." Dr. Gallo's cover note, copied to attorneys Byrnes, Grinstead, Randall and Roberts, said that Dr. Lemp's letter gives "the dates of the first electron micrograph of aberrant particles."

It is very noteworthy that the Lemp letter, which specifically states that the CC EMs, of material,

"... received on May 9, 1983 ... were actually finished on May 26, 1983,"

(3) Potential Disaster at PTO: During the Summer of 1986, there were adverse developments relating to several pending Gallo et al. patent applications, as well as the blood test patent itself. The most serious developments occurred in August and September of 1986. These developments originated at PTO, and bore directly on the blood test patent itself. Had the IP attorneys known of these developments, that knowledge might well have influenced their willingness to enter into a settlement of the French/American dispute. Almost certainly the terms of that settlement would have been different. But according to the IP attorneys, they did not know.

In early April 1986, PTO rejected all pending claims in one of the several CIPs (the "715" CIP) to the Gallo et al. blood test patent, on grounds that those claims were "anticipated by" or "unpatentable over" Barre-Sinoussi et al. or Montagnier et al. The reason the PTO examiner finally -- nearly two years after she began dealing with LTCB and IP HIV blood test patent applications -- declared the IP work prior art to Gallo et al. was because as she said,

"... HTLV-III and LAV appear to be highly related if not identical viral isolates" (4/4/86 Office Action; p. 9).

In May 1986, Gallo et al. responded to PTO's rejection of both the 610 and 715 claims. The responses, which focused on an attempted refutation of the examiner's determination that LAV and "HTLV-III" were the same virus, included numerous highly suspect arguments. The arguments of Gallo et al. were unavailing, and the PTO examiner, saying the arguments "have been carefully considered," concluded they, "are not deemed to be persuasive." Accordingly, in August 1986, all pending claims in the 610 and 715 CIPs once again were rejected. Once again, the basis for the rejection was the prior art of Montagnier et al., and the fact that LAV and HTLV-III were demonstrably the same virus.

At this point, as indicated by the documentary record, HHS officials (specifically, Lowell Harmison) and the attorneys acting for Gallo et al. became greatly concerned. On August 28, 1986, attorney John Roberts filed a response on behalf of Gallo et al. to the examiner's rejection of the 610 claims. Roberts' response referenced an August 27 telephone interview with the examiner, during which, according to Roberts,

"... a program of work necessary for applicants was set out by the examiner..."

"Amplification of applicants' arguments in this direction ... will follow with an amplified supplemental response ... Applicants realize that this case is important and will bend efforts to place before the examiner declarations under Rule 131 and 132 as requested in addition to the expanded supplemental response noted above."

The Bundren memorandum, headed "Re Moskowitz [the PTO examiner] info on patent office strategy on AIDS cases," focused in part on the pending Gallo CIPs and other Gallo et al. applications; the note confirms that the fate of the Gallo et al. CIPs was intimately tied up with the fate of the Gallo et al. blood test patent. The note indicated that, according to the examiner, PTO was weighing its options for dealing with all the pending Gallo et al. applications. One option, according to the note,

"... will include placing all the other AIDS cases on hold pending resolution of the interference."

There were even more sensational aspects of Bundren's account of the conversation with the PTO examiner. They are reflected in the following verbatim passage:

"PTO questioning NIH's and HHS' role in these cases: the 'weak' support and 'type of responses' to Office Actions, coupled with Gallo's editorial role of his book [the volume containing the September 1983 Cold Spring Harbor proceedings, which Dr. Gallo edited] have several in the PTO believing that HHS/NIH are withholding info., i.e., that Montagnier may be the first inventor of most of these cases and that Gallo did indeed steal from him (as claimed in the publicity supported by the French).

Unofficial desire by MM for us to clear up these cases quickly in order to force the PTO to act--getting all of them in interference one way or another.

Unofficial desire by MM that US, NIH, and HHS take a stronger role in backing up their position. Many believe that the lack of response shows unwillingness to support patent rights, indicating to the world the weakness of NIH's support for medical research, the position of Gallo's patent, and the lack of power behind the patent license program."

Attorney Bundren affirmed to Subcommittee staff that he was the author of the note; he affirmed unequivocally that the conversation with the patent examiner did take place. Bundren said the conversation made a vivid impression on him because it marked the first time that he, at the time a junior associate, realized the magnitude of the forces at work in connection with the Gallo patent and interference.

In early September 1986, senior attorney John Roberts evidently decided it was important to inform HHS in a formal manner about the recent developments at PTO. On September 8, Roberts wrote a memorandum (the recipient, not specifically identified, is believed to have been Lowell Harmison) concerning the near-demise of the "610" CIP and the implications of its fate for the ongoing blood test patent interference.

Roberts' memorandum explained why the "610" CIP, which focused on the p24 (core) protein of the AIDS virus, was so significant relative to the parent Gallo et al. blood test. Speaking of the 610 application, Roberts said the application,

"... is important because this core fragment of the HTLV-III virus is one of the landmark cases which, undoubtedly, will be attacked by the French and it is also related to our Gallo case now in interference."

"This letter emphasized and reiterated many of the strongest points the French have in all of their arguments against practically all of the filings we have had relating to the purification of the virus, fragmentation into such fragments as p24, deletion cases, and others leading by one or more routes toward vaccine."

"The end result would be to show that the HTLV-III p24 of Gallo is the same as the p25 LAV of Montagnier and Barre-Sinoussi."

"... are going to be or have been argued in a great number of the Gallo cases."

"One is to obtain notebooks pages from Dr. Popovic which would anticipate in point of time either Montagnier or Barre-Sinoussi or both. This would be a strong gambit and relieve us of the onerous burden of fighting the misty inherency position."

Roberts also said he planned to submit declarations under Rule 132 by both Dr. Gallo and another LTCB scientist, Dr. Ann Slisky,

"... disclaiming any special knowledge oral or written of the later written Montagnier article" (the September 1983 Cold Spring Harbor presentation).

In the weeks following Roberts' memorandum, these developments occurred relating to the "610" CIP:

1. Gallo et al. submitted and PTO rejected declarations from Drs. Gallo and Slisky relating to Dr. Montagnier's Cold Spring Harbor presentation in September 1983. PTO's rejection said the declarations,

   "... are not directed to the issues discussed at the interview [with the attorneys for Gallo et al.] ... as to the nature of the disclosure at Cold Spring Harbor and the nature and timing of Dr. Gallo's access to Montagnier's written disclosure as editor of the publication cited in rejection ... the other issues discussed at that interview have not been addressed."

2. Relative to the Barre-Sinoussi paper and the examiner's invocation of that paper as prior art, Gallo et al. told PTO they, "... have nothing further to add in that situation."

3. Despite repeated admonitions from PTO, no 131 declaration was ever submitted by Gallo et al. in the 610 case. PTO rules require that corroborating evidence ("original exhibits or drawings or records, or photocopies thereof") "must accompany and form part of" a 131 declaration. But there were no Popovic notebook pages anticipating Montagnier and/or Barre-Sinoussi. Thus, Gallo et al. had no corroborating evidence to submit in support of a 131 declaration.

   The absence of corroborating evidence was confirmed by testimony from HHS contract patent attorney, William Bundren. In 1992, Bundren told Subcommittee staff that the reason a 131 declaration was not submitted was because "it would have been a stupid thing to do." Concerning corroborating evidence for the declaration, Bundren said, "We asked Gallo for the evidence over and over, but we never got it."