Affymetrix Found to Have Infringed Patent

Friday, November 10, 2000
By Rita Farrell ,
Reuters

URL: http://www.washtech.com/news/biotech/5122-1.html

Date accessed: 17 January 2001

A second trial will now be scheduled on Santa Clara, Calif.-based Affymetrix's claim that the patent is invalid, but no date has been set yet by Judge Joseph Farnan of the U.S. District Court in Delaware.

If Affymetrix, which leads the market for gene chip arrays used to determine gene activity, loses, there will be a third trial on Oxford's claim for up to $40 million in damages. The jury found that there was no willful, or knowing, infringement by Affymetrix, ending for now Oxford's request that if any damages are awarded they be tripled.

Affymetrix shares, which were off nearly nine percent, or $7-9/16, to $78-1/8 on the Nasdaq Friday, were halted pending the news.

"This is obviously not a positive for Affymetrix stock, and we expect more downside for the shares after they resume trading," said one analyst who asked not to be named.

Dr. Yi Ri, an industry analyst at Mehta Partners, warned that there is a long way to go before the dust settles.

"People seem to have jumped on the fact that this is bad news, but the case isn't done. There is still a trial to come on the validity issue and the decision is subject to appeals. It could take years," said Ri.

"On the face of it, a federal jury decision scares investors, but this is not a done deal," Ri said.

Last week, Affymetrix stock rose about 40 percent after a British appeals court ruled that as of June 1, 1999, Affymetrix had the right to use the technology through its acquisition of a Beckman Coulter Inc. BEC.N unit, which had a license for the privately held Oxford patent.

Affymetrix chairman and chief executive, Stephen Fodor, told Reuters after the jury verdict, "The most important thing is that the U.K. court and the U.S. court have confirmed that Affymetrix has a license.

"We don't think (the decision) will have a long term effect. Our future is secure. So we're now talking about the past — of about 17 months at the most and no trebling of damages."

Fodor said the potential for Affymetrix's GeneChip arrays is big. "We don't know what the numbers will be because it's an emerging market." Revenues last year were $100 million, double those of 1998, and Affymetrix president Susan Siegel said this year's revenues are expected to be $190 million.

Fodor emphasized that "The good news is...our customers don't have to worry about legal issues and they can concentrate on their research trying to focus on curing disease by understanding the human condition."

An attorney for Oxford, Mark Pals, told Reuters "We're extremely pleased with the result and that the importance of Dr. Southern's invention has been recognized and that Affymetrix' efforts (to) disavow its use of his technology have been rejected. We feel very strong that the validity of the patent will be sustained in the second trial."

Oxford's patent, an invention of Dr. Edward Southern of Oxford University in the U.K., is for an "Apparatus and method for analyzing polynucleotide sequences and method of generating oligonucleotide arrays," which was issued Dec. 23, 1997.

At issue in this week's trial was whether Affymetrix infringed the patent and whether infringement was willful for the 17 months from the time it was issued until the Beckman acquisition last year.

Story Copyright © 2000, Reuters.

Category: 2. Patent Law