By Brady Huggett
Affymetrix Inc. took a hit Friday, but dodged a couple of major blows in its DNA array patent infringement case with Oxford Gene Technology Ltd. in U.S. District Court in Delaware.
"We are pleased because the very important elements were decided," said Michael Claes, spokesman for Affymetrix. "We have a license, we didn't literally infringe on the patent, and there wasn't willful infringement. And there are significant elements of this trial still to be tried."
Company officials would not remark further.
The verdict in the first phase of the suit found that there was no literal infringement on OGT's patent, instead saying Affymetrix infringed under the "doctrine of equivalents." Simply stated, literal infringement, or using another's patented idea without permission, is more serious than infringement under the "doctrine of equivalents," which refers to two similar products resulting from different methodologies.
Affymetrix, of Santa Clara, Calif., already has filed a motion with the court to overturn the finding of infringement under the doctrine of equivalents, claiming there was not sufficient examination of evidence in the case for the jury to reach such a verdict.
The jury also found that Affymetrix did not willfully infringe on OGT's patent, a portion of the verdict that carries significant financial weight. OGT claimed up to $40 million in damages in the case, damages that could have been tripled if willful infringement had been declared. By dismissing the willful infringement, the jury relieved Affymetrix of a potential $80 million payout and ensured it would not have to pay OGT's attorney's fees.
The court next will consider Affymetrix's assertion that the OGT patent is invalid and unenforceable, as well as other issues such as allegations of patent misuse, fraud and antitrust violations arising from OGT's relationship with certain Affymetrix competitors, Affymetrix said. The court has not said when that phase of the suit will begin, but word from the court could come as early as this week. If the court finds the patent invalid, the object of Affymetrix's infringement will be erased, and Affymetrix may be relieved of obligations to pay future royalties to OGT.
Affymetrix develops and commercializes systems to acquire, analyze and manage genetic information. Its GeneChip system consists of disposable DNA probe arrays containing gene sequences on a chip, reagents for use with the probe arrays, a scanner and other instruments to process the probe arrays and software to analyze and manage genetic information. Its spotted array system enables individual researchers to create and analyze custom microarrays. Its market share has been estimated at 90 percent.
On Nov. 2, the UK Court of Appeals overturned a previous ruling and stated Affymetrix's purchase of Beckman Coulter Inc.'s array business transferred certain patents held by OGT to Affymetrix. At the outset of the U.S. trial, the judge accepted the findings of the UK court, assuring Affymetrix a global license to patents invented by Ed Southern of Oxford University, called the Southern patents. (See BioWorld Today, Nov. 3, 2000.)
Following the announcement of the UK verdict on Nov. 2, Affymetrix's stock (NASDAQ:AFFX) gained 32 percent to close at $79.437. On Friday, Nasdaq suspended trading of Affymetrix's stock for more than an hour, and it closed at $78.625, down $7.062, or about 8 percent.