Affymetrix Loses Round in Dispute Over Gene License
Affymetrix Inc. on Friday lost the first round in a long-running dispute with a British company over licensing rights to technology used to analyze genetic material.
The British High Court ruled that Santa Clara, Calif.-based Affymetrix, which is 30% controlled by Glaxo Wellcome, does not have rights to technology that was developed by a little-known private British firm, Oxford Gene Technology.
Affymetrix’s shares fell $12.50 to close at $131.13 in Nasdaq trading, but analysts said that the market reaction was overblown and that the case could take several years to conclude.
The judgment coincides with recent milestones in the emerging field of gene sequencing, such as Thursday’s announcement by Celera Genomics that it completed the first step in mapping the genes of one person and was starting to put the pieces together.
Affymetrix specializes in computerized systems that measure and analyze genetic information, allowing researchers to crunch massive amounts of data.
The technology, which is licensed to pharmaceutical and biotechnology companies as well as academic researchers, has been heralded as a way to use differences in gene expression to ultimately understand the molecular basis of disease.
Affymetrix itself holds 70 issued DNA array patents and has hundreds under application.
“We will aggressively appeal the ruling in the U.K.,” Edward Hurwitz, chief financial officer at Affymetrix, said in an interview. The company also said the court decision will have no immediate impact on business operations.
He said Friday’s court ruling does not decide the issue of whether Affymetrix infringed on Oxford Gene’s patents. “What it does is allow Oxford Gene to start its infringement case,” Hurwitz said.
Affymetrix initially tried to negotiate a license agreement with Oxford Gene, but was stymied by the British company’s insistence that it gain a cross-license to Affymetrix’s far more comprehensive DNA array intellectual property.
Oxford Gene said it planned to seek about $300 million in damages in a U.S. court in Delaware.
But Hurwitz said damages would apply only if Oxford Gene lost profit as a result of patent infringement. He said Oxford Gene has acknowledged that it was in no position to profit from the patents.
A source at Oxford Gene, however, said, “We are claiming damages, which will be based on our own lost business and also the royalties.”
Affymetrix maintains that it acquired rights to Oxford Gene’s micro-array patents in Europe and the United States when it bought laboratory equipment maker Beckman Coulter Inc.’s array business in July 1998.
The British court, however, said the U.S. company could not use the patents because Beckman’s research program did not amount to a business and so was not capable of transferring Beckman’s existing license to Affymetrix.
