Biochip maker Affymetrix lost a patent-licensing lawsuit against a British firm on Friday, sending its stock price tumbling.
The English High Court on Friday decided against Affymetrix, famous for its GeneChip technology, in a long-running patent case with private British company Oxford Gene Technology. Affymetrix said it will appeal the case.
The court ruled that Affymetrix used genetic analysis technology developed by Oxford Gene without its permission.
"This was just a case of whether or not we had access to a license -– it does not effect our day to day operations," said Anne Bowdidge, a spokeswoman for Santa Clara, California-based Affymetrix.
Affymetrix specializes in so-called DNA microarrays, used to analyze genetic information. As the map of the human genome nears completion, biochips like the Affymetrix GeneChip will play an increasingly important role.
The technology is a critical tool of genomics researchers, who will work with information from the human genome map to develop drugs or disease prevention tools.
The British firm also said it would claim damages of up to US$300 million in a U.S. Delaware court.
"We are claiming damages which will be based on our own lost business and also the royalties," an Oxford Gene spokesperson said.
Affymetrix (AFFX) shares tumbled 12 1/2 to 131 1/8.
In 1991, Oxford Gene licensed its microarray technology to research lab Beckman Coulter. Affymetrix purchased Beckman Coulter in July 1998, and used the technology in some of its products.
Oxford Gene argued that Beckman was a research lab and not a bona-fide business, and therefore was not capable of transferring its license to Affymetrix.
The British court agreed, and stated that Affymetrix was not authorized to use Oxford Gene's microarray patents in Europe and the United States.
Oxford Gene, which has licensing agreements with Incyte Genomics and Agilent Technologies, said it was also willing to negotiate and grant Affymetrix a license.
Patent lawyer Jeff Schwartz of McKenna & Cuneo in Washington, D.C., said the decision is based on a nuance in British law, and it may not hold up in the U.S. "This is simply the first step. (Affymetrix) still has to be found to have infringed, and that the patents are enforceable and valid," Schwartz said. "I can't imagine it would have any effect at this point. It's a preliminary ruling in an isolated jurisdiction," Schwartz said. He also agreed that the investor reaction on Friday was knee jerk.
Reuters contributed to this report.
