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Affymetrix, OGT Settle Infringement Dispute; Affy to Post $19M Charge

NEW YORK, March 26 - Affymetrix and Oxford Gene Technology said Monday they had settled a multinational patent infringement dispute, allowing both companies to proceed in licensing and developing their microarray technology.

The companies, which have been entrenched in a legal battle since 1999, would not disclose the terms of the settlement, but Affymetrix said that it would incure a $19 million charge as well as other possible legal fees.

OGT, which licenses its microarray technology to a number of companies including Agilent Technologies and Incyte Genomics, would not comment on the financial terms of the settlement. An Affymetrix spokesperson was not available to comment.

Under the settlement, OGT and Affymetrix agreed to dismiss their pending lawsuits in Delaware Federal court, as well as ongoing challenges to one another’s patents in the UK and opposition to one another’s European patents.

Ed Southern, OGT’s founder, told GenomeWeb the settlement was “a relief” for OGT.

“I think this clears the ground for people to go forward,” he said, adding that the settlement would allow OGT to continue its policy of openly licensing its technology to “anyone who wants to practice array technology or develop new ways of making arrays.”  

Affymetrix said it, too, was glad about the settlement.

“All of us at Affymetrix prefer to focus our energies on providing state of the art genetic analysis tools to help our customers achieve cutting-edge results,” Susan Siegel, president of Affymetrix, said in a statement. "We are delighted to have these matters behind us.”

OGT of Oxford, UK, had originally sought $120 million in damages for willfully infringing upon Southern’s pioneering microarray patent, which covered technology he developed in his lab at Oxford University in the late 1980s.

In November, a jury held that Affymetrix of Santa Clara, Calif., infringed upon OGT’s patents under a special rule called the “doctrine of equivalents,” but that it did not willfully infringe upon Affymetrix’s patents. The November ruling limited the amount of potential damages OGT could obtain to $40 million.

The jury also agreed with a previous UK appeal court ruling, holding that Affymetrix had the license to OGT’s patents after June 1, 1999. In effect, this limited OGT's claims to royalties on sales of Affymetrix chips prior to that date.

Affymetrix had argued that its technology did not infringe upon OGT’s patents because it manufactures its microarrays using photolithography, whereas OGT’s microarray technology involves printing microarrays. But the jury found this distinction to be immaterial.

The legal battle with OGT is one of a number of patent infringement lawsuits involving Affymetrix. Affymetrix has also been embroiled in ongoing patent infringement litigation with Incyte and Hyseq over microarray-related patents. The company was also sued by PE Biosystems, now Applied Biosystems, in July 2000 for infringing on chemical oligonucleotide synthesis patents.

Affymetrix will incur the $19 million in charges for the fourth quarter of 2000, and will also incur charges for an unspecified amount of attorneys’ fees during the first quarter of 2001, Affymetrix reported in a filing with the US Securities and Exchange Commission.

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