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Nanogen Reaches Settlement with Motorola in Patent Dispute

NEW YORK, July 24- Nanogen and Motorola have reached a settlement agreement for a patent dispute over electricity-based DNA detection technology, the two companies announced on Tuesday.

According to the terms of the settlement, Nanogen will make a one-time payment of $5 million in cash and stock to Motorola and two other parties involved, the now-defunct Genometrix and the Massachusetts Institute of Technology, and will drop its declaratory judgement action against the parties. In return, Nanogen will acquire a license from Motorola to Claims 16 and 39 of the patent.

The patent, number 5,653,939, - "Optical and Electrical Methods and Apparatus for Molecular Detection," was licensed to both Motorola and Nanogen for different applications. Nanogen uses the technology as part of its NanoChip Molecular Biology Workstation, which identifies biological molecules for research use.

"Obviously, you can fight this to the death, or you can agree to settle it," Nanogen CFO Gerard Wills said. "And that's what we did."

The seeds of the dispute were planted in the early 1990s when MIT, as original owners of the patent, licensed it to both Beckman Coulter and Genometrix. The companies planned to use it for electronic hybridization, but within two separate, noncompetitive "fields of use." A few years later, Genometrix and Beckman Coulter sublicensed the patent to Motorola and Nanogen, respectively.

Motorola eventually claimed that Nanogen was "crossing over" by applying the technology of the patent to Motorola's field of use. In response, in April 2000, Nanogen launched what Wills called a "preemptive strike," filing a suit of non-infringement and invalidity to demonstrate that the company had not violated Motorola's licensing of the patent because it did not apply to Nanogen's field of use. Soon after, Motorola responded with a counterclaim of patent infringement to demonstrate that Nanogen's field of use was, in fact, Motorola's.

According to Wills, the settlement outcome was very important for Nanogen's future. Nanogen did not want another company -- especially one as big as Motorola -- to become a competitor by developing the same technology. "It was very important to us to not give them access to our technology," said Wills. "We were able to achieve [our goal.]"

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