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UPDATE: Affymetrix Asks Judge to Nix Patent Infringement Verdict

NEW YORK, Nov 10 –Responding to a jury's finding that it infringed on Oxford Gene Technology’s microarray patents, Affymetrix has filed a motion for the judge to throw out the verdict.

“We feel we have a strong position to put in front of the judge and change the verdict,” said Affymetrix spokesman Michael Claes.

In the lawsuit, which is being heard in the US District Court for the District of Delaware, OGT sought $120 million in damages against Affymetrix for willfully infringing on founder Ed Southern’s pioneering microarray patent.

The jury of eight found Friday afternoon that Affymetrix did not willfully or literally infringe on OGT’s patents, but that it did infringe under a rule called the doctrine of equivalents.

The court also held that Affymetrix had a license to OGT’s technologies after June 1, 1999, agreeing with a UK appeal court ruling last week on the same issue.

This verdict substantially reduces the total damages that OGT can claim against Affymetrix: A finding of willful infringement would have allowed OGT to seek triple the amount of the damages it alleges it suffered, or up to $120 million. Now OGT can only claim up to $40 million in damages.

The finding of infringement under the doctrine equivalents is just as serious as a finding of literal infringement, according to patent attorney Rochelle Seide, chair of the Biotechnology committee for the American Intellectual Property Lawyers Association.

" There are two ways to have direct infringement of a patent,” said Seide. “Literal infringement means whatever you are doing literally falls the language of the patent’s claim.

" But if infringement is not literal, you can still infringe under the doctrine of equivalents, which means that the infringing product does substantially the same thing in substantially the same way to obtain substantially the same result as the claimed invention.”

In this case, Affymetrix believes that there was not enough evidence for the jury to reach a finding of infringement under the doctrine of equivalents.

“The kind of evidence and kind of testimony a jury would need to properly support a finding based on the doctrine of equivalents was simply not in the courtroom,” Claes said.

In patent cases, the judge has discretion to review jury verdicts and to throw them out if they were arrived at through erroneous or incomplete understanding of the law.

The trial will progress to the second phase Monday, in which the jury will consider Affymetrix’ claim that OGT’s patent is invalid and unenforceable. If the patent is held to be valid, a third phase of the trial will be held to determine damages.

“We will now proceed to challenge the validity of the patent as well as other issues including patent misuse, fraud and anti-trust violations arising from OGT’s relationship with certain Affymetrix competitors,” Vern Norviel, Affymetrix’ senior vice president and general counsel, said in a statement.

Affymetrix alleged in pre-trial hearings that OGT was having its legal fees paid through a $15 million agreement with Agilent entered into after OGT cancelled good faith patent licensing negotiations with Affymetrix.

Affymetrix also argued at trial that it did not infringe on OGT’s patents because it was holding these good faith negotiations with OGT, until OGT cancelled the negotiations because it was allegedly negotiating with manufacturing and marketing partners for its microarrays—specifically Agilent and Amersham Pharmacia Biotech.

But Agilent spokesman Doug Forsyth denied these allegations that Agilent was behind OGT’s lawsuit.

“The two cases brought by OGT against Affymetrix in the United Kingdom and the case brought against Affymetrix by OGT in Delaware were all brought long before OGT and Agilent initiated discussions leading to our agreement on terms for Agilent's patent license,” Forsyth said Thursday. ”Consequently, no action by Agilent prompted OGT's suits against Affymetrix.”

However, Forsyth said, Agilent’s agreement with OGT did provide that OGT could use the $15 million for “a variety of purposes, including funding its litigation efforts.”

Affymetrix has put aside 10 percent of sales revenues for any possible royalty payments, according to a report by Robertson Stephens analyst Mike King. The present verdict limits the total royalties OGT may receive, since it can only receive royalty payments up to the time Affymetrix acquired the license to its patents.

OGT, meanwhile, has said it will appeal the UK appeal court decision to the House of Lords.

“If the House of Lords reverses the Court of Appeal’s decision the US court will apply the new ruling, so that Affymetrix’s infringement will be continuing,” OGT said in a statement released Friday evening. “If the license is upheld today’s ruling means that Affymetrix will be liable for 10 percent royalties on their entire future array sales.”

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