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Federal Judge Invalidates Affy Patent; Stanford App Returns to Examiners

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A Federal court has ruled invalid an Affymetrix patent filed in 1996.

US District Judge Jeremy Fogel of the Northern District Court of California, San Jose Division, last week ruled in favor of plaintiffs Incyte Pharmaceuticals and Stanford University and declared invalid a patent awarded to Affymetrix in 1998 and referenced by some 96 other subsequent patents.

The ruling breaches the palisade of patents that Affymetrix has created around its process for manufacturing microarray technology and may negatively affect the company’s business.

“Affymetrix’ failure to successfully defend against Incyte’s and Stanford’s complaint and any subsequent proceeding in the USPTO could result in a material adverse effect on Affymetrix’ business, financial condition and results of operations,” Affymetrix said in a third-quarter report to the SEC.

Affymetrix officials would not comment about the settlement.

The invalidated US patent, No. 5,800,992, “Method for Detecting Nucleic Acids,” was granted to Affymetrix CEO Steve Fodor in 1998. According to the application, on file with the USPTO, the patent covered a method and technology for sequencing, fingerprinting, and mapping biological molecules, typically polymers and recognition reagents for classifying samples.

Stanford is now free to continue its patent application process for microarray technology that was devised in the laboratory of biochemistry professor Pat Brown.

The litigation revolved around an issue that was left over after Affymetrix paid Incyte Genomics $4.5 million in cash at the end of 2001, to settle a multi-pronged patent infringement suit.

Unresolved in that settlement was an appeal of a decision made by the Board of Patent Appeals and Interferences of the US Patent and Trademark Office relating to Stanford patent applications that were exclusively licensed by Incyte.

Stanford and Incyte contended that the USPTO board incorrectly found they didn’t assert enough evidence to warrant a full interference proceeding, stipulating that Stanford was entitled to patents on subject matter covered by Affymetrix’s patent.

The Federal judge agreed and ordered the case remanded to the US PTO Board of Patent Appeals and Interferences.

“We are pleased that this came to a conclusion that we have supported all along,” said Paul Chirico, an Incyte spokesman.

Incyte, based in Palo Alto, pulled out of the microarray business in November 2001 in order to focus more on the drug discovery and genomic information areas. But it actively licenses its microarray intellectual property, holding 11 patents on microarray design and fabrication, eight in gene expression, and five in labeling and dyes.

Affymetrix released a tersely worded announcement last Friday, after the stock market closed, headlined “Affymetrix, Stanford University and Incyte Resolve Patent Oppositions and Interferences.”

According to a Securities and Exchange Commission filing Affymetrix made on Friday, Affymetrix and Stanford have agreed to end claims against each other. Affymetrix is not required to license its intellectual property to Stanford but, as part of the settlement, Affymetrix will fund two fellowships under the Bio-X program at the university.

The Bio-X program unites 40 faculty members of the School of Earth Sciences, the School of Engineering, the School of Humanities and Sciences, and the School of Medicine into an interdisciplinary research effort that will be housed in the ultramodern Jim Clark Center for Biomedical Engineering and Sciences, which is expected to be completed in June.

A total of 21 grants made under the Bio-X program and announced in November averaged $143,000 each. Initial grants, made in 2000, averaged $160,000 each.

“We are pleased that this matter is resolved and we look forward to collaborating with Affymetrix in the future,” said Ritch Eich, spokesman for the Stanford Medical Center.

Affymetrix has created a formidable portfolio of intellectual property around its microarray manufacturing processes with more than 200 patents granted since 1992 and another 300 applications filed.

It has also kept its five corporate lawyers busy with the legal proceedings of multiple intellectual property actions, including as many as four cases active at one time.

Since 1997, Affymetrix has battled against companies including Hyseq, Incyte and Oxford Gene Technology over the rights to the microarray technology. Affymetrix and Oxford Gene Technology settled in March 2001, with Affymetrix licensing OGT’s patent. Affymetrix settled with Hyseq in October 2001.

At issue in the Stanford court case, was the appeal of an [concept of] interference, part of the USPTO’s procedures in patent applications.

“In its simplest form, an interference is a determination of who was the first to invent, and therefore is entitled to patent the invention” said Lynn Pasahow, a partner at Fenwick & West, a Palo Alto firm.

The judge ruled there was no conflict between Stanford’s and Affymetrix’ claims in one case and ruled, in the second case, that there was no interference because the Affymetrix patent claims were invalid.

So, Stanford’s patent application now returns to USPTO examiners for consideration while Affymetrix has one less patent in its IP fortress.

Mark Schena, who in 1995 as a Stanford biochemistry post-doc co-authored a Science paper regarded as the first on microarray analysis, said the settlement means that Stanford will have the opportunity to be recognized for its contributions to microarray technology.

“Credit is much more important in science than money, and so I think the current settlement with Affymetrix is terrific news,” he said.

— MOK

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