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Illumina to Pay $333.8M in Damages Following Jury Verdict in MGI Tech Patent Infringement Suit

This story has been updated to include comment from MGI Tech.

NEW YORK – A jury in Delaware has found that Illumina's two-channel sequencing chemistry infringes two patents held by China's MGI Tech through its subsidiary Complete Genomics and awarded the firm $333.8 million in damages.

In a verdict issued Friday, the jury said that Complete Genomics was able to prove direct, induced, and contributory infringement of US Patent Nos. 9,222,132 and 10,662,473, both titled "Methods and Compositions for Efficient Base Calling in Sequencing Reactions." Moreover, the jury found Illumina's infringement to be willful, resulting in enhanced damages.

The jury also rejected Illumina's claims that the patents were invalid and invalidated three Illumina patents that the company had asserted in a countersuit that claimed infringement by MGI Tech and its affiliate, BGI.

"We respectfully disagree with the jury's decision, and we intend to appeal it," an Illumina spokesperson said in a statement. "We do not anticipate that this decision will affect our ability to supply and service our customers."

The high-throughput NovaSeq 6000 and mid-throughput NextSeq instruments, including the NextSeq 550 Dx clinical sequencer — arguably Illumina's most important product lines — all run on two-channel, or two-color chemistry, as does the MiniSeq.

Whether Illumina will also have to pay royalties on future sales of these systems and their associated reagents to MGI Tech remains to be seen. On Thursday, Illumina reported sequencing revenues of $996 million, driven in large part by NovaSeq instrument and consumables sales.

"If our appeals are unsuccessful, we could be required to pay interest on the judgment and an ongoing royalty at a rate to be determined by the court until the patents expire in January 2029," Illumina disclosed in a form 8-K filed on Friday with the US Securities and Exchange Commission. "In addition, although Complete Genomics may seek an injunction, we do not believe there is a reasonable basis for the court to grant one."

Complete Genomics, a US subsidiary of MGI Tech, filed the lawsuit in May 2019 in the US District Court for the District of Delaware, alleging infringement of the '132 patent. A few months later, the firm added allegations that Illumina infringed the '473 patent.

Illumina filed a countersuit, alleging that Complete Genomics, MGI Americas, and BGI Americas infringed its US Patent Nos. 9,303,290; 9,217,178; and 9,970,055, all titled "Method of nucleotide detection."

The verdict comes just a few months after a different federal court ruled that BGI's and MGI Tech's sequencers and reagents infringed patents held by Illumina and granted Illumina a permanent injunction blocking the sale of those products until the patents expire. One of those patents, US Patent No. 7,771,973, titled "modified nucleotides," will expire in August.

"Illumina invented its two-channel technology before the BGI patents, and BGI was unable to make two-channel chemistry work until it copied Illumina's technology," the Illumina spokesperson said. "The evidence also showed that BGI had copied numerous other components of Illumina's technology, including its imaging buffer used in Illumina's sequencing-by-synthesis technology and infringed Illumina's patents related to that technology."

"MGI is pleased that the jury verdict in the United States District Court for the District of Delaware supported all our claims," the firm said in a statement.

In Monday morning trading on the Nasdaq, shares of Illumina were down 9 percent at $226.57 after closing down 15 percent on Friday.

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