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Affymetrix Loses First Round in Patent Dispute to Oxford Gene, Plans to Appeal

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OXFORD, UK--Affymetrix lost the first round of a DNA microarray patent and licensing dispute here when a court ruled in favor of Oxford Gene Technology. The ruling found that Affymetrix's acquisition last year of Beckman Coulter's array business did not legally transfer Beckman's license to patents held by Oxford Gene. The court's finding applies to Europe, the UK, and the US.

The dispute is far from over, however. Affymetrix said it plans to appeal in the UK, and Oxford Gene is seeking $300 million in damages in a US patent infringement case set to begin in October. Besides the cash at stake, a loss by Affymetrix could foster more competition in the microarray space as Agilent Technologies and Incyte Genomics both license technology from Oxford Gene. In the worst case, Affymetrix could be prevented from selling its microarrays. But that is unlikely, according to one industry observer who noted that cases like these are usually resolved with one company paying another for a license.

The UK court ruled that Beckman's microarray operations only qualified as a research effort and not a business, making it unable to hand its license to Affymetrix under British law. In 1998, before acquiring the Beckman microarray unit, Affymetrix had negotiated with Oxford Gene directly to get a license, but talks failed when agreement couldn't be reached. Affymetrix then worked out a deal with Beckman.

Chris Shelley a lawyer at Manches, the law firm representing Affymetrix in the UK, said that the real issue is that Affymetrix didn't want to license its patents to Oxford Gene. When talks started to stall, Oxford Gene said it suspected that Affymetrix secretly went to Beckman to avoid Oxford.

Edward Hurwitz, Affymetrix's chief financial officer, told BioInform that Affymetrix was willing to grant a license to Oxford Gene, but that the proposed deal was not fair. It called for Affymetrix to gain access to two patents that it didn't believe it needed, and gave Oxford rights to more than 370 of Affymetrix's issued patents.

Affymetrix disagreed with the UK decision and expects its appeal to be heard in the UK within 12-18 months. In the US, Oxford has to prove that the patents are valid and that Affymetrix infringed them, said Hurwitz.

Hurwitz said that for Oxford Gene to be awarded the $300 million in damages it seeks, it would have to prove lost profits--that it would have been able to supply and sell the arrays that Affymetrix sold. The US court will retry the issue of whether the transfer of the Beckman license to Affymetrix was valid, said Hurwitz.

In the meantime, it's "business as usual" for Affymetrix, said Hurwitz. Last week, the company launched its GeneChip GenFlex array, a platform for hybridization-based assays that is the first of a planned product line designed to support flexible applications in genomics. The company also released new chips for human gene expression analysis, called the Human Genome U95 Set.

--Matthew Dougherty

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