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Illumina to Pay $325M Under Settlement With BGI Affiliates, Ending Multifront US Legal Battle

NEW YORK – Illumina said on Thursday that it has reached a settlement and licensing agreement with China's BGI and its affiliates, including MGI Tech, that will end the multi-year legal battle between the two sequencing firms in the US.

The settlement ends all outstanding litigation, including at least four lawsuits in US district courts and four pending appeals in the US Court of Appeals for the Federal Circuit, concerning patent infringement and antitrust allegations.

Under the terms of the agreement, Illumina will pay $325 million to Complete Genomics, the US-based subsidiary of Shenzhen, China-based MGI Tech. In addition, Illumina received "a fully paid-up license" to two-color sequencing from BGI. In May, a Delaware jury ruled that Illumina's two-color sequencing technology — featured in its two most commercially important sequencing instrument lines, NextSeq and NovaSeq — had infringed two patents held by Complete Genomics and awarded the firm $333.8 million in damages.

"The license allows [Illumina] to use the two-channel technology in all its current and future platforms with no additional royalties owed," the firm said in a filing with the US Securities and Exchange Commission.

In turn, BGI received a fully paid-up license to Illumina's so-called "image mix patents": US Patent Nos. 9,217,178, 9,303,290, and 9,970,055.

The firms have also agreed to a litigation ceasefire until Oct. 1, 2025. "The standstill does not apply to the parties' patents or patent applications related to noninvasive prenatal testing (NIPT), nor to any intellectual property of Grail related to multi-cancer early detection," Illumina told the SEC. "None of the parties make any admission of liability in entering into the agreement."

A permanent injunction from April that prevents MGI from selling products based on its StandardMPS sequencing chemistry in the US remains in effect; however, the firms have revised it to expire on Jan. 1, 2023.

In a statement, MGI reiterated that it will begin selling its CoolMPS sequencing technology in the US next month.

The settlement follows a similar agreement last week that ended a patent infringement lawsuit between MGI Tech and Illumina in the UK. Whether the parties have settled their litigation in other countries is unclear. MGI announced last month that it plans to enter the European market soon with its new HotMPS chemistry.

The settlement heralds a new era of competition for Illumina. MGI announced plans to enter the US market in 2019, but Illumina successfully used litigation to keep it at bay, highlighted by a 2021 victory in the US District Court for the Northern District of California, when a judge ruled that StandardMPS and CoolMPS infringed several Illumina patents. MGI will join a raft of startups that plan to ship new short-read sequencing platforms to US customers over the next year, such as Singular Genomics, Element Biosciences, and Ultima Genomics.

Illumina did not immediately respond to a request for comment.

In Friday morning trading on the Nasdaq, shares of Illumina were flat at $178.82. Shares of the firm are down 9 percent from the beginning of the week.