Illumina found to infringe 5 Affymetrix patents
LOS ANGELES, March 13 (Reuters) - Illumina Inc. (ILMN.O: Quote, Profile , Research), a maker of products used in genetic research, said on Tuesday that a federal jury found the company had infringed five patents held by Affymetrix Inc. (AFFX.O: Quote, Profile , Research) and ordered it to pay about $16.7 million in back royalties.
The Delaware decision sent shares of Illumina down nearly 8 percent, while shares of Affymetrix rose nearly 4 percent.
Affymetrix said the jury found Illumina's arrays, scanners, software and related products infringed its patents and the company owed royalties for sales between 2002 and 2005.
Illumina, based in San Diego, said it plans to appeal, will continue to sell the products and will not pay any damages until the appeals process is complete.
The true financial implications for both companies remain uncertain as the case heads into a second phase in which the validity of the patents will be determined, Deutsche Bank analyst Ross Muken said in a research note.
Santa Clara, California-based Affymetrix said it expects that phase, including a finding on whether Illumina's infringement was willful, to occur later this year.
Affymetrix said it has also requested injunctive relief in the case.
Illumina has also filed a countersuit against Affymetrix. "We expect the appeals process to last at least an additional six to 12 months, which would likely push the ultimate resolution well into fiscal 2008," Muken said.
If the Affymetrix patents are found to be valid, the 15 percent royalty rate would lower Illumina's 2008 estimated earnings per share from $1.35 to between 80 and 90 cents, and raise 2008 earnings for Affymetrix from 55 cents a share to a range of 85 cents to 95 cents, the analyst said.
Illumina said in a news release on Thursday that the U.S. Patent and Trademark Office was weighing in on the dispute by declaring a patent interference -- a procedure instituted when an issued patent and an allowed patent application claim essentially the same invention.
Illumina shares fell $2.44 to close at $28.86 on Nasdaq, while Affymetrix rose 99 cents to $26.62. |
