Illumina said today it agreed to settle all patent infringement claims between its Verinata Health business and Sequenom, under an agreement that will cost Illumina more than $50 million but grant it global rights to the technology behind the disputed intellectual property.
The companies agreed to pool all their owned and in-licensed IP covering noninvasive prenatal testing (NIPT). The pool will include patents that remain the subject of ongoing interference proceedings, according to Illumina and Sequenom.
The agreement gives Illumina exclusive worldwide rights to use the pooled IP to develop and sell in vitro diagnostic kits for NIPT, as well as to license third-party laboratories looking to develop and sell their own lab-developed NIPT tests under the pooled patents.
Illumina agreed to pay Sequenom $50 million upfront, plus undisclosed “ongoing commitments for payments” through 2020 via the patent pool structure.
However, the companies amended an existing supply agreement by extending for an additional five years the period in which Illumina will supply Sequenom with reagents and instruments.
“The patent pool established through this agreement eliminates confusion over intellectual property rights and provides a single point of contact for those wishing to license this intellectual property for NIPT testing,” Illumina CEO Jay Flatley said in a statement.
Added Sequenom CEO Bill Welch: “We believe that pooling our intellectual property will enable us to continue to expand our NIPT laboratory test offerings while allowing Sequenom to participate more broadly in the growing global NIPT marketplace.”
Illumina acquired Verinata Health last year for $350 million upfront, plus up to $100 million in payments through 2015 tied to undisclosed milestones.
The settlement comes eight months after Sequenom disclosed in a regulatory filing that it received favorable decisions from the U.S. Patent and Trademark Office, Patent Trial and Appeal Board tied to four patent interference proceedings involving the use of DNA sequencing for noninvasive prenatal testing for Down syndrome and other chromosomal abnormalities.
The board conducts interference proceedings when opposing parties have applied for a patent to the same invention, in order to determine which party was first to invent the subject matter covered by the patents in question.
At issue were patent applications that were exclusively licensed to Sequenom by the Chinese University of Hong Kong, with Dennis Lo, Ph.D., the first named inventor; as well as patents and a patent application licensed by Stanford University to Verinata Health, on which Stanford professor of bioengineering and applied physics Stephen Quake Ph.D. was named inventor.
The Quake patents had been asserted by Verinata against the Company in a patent infringement lawsuit filed in the U.S. District Court for the Northern District of California, case no. C-12-00865 SI, Sequenom stated April 7 in an 8-K filing with the U.S. Securities and Exchange Commission.
Sequenom sued Verinata in 2012, alleging infringement of the Stanford/Quake patents.