On July 15, Shenzhen Huada Intelligent Manufacturing Technology Co., LTD. (hereinafter referred to as "Huada Intelligent Manufacturing", MGI), a subsidiary of Shenzhen Huada Group, announced that the company and global gene sequencer giant Illumina reached a settlement of all pending litigation in the United States.
Under the terms of the agreement, the parties will no longer contest the outcome of the proceedings in the United States District Court for the Northern District of California and the District Court for the District of Delaware. Based on this, Imina will pay a net compensation of US $325 million to Complete Genomics (the "CG Company"), a subsidiary of BGI. It is reported that the amount of damages of $325 million will create a new record for Chinese enterprises in the history of patent litigation!
In addition, BGI will withdraw its antitrust suit against Imina in the Northern District Court of California. Imina will obtain a series of patent licenses for "Two-color sequencing technology" from Huada Intelligence and its subsidiary CG Company. Bda will begin selling its CoolMPS technology-based sequencing products in the United States in August 2022, and StandardMPS related sequencing products in January 2023.
The two parties also agreed that in the next three years, they will not Sue each other or their customers in the United States for patent infringement, violation of U.S. antitrust law or unfair competition, and will not claim damages that may be caused by the existing sequencing platform.
For Huada Wisdom Manufacturing, its products in recent years in the process of going to sea constantly encountered Imina patent interception, ending this dispute is conducive to the smooth sale and use of its products in the US market. For Imina, it has also obtained the authorization of a series of patents for two-color sequencing technology of CG, a subsidiary of Huada Intelligence Manufacturing, to avoid the risk of patent countermeasures derived from it in the future.
In addition to the US market, on July 7 this year, Huada Wisdom also announced that its sequencing equipment based on HotMPS high-throughput sequencing reagents can be officially sold in the UK market from now on. The company's official micro said that the customized version of DNBSEQ-G400 sequencer adapted to HotMPS high-throughput sequencing reagents (DNBSEQ-G400 sequencer is named MGISEQ-2000 in China) plans to enter British customers, including Imperial College London, in the near future.
Previously, due to the unknown outcome of the dispute with Imina, many sequencing products made by Huada Wisdom could not be sold and used normally in the UK. However, according to foreign media genomeweb reported that on July 7 local time, Huada Intelligent Manufacturing said that it had reached an approval agreement with the court, allowing it to list sequencing equipment based on HotMPS high-throughput sequencing reagents in the UK. This means that the company has bypassed the patent dispute with Imina and entered the UK market.
Bda Intelligence Manufacturing focuses on gene sequencers known as "national instruments". Founded in April 2016, the company was independently separated from the original sequencer segment of Huada Group. The sector originated in 2013, when BTU acquired the US CG company, obtained the core patented technology, and then set up a sequencer research and development team to implement domestic technology transformation.
The actual control behind the company is Wang Jian, the founder of Huada Group, and the domestic gene sequencing leading listed company BGI (300676) is an associated company under the same controller. In addition, the IPO of Huada Intelligent Manufacturing Technology was successfully held on September 2, 2021, and is currently submitted for registration.
It is worth noting that the disclosure of the settlement statement only relates to the parties' cases in the United States. In fact, in recent years, the intellectual property litigation between the two sides has involved many countries and regions around the world.
From the perspective of gene sequencer market, foreign gene testing technology started earlier, Illumina and Thermo Fisher occupy a large market share in gene sequencing equipment and reagent consumables. Previously mentioned in the prospectus, according to the market report released by Grand View Research in 2020, the upstream market size of the global sequencing industry in 2019 was about 4.138 billion US dollars, Illumina's market share was about 74.1%, and the related business revenue was 3.068 billion US dollars. Thermo Fisher has a market share of about 13.6 percent and related business revenue of $563 million, while other companies, including BDA Intelligent Manufacturing, together account for about 12.3 percent of the market. In 2019, the revenue of BDA's gene sequencer business was 1.001 billion yuan (equivalent to about 145 million US dollars).
Since 2019, Illumina and its subsidiaries have initiated or may initiate patent and trademark infringement cases outside of China against BGI, its subsidiaries, distributors, and customers. The countries or regions involved in the lawsuit include the United States, Germany, Belgium, Switzerland, Britain, Sweden, France, Spain, Hong Kong, Denmark, Turkey, Finland, Italy, Japan, Greece, Hungary, the Czech Republic and other 17 countries and regions.
At present, the company and its subsidiaries in the United States, Germany, Sweden, Spain, Belgium, the Czech Republic and other six countries, as well as the issuer's customers in Finland, are still affected by the temporary ban, during the period of validity of the temporary ban, will not be able to carry out business in these countries within the scope of the provisional ban involved in the products.
At the same time, the trial cycle of these intellectual property litigation cases in various countries or regions is generally relatively long. In addition to the aforementioned effects, it cannot be ruled out that relevant intellectual property litigation or potential litigation may further affect the company's future business in the overseas countries or regions involved in the products involved in the litigation. Thus, the sales performance of the company in the overseas country or region involved in the lawsuit will be adversely affected.
According to the prospectus, the operating income of Huada Intelligent Manufacturing in 2018, 2019 and 2020 was 1.097 billion yuan, 1.091 billion yuan and 2.78 billion yuan respectively, and the net profit attributable to the owner of the parent company was 125 million yuan, -244 million yuan and 261 million yuan respectively.
Public information shows that Shenzhen Huada Intelligent Manufacturing Technology Co., LTD. (hereinafter referred to as "Huada Intelligent Manufacturing"), founded in 2016, belongs to the same Huada Group as the listed company BGI. Its main business is the research and development, production and sales of sequencers and supporting reagents, and it is an important instrument and reagent supplier of BGI.
Imina, a Us-Based developer, manufacturer and marketer of life science tools and integrated systems, is one of the world's three high-end manufacturers capable of independently developing and mass-producing clinical-grade sequencers. Bda is the third company in the world to have this capability.
In recent years, the patent war between Huada and Imina has attracted attention. With the expansion and collision of the two parties in the international market, the commercial war between them using patent litigation as a tool has also intensified. There are relevant patent litigation cases in the courts of London, Germany, Munich, Stockholm, Switzerland, Zurich and other countries and regions.
In May, a federal jury in Delaware found that Illumina's two-channel sequencing chemistry violated two DNA sequencing patents held by its subsidiary, Complete Genomics Inc. (CGI). $333,801,990 should be paid to CGI. It is the largest patent settlement ever awarded by a Chinese company overseas.
According to public reports, Wei Wei, senior vice president and general counsel of BDA Intelligent Manufacturing, has said that the company has a source patent layout in the field of gene sequencing through long-term investment, which is also one of the core assets of BDA Intelligent manufacturing. The development and protection of intellectual property rights is an important foundation for BGI to continue to develop in the field of gene sequencing and provide first-class life technology core tools for the industry.
"We are confident in the value and strength of BGI's patent portfolio and will protect our intellectual property around the world when necessary." The current lawsuit demonstrates the company's serious attitude and firm confidence in protecting its intellectual property rights." Wei Wei said.
Full text of the statement:
Statement from Huada Wisdom
MGI and its affiliates today announced that they have settled all pending litigation with Illumina in the United States. Under the terms of the agreement, the parties will no longer contest the outcome of the proceedings in the District Court for the Northern District of California and the District Court for the District of Delaware. Based on this, Imina will pay a net compensation of US $325 million to CG, a subsidiary of Huada Intelligent Manufacturing.
In addition, BGI will withdraw its antitrust suit against Imina in the Northern District Court of California. Imina will obtain a series of patent licenses for "Two-color sequencing technology" from Huada Intelligence and its subsidiary CG. As previously announced, BGI will begin selling its CoolMPS technology-based sequencing products in the United States in August 2022, and StandardMPS related sequencing products in January 2023.
The parties also agreed that they will not Sue each other or their customers in the United States for patent infringement and violations of U.S. antitrust law or unfair competition for the next three years, and will not claim damages that may be caused by existing sequencing platforms.
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