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Update: SQNM Faces Further Patent Litigation

|Includes:Sequenom, Inc. (SQNM)

Sequenom (NASDAQ: SQNM) released an 8-K today disclosing that it had been named in a complaint filed by Natera seeking a judicial declaration that (i) its pre-natal paternity test does not infringe on a patent licensed by SQNM from Isis Innovation and (ii) that some of the patent claims are invalid. SQNM reported in late December that it was subject to a similar claim filed by Aria Diagnostics (see our previous article).

It appears as though the more important aspect of the lawsuit relates to the attempt to invalidate one or more of the patent claims. While SQNM certainly could develop and market a paternity test, its filings only reference the use of the technology for pre-natal disease recognition. If, however, some of the patent claims are found to be invalid, the decision could have a significant impact on SQNM’s intellectual property battles with more threatening competitors, such as Aria.

It is important to keep in mind that by filing an 8-K, SQNM has determined that the lawsuit is material enough to the investment decision making process to warrant disclosure to investors. As there is no reference to the development of a paternity test in any of SQNM’s SEC filings, the aspect of the matter that likely crossed the materiality threshold appears to be the possible invalidation of patent claims. While SQNM did not file a press release related to the matter, investors should be wary. The fact that the matter was disclosed at all indicates that the company is taking it seriously.

Stocks: SQNM