NanoString files for bankruptcy as first UPC Court of Appeal ruling looms
NanoString has filed for Chapter 11 bankruptcy in the US to restructure its business. This will halt all global patent litigation. In Europe, the judgment of the UPC Court of Appeal in the PI proceedings against 10X Genomics is imminent. However, it is unclear how the UPC will react to current developments.
7 February 2024 by Mathieu Klos
Since September, NanoString has been unable to sell its products in Europe. This affects NanoString’s CosMx Spatial Molecular Imager (SMI) instruments and CosMx reagents for RNA detection. The UPC local divison in Munich prohibited this at the request of 10X Genomics.
NanoString immediately appealed to the UPC Court of Appeal. In the dispute over the analysers, the District Court of Delaware also imposed a claim for damages against NanoString for $31 million. This is what has probably led to the filing of a Chapter 11 petition.
Proceedings on hold
Brad Gray, president and CEO of NanoString, says, “The unexpected outcome of the November GeoMx patent litigation trial in Delaware and the unusually large magnitude of the damages awarded by the jury have forced us to take proactive steps to protect our stakeholders, customers and employees. We believe Chapter 11 protection will provide us with the necessary breathing room to continue to serve our customers while we address our litigation and the related financial challenges.”
The filing is accompanied by a new $40 million cash injection from key lenders. NanoString intends to continue selling its products.
According to JUVE Patent information, the company has probably also applied in the US to stop all global patent proceedings for the time being.
Effect on European litigation
However, the move will not necessarily immediately impact proceedings between 10X Genomics and NanoString in Germany and at the UPC. 10X Genomics had sued its competitor at the Munich Regional Court in February 2022 and at the UPC in June 2023 over several patents. Both courts imposed sales bans against NanoString in Germany and Europe respectively. NanoString appealed against the injunctions in each case.
Even though Munich Higher Regional Court has provisionally allowed NanoString to sell products in Germany again, the UPC’s preliminary injunction remains in force.
In order to halt proceedings, NanoString would have to submit corresponding applications to the courts. It is particularly piquant that 10X Genomics and NanoString are awaiting the judgment of the UPC Court of Appeal in one of two PI proceedings. Here, NanoString is challenging the sales ban.
The UPC Court of Appeal heard the case in December, with the ruling set to be the first judgment by the Court of Appeal in a main action. Many observers expect it to clarify the details of the new court. Over the past three weeks, various UPC judges have announced there will be a ruling in the near future. However, none have given a specific date.
To stay or not to stay
But the legal situation in Europe regarding Chapter 11 applications in the US is unclear. While in Germany, the Federal Court of Justice generally allows a halt of ongoing proceedings in Chapter 11 applications, courts can announce judgments if they have already held a hearing.
According to experts, the European Patent Office does not take Chapter 11 proceedings in the US into consideration in grant proceedings.
The UPC’s position on this issue is unclear. According to Rule 311 of the UPC Rules of Procedure, companies in insolvency can apply for a stay of UPC proceedings. Whether this also applies to Chapter 11 proceedings has yet to be clarified by the Court of Appeal. JUVE Patent does not know whether NanoString has already filed such applications.
In the patent proceedings, 10X Genomics is represented by Bardehle Pagenberg and NanoString by Bird & Bird.
