A CATALIST-LISTED medtech firm that made strong gains this year as investors hunted for exposure to tech plays and Covid-19 test makers, has now claimed that a Japanese group breached intellectual property-related (IP) agreements.

 

Biolidics has issued a letter of demand to Japan-based healthcare group Sysmex Corporation, saying that Sysmex breached IP obligations under a collaboration agreement struck in 2016 for the joint development of biochips.

 

Biolidics is claiming that Sysmex has filed certain patent applications in the US, China, Japan and Europe which contain IP, technical information and/or know-how that belongs to Biolidics and/or qualifies as newly developed or jointly developed IP under the development agreement.

 

Under the agreement, both parties agreed that any newly developed or jointly developed IP would be jointly owned.

 

They would also need to discuss in which countries the patent applications will be made, as well as the percentage of each party' s respective ownership share before the applications are filed.

 

Such patent applications would then be jointly filed by both parties after an agreement is made.

 

Biolidics asserted that Sysmex had an obligation under the development agreement to reach a joint agreement prior to filing the applications.

 

" The company also asserts that in filing the patent applications without reaching a joint agreement with the company, Sysmex had breached its obligations of confidence and to act in good faith owed to the company under the development agreement," Biolidics said in a bourse filing on Friday night.

 

Biolidics has demanded that Sysmex provide an undertaking that it will refrain from using or disclosing Biolidics' confidential information contained in, among others, IP, technical information and/or know-how.

 

Sysmex, in its undertaking, will also need to rectify the pending patent applications to reflect Biolidics as sole proprietor or joint proprietor, as the case may be and enter into a commercial licensing agreement with Bioliodics for any and all relevant IP owned by Biolidics which Sysmex requires for its commercial endeavours.

 

Biolidics demanded that Sysmex affirms, under oath, a full and complete listing of any and all patent applications filed in respect of or in connection with the development agreement.

 

Biolidics also demanded compen-sation from Sysmex for legal or other reasonable administrative costs incurred in this matter.

 

The company said it is working with its legal advisers to monitor the progress of this matter and will update its shareholders if there are any material developments. In the meantime, the group' s operations are unaffected by this matter.

 

If Sysmex fails to comply with the letter of demand, Biolidics said it intends to take all necessary steps to protect its interests, including starting dispute resolution proceedings in accordance with the development agreement.

 

The matter may have an impact on the group' s financial performance for the financial year ending Dec 31, 2020, depending on the timing and outcome of Sysmex' s response to the letter of demand. The group said it is unable to quantify the impact of the matter on its fiscal 2020 financial performance.

 

Shares of Biolidics closed flat at 32.5 Singapore cents on Monday. At its height this year, the stock more than doubled since it started the year trading at 22.5 Singapore cents, propelled by announcements related to its Covid-19 test kits. But the shares have lost some ground since July.

 

At end-March 2020, Biolidics announced the launch of a rapid test kit for the novel coronavirus in April this year. The test kit received provisional authorisation from Singapore' s Health Sciences Authority for use in the Republic at the time.

 

This is in connection with the Company' s claim that Sysmex has breached its obligations under a Collaboration Agreement for the Joint Development of Biochips entered into between the Company and Sysmex dated 14 March 2016 (the " Development Agreement" ). Further details in relation to the Development Agreement is set out under the section entitled &ldquo Our Business &ndash Research and Development&rdquo of the Company&rsquo s offer document dated 11 December 2018.

 

Under the Development Agreement, the parties had, among others, agreed that: (a) any newly- developed or jointly-developed intellectual property under the Development Agreement would be jointly owned by both parties (b) before filing an application of patent rights relating to any newly- developed or jointly-developed intellectual property, the parties would discuss on the countries in which the application will be made and the percentage of each party' s respective ownership share and (c) such patent applications would be filed jointly following such joint agreement.

 

As advised by the Company&rsquo s legal advisors, the Company understands that Sysmex has filed certain patent applications in the United States of America, People&rsquo s Republic of China, Japan and Europe (the " Patent Applications" ) and that the Patent Applications contain intellectual property, technical information, and/or know-how that: (a) belongs to the Company and/or (b) qualifies as newly- developed or jointly-developed intellectual property under the Development Agreement. As such, the Company is of the opinion that the filing of the Patent Applications by Sysmex has breached its obligations under the Development Agreement to reach a joint agreement with the Company prior to filing of the Patent Applications.

 

Accordingly, the Company asserts that Sysmex had an obligation under the Development Agreement to reach a joint agreement with the Company prior to filing the Patent Applications. The Company also asserts that in filing the Patent Applications without reaching a joint agreement with the Company, Sysmex had breached its obligations of confidence and to act in good faith owed to the Company under the Development Agreement.

 

In light of the foregoing, and as set out in the LOD, the Company demands, among others: 

(a) that Sysmex provides the Company with an undertaking that it will:

(i) refrain from using or disclosing the Company' s confidential information contained in, among others, intellectual property, technical information, and/or know-how that belongs to the Company

(ii) rectify the pending patent applications to reflect the Company as sole proprietor or joint proprietor, as the case may be and

(iii) enter into a commercial licensing agreement with the Company for any and all relevant intellectual property owned by the Company and which Sysmex requires for its commercial endeavours

(b) that Sysmex affirms under oath a full and complete listing of any and all patent applications filed in respect of or in connection with any subject matter of the Development Agreement and

(c) that Sysmex compensates the Company for legal or other reasonable administrative costs incurred in this matter.