Recently in an online community, I saw an investor commenting that Harbour BioMed (HK2142) is poised to receive a substantial payment following a successful patent litigation against Amgen, and therefore is bullish on the stock's medium-term performance. I believe investing in Harbour BioMed based on this reasoning would be a significant mistake, especially considering the recent weakness in the biotech sector.
Harbour BioMed sued Amgen for infringement concerning the aforementioned four patents. While the jury found Amgen liable and awarded Harbour $20.2 million in damages, it also invalidated two of Harbour's patents, US 9346877 and US 979, due to "lack of definiteness." In my view, while the legal battle over the first-generation transgenic mouse technology initiated by Harbour was necessary, the outcome feels somewhat like "the cost of victory outweighs the gain."
Furthermore, there is uncertainty regarding whether Harbour will actually receive the $20.2 million in damages. Amgen (AMGN) will inevitably file motions requesting the judge to overturn the jury's verdict. It is highly probable the case will escalate to the US Court of Appeals for the Federal Circuit. Until a final ruling is issued, excessive optimism is unwarranted.
A well-known comparable case is the decade-long patent infringement dispute between the CVC team and the Broad Institute over CRISPR gene-editing technology. When the US Patent Trial and Appeal Board ruled on the case in 2017, it determined the two patent portfolios did not cover the "same invention," allowing both parties to hold independent patent rights. Subsequently, the US Patent and Trademark Office's final decision was modified, granting the CVC team rights to the foundational system patent while the Broad Institute retained the patent for eukaryotic cell applications.
For the same litigation, the European Patent Office delivered a different verdict. While limiting the scope of some CVC claims, the EPO revoked the Broad Institute's European patent due to "lack of novelty," as the CVC patent had an earlier priority date. This illustrates that the US Federal Circuit Court could indeed render a different judgment, and outcomes for patent cases can vary significantly across different jurisdictions.
For instance, China's patent law framework, centered on the Patent Law of the People's Republic of China, employs an "absolute novelty" standard during examination and incorporates the concept of "conflicting applications" (where a patent application filed by another party before the filing date but published afterward can destroy novelty). The United States follows the common law system of case law, lacks the "conflicting application" concept, and primarily assesses novelty based on "prior art" and filing dates.
When determining patent infringement, China applies a "three-step" standard involving "identifying the closest prior art," "determining distinguishing features," and "assessing obviousness." The United States utilizes the "Graham factors" test. Even for an identical case, judicial outcomes can differ between countries.
Even if Harbour BioMed ultimately secures the $20.2 million payment from Amgen, it constitutes merely a one-time revenue event and does not elevate the company's long-term valuation anchor. A similar case can be referenced in the commercial dispute between Kelun-Biotech and YL Biopharma. Although the former received a significant payment from the latter this month and stands to gain potential future commercial milestone payments, Kelun-Biotech (HK6990) did not experience a sustained uptrend as a result, showing only a "single-day rally."
Therefore, it is unwise for investors to increase their position in Harbour BioMed based solely on the premise of a one-time litigation payout from a potential victory.
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