Genetic testing company Natera was ordered to pay $57 million in a patent infringement lawsuit brought by rival Ravgen, but Natera still considers the verdict a win since the amount is a fraction of what Ravgen was seeking and the jury found no willful infringement.
Background of the Legal Battle
Ravgen sued Natera in 2021, alleging that Natera’s non-invasive prenatal tests infringed on patents held by Ravgen involving methods to detect fetal genetic traits from circulating cell-free fetal DNA. Ravgen was seeking $1 billion in damages from Natera.
Natera denied infringing Ravgen’s patents and argued the patents were invalid.
The case went to trial in January 2024 in federal court in Austin, Texas. After a 12-day trial, the jury reached a verdict on January 13 finding Natera liable for infringing two Ravgen patents involving testing cell-free fetal DNA.
Verdict and Damages
The jury awarded Ravgen $57.1 million in reasonable royalty damages, far below the $1 billion Ravgen was seeking.
Natera considers this a major victory. In a statement, Natera said: “We are very pleased that the jury rejected Ravgen’s request for over $1 billion in damages and found no willful infringement.”
By avoiding a finding of willful infringement, Natera won’t have to pay increased punitive damages. Natera can also continue selling its tests without threat of injunction since the jury allowed an ongoing royalty rate.
| Damages Sought by Ravgen | $1 billion |
|---|---|
| Damages Awarded by Jury | $57.1 million |
What’s Next
Natera said it “strongly disagrees” with the infringement findings and plans to appeal. Legal experts say Natera has a good chance of getting the verdict overturned or reduced given how low the damages award was compared to what Ravgen wanted.
If the verdict stands, Natera will have to pay Ravgen ongoing royalties of 5% on applicable test revenues. But legal observers say Natera should easily be able to afford this.
Piper Sandler analyst Steven Mah said the royalty rate is “completely manageable” for Natera and this “largely removes the legal overhang” on the stock.
Going forward, Natera’s strong patent portfolio protects them from future lawsuits according to analysts. Canaccord Genuity said the verdict “highlights the rock-solid nature” of Natera’s IP.
So while Natera may be writing a large check to Ravgen in the short term, analysts seem confident this will not negatively impact their fast-growing genetic testing business. Natera continues to rapidly gain market share with revenues expected to top $1.5 billion by 2025.
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