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Biotech companies in contract dispute over returning equipment
Biotech firm DNANudge's court injunction bid to reclaim specialized equipment from manufacturer Jabil Inc. has been denied. The case highlighted unresolved issues surrounding lien, ownership, and payment allocation. The court ruled in favor of Jabil, considering the potential harm to the company outweighed DNANudge's interests.
A biotech company has failed in its bid to get a court injunction ordering that a manufacturer should return some of its specialist equipment. The case involved start-up company DNANudge Ltd, which developed a product that allowed DNA/RNA testing to take place outside of a laboratory using disposable cartridges. In 2020, it entered into an agreement with American company Jabil Inc. This involved Jabil manufacturing cartridges using equipment provided or paid for by DNA. In June 2022 DNA asked for manufacturing to stop. Jabil demanded a large payment. In December 2022 DNA demanded delivery up of its equipment and components. Jabil refused and claimed that the agreement entitled it to retain the equipment until it was paid all amounts due. DNA filed an application seeking a mandatory injunction requiring delivery up of the equipment.
The High Court refused the application. It held that there was a serious issue to be tried in respect of whether the agreement entitled Jabil to exercise a lien over the equipment. The position was not clear cut. There was also a serious issue as to whether DNA had title to the requested components and was entitled to their delivery up. Finally, there was a serious issue as to whether a payment appropriated by DNA had properly been tied to specific goods or debts. The balance was fine between the parties. If the injunction was not granted, DNA would be prevented from growing its business, which was an existential threat. If it was granted, Jabil would lose the security that it might enjoy under the agreement. Overall, the potential harm to Jabil outweighed that to DNA.
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