Chembio Diagnostic Systems Prevails in International Arbitration Against BioSure (UK) Ltd
November 22 2021 - 8:00AM
Chembio Diagnostic Systems Inc. (“Chembio”), a subsidiary of
Chembio Diagnostics, Inc. (Nasdaq: CEMI), received an international
arbitration award Thursday, November 18, 2021 against BioSure (UK)
Ltd, Chembio’s former UK distributor of HIV self-tests.
In April 2014, Chembio and BioSure entered into a distribution
agreement under which BioSure was licensed the right to sell
bundled products in the UK containing Chembio’s SURE CHECK HIV ½
pouched tests. The distribution agreement terminated on April 1,
2019. On September 16, 2019, Chembio initiated arbitration in New
York, USA alleging BioSure breached the distribution agreement,
misappropriated Chembio’s trade secrets, and engaged in other
unlawful conduct. A final merits hearing was held in April
2021.
In the award, the arbitration tribunal held that BioSure
breached various provisions of the distribution agreement, breached
its implied covenant of good faith and fair dealing, and
misappropriated Chembio’s trade secrets under both federal and New
York law. The tribunal concluded that BioSure’s HIV self-test “is
substantially based upon and incorporates Chembio Confidential
Information in material breach” of the distribution agreement.
According to the tribunal, BioSure breached its duty of good faith
and fair dealing by using SURE CHECK HIV ½ pouched tests and
Chembio confidential information to develop a competing HIV test,
and by misappropriating goodwill that should have inured to
Chembio’s benefit.
The tribunal awarded Chembio damages of $1,013,875.70 and costs
and attorneys’ fees of $1,654,161.08. In total, exclusive of
interest, Chembio was awarded $2,668,036.78.
In addition to the monetary award, BioSure has been ordered to
immediately:
- Stop making, using, offering for sale, or selling the BioSure
HIV Self Test.
- Transfer all regulatory approvals and filings related to the
BioSure HIV Self Test to Chembio.
- Stop using the BioSure HIV Self Test name.
- Stop making, using, offering for sale, or selling components or
other materials developed for the bundled products as defined in
the distribution agreement, as well as any other design packaging
or labeling associated with the bundled products.
- Stop using all marketing and promotional materials in
connection with the BioSure HIV Self Test name.
- Instruct BioSure’s contract manufacturer to return certain
materials to BioSure, including any Chembio confidential
information and trade secrets within the manufacturer’s
possession.
- Return all files and records regarding the BioSure HIV Self
Test to Chembio.
- Stop using any results, conclusions, or data associated with
any studies or performance evaluations related to the BioSure HIV
Self Test.
“We are pleased with the arbitration’s outcome and believe the
tribunal reached the correct decision,” stated Richard Eberly,
President and Chief Executive Officer of Chembio Diagnostics, Inc.
“Chembio’s confidential information and trade secrets are very
important to Chembio, and this case was about protecting that
information.”
Chembio was represented by Chris Centurelli, Mike Creta, and
John Gavin of K&L Gates LLP in the arbitration.
About Chembio DiagnosticsChembio
Diagnostics, Inc. is a leading diagnostics company focused on
developing and commercializing point-of-care tests used for the
rapid detection and diagnosis of infectious diseases, including
sexually transmitted disease, insect vector and tropical disease,
COVID-19 and other viral and bacterial infections, enabling
expedited treatment. Coupled with the company’s extensive
scientific expertise, its novel DPP technology offers broad market
applications beyond infectious disease. The company’s products are
sold globally, directly and through distributors, to hospitals and
clinics, physician offices, clinical laboratories, public health
organizations, government agencies, and consumers. Learn more
at www.chembio.com.
DPP and SURE CHECK are Chembio’s registered trademarks, and the
Chembio logo is Chembio’s trademark. For convenience, these
trademarks appear in this release without ® or ™ symbols, but that
practice does not mean that Chembio will not assert, to the fullest
extent under applicable law, its rights to the trademarks.
Contact:
Philip Taylor
Gilmartin Group
415-937-5406
investor@chembio.com
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