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High Court Rules Oxonica Breached Patent License

Neuftec Limited, the proprietor of a new, highly successful technology producing greener fuel (the original nano-particulate cerium oxide fuel catalyst previously sold by Oxonica as Envirox), announced today that the High Court successfully upheld Neuftec's license rights in the face of a claim brought by Oxonica Energy Limited. Oxonica Energy is a wholly owned subsidiary of Oxonica PLC, the Aim-listed Oxford University spin-out, chaired by former Dragon's Den TV star Richard Farleigh. Since 2002 Envirox has represented approximately 95% of Oxonica PLC's sales.

In October 2006, Oxonica informed Neuftec it had produced an 'alternative' to the patented Envirox formulation which would not be eligible for continued royalty payments. Following Oxonica's failure to pay these royalty payments, Neuftec terminated Oxonica's production and distribution rights and sought alternative means to market this highly successful product. Oxonica commenced legal proceedings against Neuftec in February 2007 in the High Court, originally seeking declarations that Neuftec be prevented from competing with Oxonica and additionally that sales of 'Envirox 2' were not caught by the terms of the Neuftec licence and therefore should not trigger royalty payments by Oxonica.

Neuftec defended both assertions and counterclaimed for payment of royalties due from Oxonica's sales of its alternative 'Envirox 2' formulation. Neuftec also sought an audit of Oxonica's records relating to all Envirox sales and payment of sums due. Oxonica subsequently dropped its challenge to Neuftec's right to compete with Oxonica in the market place, but the dispute over the patent rights and earlier royalty payments continued.

The trial was heard before Mr. Peter Prescott QC, Deputy Judge at the High Court in London in June 2008 and judgment was issued today. In a 40 page judgment, the judge ruled that "...royalties are payable in respect of any product, process or use falling within the scope of any claim of the PCT application as appended to the Licence Deed, and nothing else. Envirox 2 is a Licensed Product as defined, and attracts royalties accordingly. The claim fails and the counterclaim succeeds...".

Ronen Hazarika, co-founder of Neuftec said,

"We are absolutely delighted that the court has found in our favour. It has been an expensive and time-consuming battle but we now feel wholly vindicated.

When Oxonica's actions in trying to avoid paying substantial royalty payments first came to light, we took the decision to fight this on a matter of principle and ethics. If inventors of new and groundbreaking technology cannot rely on their licencees and the licencees' business angels to honour agreements, innovation is at risk. The emergence of new technologies would solely be in the hands of large corporations. Protecting intellectual property rights is crucial to the encouragement of advances in technology.

It is of some regret that at no time since the commencement of proceedings did Oxonica make any attempt to settle this matter out of court despite Neuftec being open and willing to such discussions. I imagine Oxonica's management will be answerable to its shareholders over this whole affair."

Neuftec estimates that royalties owed amount to approximately GBP500,000 plus legal and associated costs of around GBP1.3 million. Neuftec has instructed a leading firm of forensic accountants to complete the audit of Oxonica's records and to verify whether Neuftec is also entitled to a 25% share of Oxonica's profits from Envirox and 'Envirox 2' plus a GBP1 million milestone payment as defined by the Neuftec license. Neuftec intends to reclaim all sums due, together with interest from Oxonica.

Neuftec is also now evaluating the prospect of filing fresh claims in the High Court in relation to Oxonica's on-going sales of 'Envirox 2'. Neuftec filed a separate patent infringement action against Oxonica in June 2008 relating to sales of Envirox that infringe Neuftec's European patents. Oxonica has recently confirmed that, contrary to its earlier undertakings, it has sold Envirox (originally licensed from Neuftec) in Europe, post the termination of the licence agreement.

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