Bio-Rad Labs., Inc. v. 10X Genomics, Inc.
| Citation | 483 F.Supp.3d 38 |
| Decision Date | 31 August 2020 |
| Docket Number | CIVIL ACTION NO. 19-12533-WGY |
| Parties | BIO-RAD LABORATORIES, INC. and President and Fellows of Harvard College, Plaintiffs, v. 10X GENOMICS, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Audra Sawyer, Pro Hac Vice, Weil Gotshal & Manges LLP, Washington, DC, Brian Chang, Pro Hac Vice, Derek C. Walter, Pro Hac Vice, Edward Reines, Pro Hac Vice, Prachi Mehta, Pro Hac Vice, Weil Gotshal & Manges LLP, Redwood Shores, CA, David S. Godkin, James E. Kruzer, Birnbaum & Godkin, LLP, Patrick J. O'Toole, Jr., Weil, Gotshal & Manges, Boston, MA, Eric S. Hochstadt, Pro Hac Vice, Weil Gotshal & Manges LLP, New York, NY, Justin Constant, Pro Hac Vice, Garland Stephens, Weil Gotshal & Manges LLP, Houston, TX, for Plaintiff Bio-Rad Laboratories, Inc.
Brian Chang, Pro Hac Vice, Derek C. Walter, Pro Hac Vice, Edward Reines, Pro Hac Vice, Weil Gotshal & Manges LLP, Redwood Shores, CA, David S. Godkin, James E. Kruzer, Birnbaum & Godkin, LLP, Michael J. Tuteur, Geoffrey Raux, Ruben J. Rodrigues, Foley & Lardner LLP, Patrick J. O'Toole, Jr., Weil, Gotshal & Manges, Boston, MA, Eric S. Hochstadt, Pro Hac Vice, Weil Gotshal & Manges LLP, New York, NY, for Plaintiff President and Fellows of Harvard College.
Aaron M. Nathan, Pro Hac Vice, Kiley White, Pro Hac Vice, Samantha A. Jameson, Pro Hac Vice, Tensegrity Law Group LLP, McLean, VA, Azra M. Hadzimehmedovic, Pro Hac Vice, Daniel M. Radke, Pro Hac Vice, Gina Cremona, Pro Hac Vice, Jennifer K. Robinson, Pro Hac Vice, Matthew D. Powers, Pro Hac Vice, Paul T. Ehrlich, Pro Hac Vice, Robert L. Gerrity, Pro Hac Vice, Utsav Gupta, Pro Hac Vice, Natasha Saputo, Pro Hac Vice, Stefani C. Smith, Pro Hac Vice, Tensegrity Law Group, LLP, Redwood Shores, CA, Kenneth Reinker, Pro Hac Vice, Cleary Gottlieb Steen & Hamilton LLP, Washington, DC, Leah Brannon, Pro Hac Vice, Cleary Gottlieb Steen & Hamilton, Washington, DC, Sarah Chapin Columbia, Katrina C. Rogachevsky, Katherine Nicole Clouse, McDermott, Will & Emery LLP, Brian J. Wall, James L. Messenger, Gordon & Rees Scully Mansukhani, Boston, MA, for Defendant.
YOUNG, D.J.
This motion to dismiss 10X Genomics’ ("10X") antitrust counterclaims is the latest maneuver by Bio-Rad Laboratories ("Bio-Rad") in the multi-district struggle between these two competitors. The current engagement grows out of a complaint Bio-Rad filed in this Court on December 18, 2019, accusing 10X of infringing on one of its patents and two patents it licenses from the President and Fellows of Harvard College ("Harvard"). See generally Compl., ECF No. 1. This Court has already considered and denied 10X's motion to dismiss that complaint, ECF No. 24, though in so doing it transferred one of the three patents to the Northern District of California where the parties have other ongoing litigation. See generally, Bio-Rad Labs., Inc. v. 10X Genomics, Inc., No. 19-12533-WGY, 2020 WL 2079422, 2020 U.S. Dist. LEXIS 76156 (D. Mass. Apr. 30, 2020). Before the Court now is a set of antitrust counterclaims that 10X brought prior to that decision. See 10X Partial Am. Answer Bio-Rad and Pres. Fellow Harvard College Compl. and 10X Am. Counterclaims Bio-Rad ("Answer"), ECF No. 53; Antitrust Counterclaims ("Def.’s Counterclaims"), id.; Pl.’s Mot. Dismiss 10X Antitrust Counterclaims ("Pl.’s Mot. Dismiss"), ECF No. 68.1
In its counterclaims, 10X paints Bio-Rad as an aggressor illegally exploiting its market power to harm competition in three distinct markets, corresponding to two types of genetic analysis, as well as the market for genetic droplet research technology generally. Def.’s Counterclaims ¶ 7. Bio-Rad moves for dismissal of the counterclaims under Federal Rule of Civil Procedure 12(b)(6), arguing 10X is trying to penalize it for successfully enforcing its patents. Pl.’s Mem. Supp. Mot. Dismiss 10X's Antitrust Counterclaims ("Pl.’s Mem."), ECF No. 69.
10X must allege only "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). It is therefore far too early to answer the question whether 10X has unearthed an illegal scheme on the part of Bio-Rad to establish a monopoly in life sciences analysis, or whether this suit is merely the parting shot of a competitor defeated one too many times in the field. It is enough to say that 10X has alleged sufficient facts to survive the motion to dismiss on some, but not all, of its claims, and save the moment of ultimate decision for summary judgment or trial.
For the reasons given below, the Court GRANTS the motion to dismiss as to counterclaim counts I, III, and IV, and DENIES the motion to dismiss with respect to counts II, V, VI, and VII.
Bio-Rad and 10X are competitors in the market for life sciences tools. See Def.’s Counterclaims ¶¶ 7-9. Two particular types of genetic research tools are at issue in this case. The first is droplet digital polymerase chain reaction
("ddPCR"), a genetic sequencing tool that allows scientists to calculate the presence and quantity of a target DNA molecule in a sample. Id. ¶ 19. The second is what 10X terms "Next-Generation Sequencing" ("NGS") sample preparation or "NGS Sample Prep," a set of techniques for reading known or unknown nucleotide sequences in DNA. Id. ¶¶ 7, 20. Bio-Rad competes in the ddPCR market, while both parties compete in the NGS Sample Prep market. Id. ¶¶ 56-59. Universities, pharmaceutical companies, hospitals, governments, and other customers of the $50,000,000,000 annual market for life science tools require DNA sequencers such as the ones produced by both companies to conduct research and scientific operations. Id. ¶ 41.
The fates of 10X and Bio-Rad have been forever-entangled. In 2012, after Bio-Rad acquired the life sciences firm QuantaLife, three scientists from QuantaLife who briefly had been working for Bio-Rad left to form 10X. Answer ¶ 22. The two parties have since brought their disputes over intellectual property to courts around the country. Bio-Rad is the plaintiff in the underlying patent litigation before this Court. Bio-Rad has also prosecuted patent infringement cases against 10X in Delaware, see RainDance Techs., Inc. v. 10X Genomics, Inc., No. 15-152-RGA, 2016 WL 927143 (D. Del. March 4, 2016) vacated in part 967 F.3d 1353 (Fed. Cir. 2020) (the " 152 case"); Bio-Rad Labs., Inc. v. 10X Genomics, Inc., 322 F. Supp. 3d 537 (D. Del. 2018), and before the U.S. International Trade Commission, see Certain Microfluidic Devices, Inv. No. 337-TA-1068, 2019 WL 7049092 (U.S.I.T.C. Dec. 18, 2019) (the " 1068 ITC Investigation"). Bio-Rad is the plaintiff pursuing patent claims in the Northern District of California, see Bio-Rad Labs., Inc. et al. v. 10X Genomics, Inc., Civ. A. No. 3:17-04339, 2017 WL 3304233 (N.D. Cal. July 31, 2017), while 10X is the patent plaintiff before a different session of that court, see Compl., 10X Genomics, Inc. v. Bio-Rad Labs., Inc., Civ. A. No. 4:18-cv-00209 (N.D. Cal. Jan. 9, 2018). 10X was also the plaintiff in a successful separate action against Bio-Rad before the ITC. See In the Matter of Certain Microfluidic Systems, Inv. No. 337-TA-1100, 2020 WL 748729 (U.S.I.T.C. Feb. 12, 2020) (the " 1100 ITC Investigation"). The above list is not exhaustive, but demonstrates the parties’ appetite for litigation is exhausting.
In 2017, Bio-Rad acquired the life sciences company RainDance Technologies, Inc. ("RainDance"), the owner of patents related to ddPCR analysis, one of the technologies at issue in these counterclaims. Def.’s Counterclaims ¶¶ 10, 19, 21. RainDance is the company which originally brought the Delaware patent litigation, the 152 case ; Bio-Rad stepped into its shoes following the acquisition. See Bio-Rad, 322 F. Supp. 3d at 539.
10X brought these antitrust counterclaims on January 24, 2020, amended them on February 5, 2020, and submitted a second set of amended counterclaims on July 13, 2020 without further altering the antitrust portion. ECF Nos. 32, 53, 113. The parties have fully briefed the issues. See Pl.’s Mem.; Def.’s Opp'n Mot. Dismiss 10X's Antitrust Counterclaims ("Def.’s Opp'n"), ECF No. 75; Pl.’s Reply Mot. Dismiss 10X's Antitrust Counterclaims ("Pl.’s Reply"), ECF No. 84. This Court's April 30, 2020 decision does not address these counterclaims but does summarize the underlying facts of the alleged patent infringement that gave rise to the current action. See Bio-Rad, 2020 WL 2079422, at *1-3, 2020 U.S. Dist. LEXIS 76156, at *3-9.
10X alleges that Bio-Rad has engaged in illegal anticompetitive behavior in three markets, which it terms the ddPCR market, the Droplet Single-Cell Product market ("DSCP market"), and the Droplet Genetic Analysis Technology market ("DGAT market"). Def.’s Counterclaims ¶¶ 61-76.
The biological analysis technique of polymerase chain reaction
("PCR") uses the rapid heating and cooling of strands of DNA in order to make numerous copies. Id. ¶¶ 46-47. "Digital" PCR involves dividing the DNA into sub-units, then running tests on each of the subunits to see if they react for a desired genetic sequence, allowing for a quantitative count of that sequence. Id. ¶ 48. The technology at issue here uses droplets as sub-units, thus the first "d" in "ddPCR." Id. Bio-Rad developed its ddPCR patent portfolio by acquiring QuantaLife in 2011, and expanded it by acquiring RainDance in 2017, as Raindance had multiple patents in the field. Id. ¶¶ 49-52. 10X alleges that ddPCR is more accurate, sensitive, and easier to use than other PCR analysis techniques, and thus customers do not view other techniques as reasonable substitutes. Id. ¶¶ 62-63. 10X alleges that Bio-Rad had a 90% market share in the ddPCR field prior to its acquisition of RainDance, and that it maintains over 90% control of the field after this acquisition. Id. ¶¶ 11, 65. 10X is a customer of Bio-Rad in the ddPCR market. Id. ¶ 27.
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