Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 2018-2198

• Decision Date: 24 April 2020
• Docket Number: 2018-2317,2018-2303,2018-2198,2018-2305,2018-2306
• Parties: VERINATA HEALTH, INC., ILLUMINA, INC., Plaintiffs-Appellants v. ARIOSA DIAGNOSTICS, INC, ROCHE MOLECULAR SYSTEMS, INC., Defendants-Cross-Appellants
• Court: U.S. Court of Appeals — Federal Circuit

VERINATA HEALTH, INC., ILLUMINA, INC., Plaintiffs-Appellants v. ARIOSA DIAGNOSTICS, INC, ROCHE MOLECULAR SYSTEMS, INC., Defendants-Cross-Appellants

2018-2198

2018-2303

2018-2305

2018-2306

2018-2317

United States Court of Appeals for the Federal Circuit

April 24, 2020

NOTE: This disposition is nonprecedential.

Appeals from the United States District Court for the Northern District of California in Nos. 3:12-cv-05501-SI, 3:14-cv-01921-SI, 3:15-cv-02216-SI, Senior Judge Susan Y. Illston.

EDWARD R. REINES, Weil, Gotshal & Manges LLP, Redwood Shores, CA, argued for plaintiffs-appellants. Also represented by CHRISTOPHER SHAWN LAVIN. Plaintiff-appellant Illumina, Inc. also represented by DEREK C. WALTER.

MARK CHRISTOPHER FLEMING, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, argued for defendants- cross-appellants. Also represented by TIMOTHY ANDREW COOK, KATHERINE P. KIECKHAFER; CHRISTOPHER ASTA, THOMAS SAUNDERS, Washington, DC; ROBERT J. GUNTHER, JR., OMAR KHAN, CHRISTOPHER R. NOYES, New York, NY; DAVID ISAAC GINDLER, ALAN J. HEINRICH, Irell & Manella LLP, Los Angeles, CA; LISA GLASSER, Newport Beach, CA.

Before REYNA, WALLACH, and HUGHES, Circuit Judges.

REYNA, Circuit Judge.

After trial on the merits, a jury found two U.S. patents valid and infringed. Ariosa Diagnostics, Inc., and Roche Molecular Systems, Inc., moved for judgment as a matter of law on invalidity and noninfringement. Verinata Health, Inc., and Illumina, Inc., moved for a permanent injunction, supplemental damages, an accounting, and pre- and post-judgment interest. The district court denied the parties' motions. Verinata and Illumina appeal the denial of the permanent injunction, supplemental damages, an accounting, and pre-judgment interest. Ariosa and Roche cross-appeal the denial of judgment as a matter of law on invalidity and noninfringement. We conclude that substantial evidence supports the district court's denial of Ariosa's motion for judgment as a matter of law on noninfringement and invalidity. We also conclude that the district court did not abuse its discretion by denying Verinata and Illumina's motion for a permanent injunction, supplemental damages, an accounting, and pre-judgment interest. We affirm.

BACKGROUND

A

Appellant Illumina, Inc., develops, manufactures, and markets integrated systems and tools for DNA analysis. Verinata Health, Inc., a wholly-owned subsidiary of Illumina (collectively "Illumina"), developed and offered a non- invasive prenatal test ("NIPT") for the early identification of fetal chromosomal abnormalities. Appellee Ariosa Diagnostics, Inc., also conducts research and development in the field of NIPT for fetal chromosomal abnormalities. Roche Molecular Systems, Inc., acquired Ariosa in December 2014. In an effort to "streamline issues in the [l]itigation and avoid unnecessary discovery," the parties stipulated that "Ariosa will be deemed the Defendant responsible for the conduct that Illumina has accused of infringing the asserted claims" and that Roche would be dismissed from the litigation and subsequently "deemed a party to any judgment to the same extent as Ariosa." J.A. 11606-07.

Illumina owns U.S. Patent No. 7,955,794 (the "'794 patent"), which is directed to custom DNA assay optimization techniques. The '794 patent identifies seven inventors, including Dr. John Stuelpnagel and Dr. Arnold Oliphant. Dr. Stuelpnagel was a co-founder of Illumina, and Dr. Oliphant served as Illumina's executive vice president of scientific operations.

The '794 patent describes the detection of DNA target sequences by introducing probes with complementary sequences into a sample and observing whether hybridization occurs. An excerpt of claim 1 identifying the elements relevant to this appeal is set forth below:

A multiplex for determining whether a sample contains at least 100 different target sequences, comprising:

a) providing a sample which may contain at least 100 different single-stranded target sequences attached to a first solid support;

b) contacting said target sequences with a probe set comprising more than 100 different single-stranded probes, wherein each of said more than 100 different probes comprises:

i) a first universal priming site, wherein each of said more than 100 different probes has identical universal priming sites, and

ii) a target specific domain, such that different double-stranded hybridization complexes are formed, each of the different hybridization complexes comprising one of said more than 100 different single-stranded probes and one of the different single-stranded target sequences from the sample;

. . .

d) contacting said probes of the hybridization complexes with a first enzyme and forming different modified probes;

e) contacting said modified probes with:

i) at least a first primer that hybridizes to said universal priming site;

ii) NTPs; and

iii) an extension enzyme;

wherein said different modified probes are amplified and forming different amplicons;

f) immobilizing said different amplicons to a second solid support, and

g) detecting said different amplicons immobilized to said second solid support, thereby determining whether the sample contains at least 100 different target sequences.

'794 patent col. 68 ll. 46-67, col. 68 l. 65-col. 69 l. 12.

Verinata owns U.S. Patent No. 8,318,430 (the "'430 patent"), which is directed to methods for NIPT screening of fetal chromosomal abnormalities. An excerpt of claim 1 is appended below identifying the elements relevant to this appeal:

1. A method for determining a presence or absence of a fetal aneuploidy in a fetus for each of a plurality of maternal blood samples . . . comprising fetal and maternal cell-free genomic DNA, said method comprising:

. . .

(e) . . . enumerating sequence reads corresponding to enriched and indexed fetal and maternal non-random polynucleotide sequences . . . ; and

(f) . . . determining the presence or absence of a fetal aneuploidy comprising using a number of enumerated sequence reads corresponding to the first chromosome and a number of enumerated sequence reads corresponding to the reference chromosome of (e).

'430 patent at col. 63.

B

In 2008, both Dr. Stuelpnagel and Dr. Oliphant left Illumina. By late 2009, Dr. Stuelpnagel launched Ariosa. Dr. Oliphant rejoined Dr. Stuelpnagel at Ariosa shortly thereafter. They sought to develop a NIPT for the detection of fetal aneuploidies, which can lead to conditions such as Down Syndrome. Between 2010 and 2011, Ariosa provided Illumina, as a prospective investor in Ariosa, technical information about its product proposals under development. In January 2012, seven months after the '794 patent issued, Ariosa entered into a three-year sale and supply agreement ("SSA") with Illumina. J.A. 4326, J.A. 4349-4350 (excerpts from SSA).

C

In March 2012, Ariosa launched a DNA-sequencing test called the Harmony Prenatal Test. The test consisted of materials supplied by Illumina. The Harmony Prenatal Test is a multiplex method that analyzes fetal cell-free DNA (or cfDNA). Ariosa designed two versions of the Harmony test—"Harmony V1" and "Harmony V2." For purposes of this appeal, we focus our discussion of the relevant technology on Harmony V2.

Harmony V2 tests a sample of isolated fetal cfDNA for the presence of about 6800 gene sequences by using a laboratory robot to perform the steps summarized below in Figure 1.

Figure 1

Image materials not available for display.

J.A. 3100-3101; J.A. 2067-2068. First, the sample's double-stranded fetal cfDNA is separated, or "denatured," into individual strands. Next, a molecule called biotin is added to the end of each cfDNA strand (represented by "B" in Figure 1). The robot then adds a solution containing a mixture of single-stranded oligonucleotides that are complementary to the 6800 sequences Harmony V2 detects (orange lines in Figure 1). The mixture contains three different oligonucleotides for each of the 6800 target sequences, corresponding to the beginning, middle, and end portions of the target sequence. The oligonucleotide for the beginning of each sequence contains a "readout cassette," which is a short, artificial DNA segment that is uniquely assigned to each of the 6800 sequences tested in Harmony V2. If the cfDNA sample contains one of the 6800 target sequences, each of the three oligonucleotides corresponding to that target sequence will hybridize to it, creating a section of double-stranded DNA with two gaps (between the first and second and between the second and third oligonucleotides). If the cfDNA does not contain a certain target sequence, the oligonucleotides corresponding to that sequence will remain unbound in solution.

The test allows the oligonucleotides two hours to bind to target sequences. After the two hours elapse, the robot adds magnetic beads coated with a protein called streptavidin, which binds strongly with the biotin on the cfDNA and links it to the beads. The robot then immobilizes the magnetic beads (and therefore the sample DNA and any bound oligonucleotides) and washes away anything that is left in solution, including any unbound oligonucleotides.

Next, the robot adds an enzyme that ligates, i.e., connects, the three oligonucleotides, creating a single DNA strand. This only happens if all three oligonucleotides corresponding to the target sequence are bound to the sample cfDNA. The robot then denatures, i.e., separates, the newly-joined oligonucleotides from the sample cfDNA and amplifies the newly-joined oligonucleotides. Universal primer sequences on the first and third oligonucleotides enable this amplification.

During processing, the copies that result from the amplification step (termed "amplicons") are purified and added to a mixture that cuts ("digests") them into fragments. Then, detection begins by applying the digested reaction mixture, including the readout cassettes, to an array. An array is a chip (or device) containing thousands of short DNA sequences attached to a solid support. If a readout cassette corresponding to...