By Kevin E. Noonan --
In responding to Myriad Genetics' complaint for patent infringement, both Ambry Genetics and Gene-by-Gene asserted counterclaims under the Sherman Antitrust Act, predicated on Myriad's filing its patent infringement lawsuit. Myriad filed motions with the District Court to dismiss these antitrust counterclaims under Fed. R. Civ Pro 12(b)(6) for failure to state a claim upon which relief can be granted, which Ambry and Gene-by-Gene have jointly opposed. The basis for Myriad's motion is that filing lawsuits against these alleged infringers is immune from antitrust liability under the Noerr-Pennington doctrine, that neither Defendant has shown that Myriad's patent infringement allegations amount to sham litigation, and procedurally that neither Defendant has satisfied the pleadings requirements set forth by the Supreme Court under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Both Plaintiff's and Defendants' arguments ultimately depend on how the District Court will view the interpretation of the Supreme Court's decisions in its Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012), and Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013), cases.
Defendants' brief opposing Myriad's motion to dismiss relies on two principles: first, procedurally, that their complaint alleges sufficient facts to satisfy the Supreme Court's Twombly and Iqbal standards; and substantively, that Myriad's complaint is not entitled to Noerr-Pennington antitrust immunity because the litigation is a sham in view of the Court's recent Mayo and Myriad decisions. The Noerr-Pennington doctrine of antitrust immunity, which arises from two Supreme Court cases: Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 136, 81 S.Ct. 523 (1961), and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585 (1965), stands for the proposition that a party has the right to petition its government for redress of grievances or to influence public officials is protected activity that cannot raise antitrust liability. These activities include, inter alia, filing suit including patent infringement lawsuits. However, there are exceptions to this immunity, including asserting claims obtained through inequitable conduct (Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 175-77 (1965); accordingly "Walker Process fraud") or when the lawsuit is "objectively basis" or constitutes "sham litigation." Neither Ambry nor Gene-by-Gene have alleged Walker Process fraud against any of Myriad's patents.
Defendants argue in their opposition that, as a procedural matter they have raised "substantial and detailed factual allegations" that the District Court must take as true in deciding whether to deny Myriad's motion, citing Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013). Moreover, they argue that there is a "powerful presumption against rejecting pleadings for failure to state a claim," quoting Cayman Exploration Corp. v. United Gas Pipe Line Co., 873 F.2d 1357, 1359 (10th Cir. 1989), and further citing as additional 10th Circuit precedent Duran v. Carris, 238 F.3d 1268, 1270 (10th Cir. 2001), and Lone Star Indus., Inc. v. Horman Family Trust, 960 F.2d 917, 920 (10th Cir. 1992). This is particularly true in antitrust cases, according to Defendants, because of the need (?) for "ample opportunity for discovery," citing Poller v. Columbia Broad. Sys., 368 U.S. 464, 473 (1962); Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 746 (1976).
Substantively, Defendants argue that Myriad is not immunized under the Noerr-Pennington doctrine because Myriad's asserted claims are facially invalid under the Supreme Court's Mayo and Myriad decisions, and thus these lawsuits are brought in bad faith. Defendants cite case law (albeit not from the 10th Circuit or Supreme Court) that make satisfaction of the objective prong of the sham litigation test apparently easier to satisfy than the precedent cited by Myriad in its motion to dismiss; indeed, Defendants even cite a DC District Court case (WAKA LLC v. DC Kickball, 517 F.Supp.2d 245, 251 (D.D.C. 2007)) that "the mere invocation of 'sham litigation' is enough to state a claim and survive dismissal (although this case was decided prior to either the Twombly or Iqbal decisions). More convincingly, Defendants also cite 10th Circuit precedent that whether a suit is objectively baseless involves subjective factual determinations of whether a plaintiff had "probable cause" to file the lawsuit and that a motion to dismiss should be denied on those grounds. Pers. Dept., Inc. v. Prof'l Staff Leasing Corp., 297 Fed.Appx. 773, 780-81 (10th Cir. 2008).
Defendants recite a litany of their factual allegations in this regard (supported by "over 30 pages of factual allegations regarding Myriad's bad faith conduct, spanning more than 100 paragraphs" in their counterclaim, including:
• Myriad has in bad faith brought
this lawsuit against Defendants on patent claims that it knows are invalid
under two Supreme Court decisions and Federal Circuit authority.
• Two decisions by the Supreme Court, issued before plaintiffs brought this suit, rebut the presumption by Myriad that it brought this suit in good faith: [Myriad] and Mayo.
• According to the Federal Circuit, with Mayo the Supreme Court "made clear that such diagnostic methods in that case essentially claim natural laws that are not eligible for patent."
• The Supreme Court in AMP IV unanimously held that isolated DNA is not patent eligible subject matter, which had the effect of invalidating the claims Myriad currently asserts against Defendants.
• The Supreme Court in [Myriad] unequivocally excluded from patentable subject matter synthetic DNA "that may be indistinguishable from natural DNA"; yet, Myriad is attempting to enforce claims in the present litigation that have common subject matter to the invalidated claims.
• Myriad is asserting method claims in the present litigation that are facially invalid in view of the Supreme Court's decision in Mayo and the Federal Circuit's [two Myriad] decisions.
Regarding the composition claims, Defendants contend that these are invalid under the Supreme Court's Myriad decision, illustrating the dispute (and the consequence of the Court's "less than pellucidly clear" opinions on matters of patent law) in how the Court's language in its Myriad decision should be interpreted. Myriad contends that the synthetic nature of the probes and primers in its asserted composition claims brings those claims within the ambit of subject matter the Court deemed patent eligible, whereas Defendants argue that the patent eligibility question depends on whether the sequence of the primers is identical to sequences found in genomic DNA. Although Defendants may have the better argument, Myriad relies on its assertion of claim 6 of U.S. Patent No. 5,747,282 which was among the claims not invalidated in the Court's opinion.
It is with regard to the method claims that Defendants' arguments require the District Court to accept their (perhaps) logical extension of the Court's Mayo decision to extend to Myriad's asserted method claims and further to argue that assertion of such claims is objectively baseless and brought in bad faith. This is certainly a question that needs answering, and may in fact be answered in the course of this patent infringement litigation. But the fact that it needs to be answered undercuts Defendants' allegations that by bringing the lawsuit(s) Myriad has shed its Noerr-Pennington immunity and brought an objectively baseless lawsuit. And Defendants are themselves capable of stretching the limits of the precedential value of the Myriad decisions, in their case regarding decisions by the Federal Circuit. For example, their brief states that:
The [second Federal Circuit Myriad opinion] declared invalid all method claims asserted in the AMP litigation except for Claim 20 of the '441 patent. The method claims other than Claim 20 asserted in the AMP litigation (and here) compare and analyze patient BRCA1 and BRCA2 sequences. That subject matter was expressly declared invalid in [the first and second Federal Circuit Myriad opinions]. Importantly, Myriad did not appeal that aspect of [second Federal Circuit Myriad opinion] to the Supreme Court.
Missing from this analysis is that Plaintiffs in the Myriad case deigned not to challenge any of the method claims now asserted by Myriad, and that the method claims invalidated in the Myriad decisions were of a much broader and less specific scope than Myriad's now-asserted claims. Thus, there is no direct precedential value of any of the Myriad decisions to the question of whether assertion of Myriad's claims is objectively baseless.
Finally, the brief notes that several other competitors, including some (Counsyl, Quest, GeneDX) that Myriad has also sued, entered the marketplace as evidence that Myriad's patents are invalid; this at least raises a factual question as to the objective baselessness of Myriad's complaint that Defendants argue is not appropriate for summary dismissal under Fed. R. Civ. Pro. 12(b)(6). Hedging their bets, Defendants also ask for leave to file an amended complaint should the District Court grant Myriad's motion.