Bio-Rad Laboratories, Inc. v. Int'l. Trade Comm. (Fed. Cir. 2021)

By Kevin E. Noonan --

Last month, the Federal Circuit affirmed an exclusion order imposed by the International Trade Commission against Bio-Rad for importing infringing microfluidic systems and components used for gene sequencing or related analyses, in Bio-Rad Laboratories, Inc. v. Int'l. Trade Comm.

The ITC's decision followed a complaint by 10X Genomics, an intervenor in this appeal, for infringement of U.S. Patent Nos. 9,689,024, 9,695,468, and 9,856,530.  An ITC Administrative Law Judge found importation of the accused articles infringed claims in each of the asserted patents, that Bio-Rad had not established that the patents were invalid, and that 10X Genomics practiced the claims (and thus satisfied the "domestic industry" requirement of the Tariff Act of 1930, 19 U.S.C. § 1337(a)(2)).  Also, the ALJ rejected Bio-Rad's affirmative defense that it was a co-owner of these patents under terms of a prior employment contract with certain of the inventors.

The following claims are representative for each of the asserted patents:

Claim 1 of the '024 patent:

1.  A method for sample preparation, comprising:
    a) providing a droplet comprising a porous gel bead and a target nucleic acid analyte, wherein said porous gel bead comprises at least 1,000,000 oligonucleotide molecules comprising barcode sequences, wherein said oligonucleotide molecules are releasably attached to said porous gel bead, wherein said barcode sequences are the same sequence for said oligonucleotide molecules;
    b) applying a stimulus to said porous gel bead to release said oligonucleotide molecules from said porous gel bead into said droplet, wherein upon release from said porous gel bead, a given oligonucleotide molecule from said oligonucleotide molecules attaches to said target nucleic acid analyte; and
    c) subjecting said given oligonucleotide molecule attached to said target nucleic acid analyte to nucleic acid amplification to yield a barcoded target nucleic acid analyte.

Claim 1 of the '468 patent:

1.  A method for droplet generation, comprising:
    (a) providing at least 1,000,000 oligonucleotide molecules comprising barcode sequences, wherein said barcode sequences are the same sequence for said at least 1,000,000 oligonucleotide molecules, wherein said at least 1,000,000 oligonucleotide molecules are releasably attached to a bead, wherein said bead is porous;
    (b) combining said at least 1,000,000 oligonucleotide molecules and a sample comprising a nucleic acid analyte each in an aqueous phase at a first junction of two or more channels of a microfluidic device to form an aqueous mixture comprising said at least 1,000,000 oligonucleotide molecules attached to said bead and said sample; and
    (c) generating a droplet comprising said at least 1,000,000[ ]oligonucleotide molecules attached to said bead and said sample comprising said nucleic acid analyte by contacting said aqueous mixture with an immiscible continuous phase at a second junction of two or more channels of said microfluidic device.

Claim 1 of the '530 patent:

1.  A method for nucleic acid preparation or analysis, comprising:
    (a) providing:
        (i) at least 1,000 gel beads;
        (ii) releasably attached to each of said at least 1,000 gel beads, at least 1,000 barcode molecules comprising identical barcode sequences that are distinct from barcode sequences of at least 1,000 barcode molecules releasably attached to any other gel bead of said at least 1,000 gel beads; and
        (iii) a plurality of cells each comprising a plurality of polynucleotide molecules;
    (b) generating a plurality of droplets, wherein at least 1,000 droplets of said plurality of droplets each comprise:
        (i) a single gel bead from said at least 1,000 gel beads; and
        (ii) a single cell from said plurality of cells; and
    (c) in each of said at least 1,000 droplets, using said plurality of polynucleotide molecules from said single cell and barcode molecules of said at least 1,000 barcode molecules from said single gel bead to generate a plurality of barcoded polynucleotide molecules,
    wherein said barcode molecules become detached from said gel bead.

The factual history as set forth in the Federal Circuit's opinion is as follows.  Two of the named inventors of the asserted patents previously worked for a company (QuantaLife, Inc.) that was thereafter acquired by Bio-Rad.  These inventors had agreed in their employment contracts with QuantaLife to promptly disclose and assign to the company "the full details of any and all ideas, processes, recipes, trademarks and service marks, works, inventions, discoveries, marketing and business ideas, and improvements or enhancements to any of the foregoing ("IP")" that they "conceive[d], develop[ed] or create[d] alone or with the aid of others during the term of Employee's employment with the Company," and assign any such IP to the company (emphasis added).  These inventors signed similar agreements with Bio-Rad after the acquisition.

These inventors then left Bio-Rad in April 2012 and formed 10X Genomics in July 2012, where they developed the technology claimed in the asserted patents.  As set forth in the opinion, the 10X Genomics technology had a "gel bead in emulsion" (GEM) architecture that differed from the more conventional "capsule-in-capsule and capsule-in-droplets architecture."  The relevant features of this technology as claimed included that it "involves 'partitioning nucleic acids, DNA or RNA, in droplets together with gel beads that are used to deliver the barcodes into the droplet,' where the 'barcodes are released from the gel beads using a stimulus.'"  According to the opinion, there was no evidence that the inventors conceived of their technology prior to January 2013.

The basis for 10X Genomics' complaint was that Bio-Rad's products practiced the invention claimed in each asserted patent.  With regard to the '024 patent, the ALJ determined that Bio-Rad's accused methods practiced the step of "applying a stimulus to said porous gel bead to release said oligonucleotide molecules from said porous gel bead" (emphasis in opinion).  Bio-Rad unsuccessfully contended that the stimulus in its method acted on the oligonucleotides themselves rather than the gel bead, but the ALJ held (and the Commission affirmed) that the oligonucleotides were part of the gel bead and thus Bio-Rad's method satisfied this limitation.  For the '468 patent, Bio-Rad argued a distinction over the claim requirement of  "combining said at least 1,000,000 oligonucleotide molecules and a sample comprising a nucleic acid analyte . . . at a first junction of two or more channels of a microfluidic device to form an aqueous mixture."  Bio-Rad argued that the sample and oligonucleotide combination did not form an aqueous mixture at the first junction of the apparatus but were separate until droplets formed thereafter.  The ALJ disagreed based on testimony from 10X Genomics' expert, and the Commission agreed.  Concerning the '530 patent, Bio-Rad argued that its method did not fulfill the ALJ's construction of the claim that the second step (generating at least 1,000 droplets) was complete prior to the third step ("generating a plurality of barcoded polynucleotide molecules").  Bio-Rad supported this argument by the contention that the enzymes that provide the stimulus in its product "begin to form barcoded molecules immediately upon droplet formation" rather than after at least 1,000 droplets are formed.  The ALJ rejected this argument because the evidence showed that in practice the enzyme did not act sufficiently quickly to have "finish[ed] cleaving all barcoded molecules from the gel bead within the droplets before 1,000 droplets are formed."

The ALJ also rejected Bio-Rad's assertions that the 10X Genomics' product did not practice the invention claimed in the '530 patent any more than its own product did, a decision affirmed by the Commission on a slightly different basis, as well as rejecting Bio-Rad's argument that the claims of the '530 patent were indefinite.

Turning to Bio-Rad's affirmative defense that it was a co-owner of the asserted patents, the ALJ rejected the argument because there was no evidence that the invention(s) claimed in these patents had been conceived prior to January 2013 (after the inventors had left Bio-Rad's employ) and "'[n]o provision of any of the applicable contracts governs future inventions' merely because the future inventions 'are based on or developed from work done during employment.'"  In agreeing, the Commission also stated that the "ideas" identified by Bio-Rad purportedly worked on by the inventors during their employment terms were too "generic" to support co-ownership because the lacked the specifics required by the claims (and in particular that their work at Bio-Rad involved "droplet-in-droplet" not "gel-bead" architecture).  Also supporting the Commission's decision was their determination that many of the ideas asserted by Bio-Rad were to be found in Bio-Rad's prior art U.S. Patent No. 9,347,059 that named one of the inventors (showing, according to the Commission, that Bio-Rad had received the "benefit of its bargain" from the employment contract).

The Commission having affirmed the ALJ's decision, this appeal followed.

The Federal Circuit affirmed, in a decision by Judge Taranto joined by Judges Chen and Stoll.  The Federal Circuit held that substantial evidence supported the Commission's decision that Bio-Rad's accused imported articles infringed the asserted claims of the '024 patent.  The opinion notes that the plain meaning of the claim language recites that the oligonucleotides are releasably attached to the porous gel bead, and release is caused by applying a stimulus; Bio-Rad's system satisfies those requirements according to the Court.  The panel rejected Bio-Rad's arguments to the contrary, based on the distinction between the oligonucleotides and the porous gel bead being distinct entities, and differences in how its stimulus differs from what is exemplarily disclosed in the '024 specification.

The Court also rejected Bio-Rad's distinctions between what is claimed in the '468 patent and its accused imported articles based on the details of mixing the nucleic-acid-sample solution and reagent solution.  The opinion states that the evidence Bio-Rad relied upon to make a spatial distinction between where these solutions are mixed and where droplets are formed was "hazy" and that without record evidence supporting Bio-Rad's argument the Court "cannot say that the Commission lacked substantial evidence to find that Bio-Rad infringed the '468 patent."

The opinion also set forth and rejected the arguments Bio-Rad raised against the Commission's determination that its accused imported articles infringed the asserted claims of the '530 patent.  As a threshold matter the opinion states that:

Bio-Rad's argument must fail unless the Commission erred, as a matter of claim construction, in determining that the claim permits some barcode detachment (from the gel of the bead) to occur before 1,000 droplets are formed—as long as the claim-required number of detachments occur after 1,000 droplets have formed.

But Bio-Rad made no objection or argument regarding the Commission's claim construction, and the panel found none.  The claim recites that the second step of claim 1 of the '530 patent be completed before the third step.  But the panel opinion states that "[c]ritically, that conclusion does not mean, and the claim language does not require, that there be no barcode detachment before 1,000 droplets are generated" (which was the basis for Bio-Rad's argument).  The opinion states that the Commission's determination was supported by substantial evidence that "barcode molecules are not released from the gel beads instantaneously and that, instead, the barcoding process merely begins to occur upon droplet formation, with enough barcode detachment still occurring after 1,000 droplets are formed to meet the claim requirement" and, if that was the case, the Commission was correct in finding that "[t]he fact that barcoding of other polynucleotides also happened before 1,000 droplets were generated is irrelevant."

Bio-Rad turned this argument on its head in contending that 10X Genomics' product did not practice the invention claimed in the asserted claims of the '530 patent and thus did not satisfy the domestic industry requirement in the statute for relief from the ITC under Section 1337(a)(2).  But because "[t]he test for satisfying the 'technical prong' of the [domestic] industry requirement is essentially [the] same as that for infringement, i.e., a comparison of domestic products to the asserted claims," Alloc, Inc. v. Int'l Trade Comm'n, 342 F.3d 1361, 1375 (Fed. Cir. 2003), the Federal Circuit also rejected this challenge to the Commission's determination.  According to the opinion, Bio-Rad failed to show the Commission's determination was not supported by substantial evidence, being based on documentary evidence and expert testimony.

Bio-Rad also asserted (and the Federal Circuit rejected) that the claims of the '530 patent are indefinite, which the panel reviewed de novo in the absence of any challenge to the Commission's material findings.  The opinion affirmed the Commission's determination that Bio-Rad had forfeited this defense by raising it for the first time during the Commission's consideration of the ALJ's determination (Bio-Rad did not contest this decision until its Reply brief below).  But in addition, the panel rejected the basis for Bio-Rad's indefiniteness contention, that the Commission had to clarify the ALJ's initial claim construction.  The opinion notes that "[m]odifications are proper and sometimes necessary steps as disputes sharpen during litigation," citing Pfizer, Inc. v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1377 (Fed. Cir. 2005), and that in this case all that occurred before the Commission was "[m]ere amplification of an initial construction to resolve a material dispute about claim meaning," which "provides an even weaker potential basis for a suggestion of indefiniteness."

Finally, the Court turned to Bio-Rad's argument that it is a co-owner of the asserted patents based on an employment contract with some of the inventors.  As the Court understood Bio-Rad's contentions:

First, Bio-Rad asserts, if [inventors] Drs. Hindson and Saxonov, when working at Bio-Rad (or its predecessor QuantaLife), had ideas that contributed to the post-employment inventions at issue, and if those contributions would make them co-inventors (regardless of post-employment contributions to the inventions), then the assignment provisions required assignment of their co-ownership interest to Bio-Rad.  Second, Bio-Rad asserts, Drs. Hindson and Saxonov did in fact have such co-inventorship-qualifying ideas while employed at Bio-Rad (specifically, while working for QuantaLife).

The Court assessed these assertions under California law as matters of contract interpretation; under that law interpretation of a contract is a matter of law subject to de novo review according to the opinion.  The opinion comes directly to the point:  "Bio-Rad has furnished no persuasive basis for disturbing the Commission's conclusion that the assignment provisions do not apply to a signatory's ideas developed during the employment (with Bio-Rad or QuantaLife) solely because the ideas ended up contributing to a post-employment patentable invention in a way that supports co-inventorship of that eventual invention."  Specifically, the panel appreciated that the employment contracts by their terms were limited to intellectual property that arose in the course of employment at the time the inventors were employed by Bio-Rad's predecessor-in-interest, QuantaLife (i.e., "before the termination of employment").  Under these circumstances, the Court noted that "Bio-Rad does not argue, much less demonstrate, that a person's work, just because it might one day turn out to contribute significantly to a later patentable invention and make the person a co-inventor, is itself protectible intellectual property before the patentable invention is made."  For a patent, "the pertinent intellectual property does not exist until at least conception of that invention" the opinion states, citing, inter alia, Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1227–28 (Fed. Cir. 1994).  None of the precedent Bio-Rad advanced in support of its co-ownership argument was to the contrary (and remarkably did not support its argument in the Court's opinion), in particular Bd. of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 583 F.3d 832, 837 (Fed. Cir. 2009).  Finally, the panel understood California law to "recognize[] significant policy constraints on employer agreements that restrain former employees in the practice of their profession, including agreements that require assignment of rights in post-employment inventions" insofar as "[s]uch an agreement might deter a former employee from pursuing future work related to the subject matter and might deter a future employer from hiring that individual to work in the area."  And the panel did not find any reversible error by the Commission in deciding, on the merits, that nothing the inventors had done during the course of their employment had sufficient specificity to support Bio-Rad's claims of an ownership interest in any of the asserted patents.

Bio-Rad Laboratories, Inc. v. Int'l. Trade Comm. (Fed. Cir. 2021)
Panel: Circuit Judges Taranto, Chen, and Stoll
Opinion by Circuit Judge Taranto

Comments

[skeptical]

While write-ups on this blog tend to be long (seemingly — sometimes — as long as the decisions being covered), they also tend to be amazingly accurate and clear, tracking the multiple issues and elucidating them well.

Nice job!

[Kevin E Noonan]

Thanks skeptical (but we really do check and they are always shorter, but maybe not by much, than the opinion, or at least they don't contain some of the necessary detail the Court thinks it must include in the opinion; see, coming up, the Pacific Bioscience case, where we don't burden the reader with the ins and outs of nanopore nucleic acid sequencing, as fascinating as that can be).