Illumina, Ariosa Trade Demands for Nearly $100M in Damages as Trial Closes
Lawyers for Illumina Inc. and Ariosa Diagnostics—rivals in the burgeoning market for non-invasive prenatal testing (NIPT)—both asked a San Francisco federal jury for damage awards of around $100 million.
January 23, 2018 at 06:51 PM
4 minute read
SAN FRANCISCO — It's not unusual at the end of a high-stakes intellectual property trial for the parties to have wildly different damages figures. But less common is for both sides to demand that their opponent fork over nearly $100 million.
At the close of a two-week federal jury trial in San Francisco between rivals in the burgeoning market for non-invasive prenatal testing (NIPT), lawyers for Illumina Inc. and Ariosa Diagnostics did just that.
Illumina's lawyer, Edward Reines of Weil, Gotshal & Manges, told jurors Tuesday that Ariosa's infringement of his client's patented technology had led to about $104 million in lost profits. Meanwhile, Ariosa's lawyer, David Gindler of Irell & Manella, contended that there was no infringement and that his client had suffered $88.5 million in harm because of Illumina's bad faith and breach of contract. Gindler had also asked jurors to force Illumina to turn over about $14.4 million Ariosa paid for testing supplies.
Tuesday's proceedings got testy at times—with each lawyer objecting to the other's characterization of the trial record during closings. U.S. District Judge Susan Illston of the Northern District of California, who has been overseeing the case, was visibly frustrated and sighed aloud as she descended from the bench for a third and final sidebar conversation sparked by the objections.
Weil's Reines attempted to paint Ariosa's “Harmony” test as a holdout in an industry that has largely paid to license the Illumina gene sequencing technology—most paying about $75 per test. Illumina maintains that its patents are central to technology that allows physicians to use simple blood tests to screen for genetic defects and determine the sex of a fetus.
Reines pointed out that Ariosa co-founder John Stuelpnagel had served as one of the named inventors of one of the two patents in the suit during a prior stint working at Illumina. He said that Stuelpnagel's efforts to get his name taken off the invention undermined his credibility, and were an attempt to work around rules barring inventors from arguing their patent is invalid.
“There's a word for that: That's willful infringement,” said Reines, urging the jury to return a finding that could allow the judge to treble damages in the case.
Reines further argued that the commercial agreement for Ariosa to use Illumina's sequencers to perform its test didn't include a license to the patent at the heart of the dispute. Reines pointed back to earlier testimony comparing the test materials to someone using a cake mix: “The fact at the end of the recipe it says throw the cake in the oven doesn't mean that you've got the right to use the mixer.”
Irell's Gindler painted a starkly different version of the dispute for San Jose-based Ariosa. He argued that his client had developed a test marketed to the general population at a fraction of the cost of competing products. Gindler contended that Ariosa's commercial relationship with Illumina didn't turn sour until Illumina purchased a rival testing company, Verinata Health, in 2013. “Now you understand why our cost advantage is such a concern,” Gindler said. “We do this better than everybody else and they want to take that away.”
Gindler argued that Ariosa's supply agreement did include a license to Illumina's IP and that Illumina breached the agreement in bad faith, by suing despite the license. He argued that the lawsuit was timed just after Ariosa had announced the pricing of its IPO to disrupt the offering. Ariosa's IPO was shelved and instead the company was acquired by Roche Molecular Systems Inc. in 2014.
“Illumina went out of its way to ruin our IPO,” Gindler said. “They had just turned the corner and had their first quarter of profitability.”
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