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Latest Federal Court Cases, 05/03/21

May 3, 2021

Overview

Bio-Rad Laboratories, Inc. v. International Trade Commission, Appeal No. 2020-1785 (Fed. Cir. Apr. 29, 2021)

The Federal Circuit’s only precedential patent decision this week comes on appeal from the International Trade Commission, where an Administrative Law Judge found infringement of multiple patents and the Commission issued a limited exclusion order related to sample preparation. The Federal Circuit’s 35-page opinion largely deals with the issue of patent ownership after two inventors left their prior company and started a competing company, but also addresses issues of infringement, indefiniteness, and waiver.

The patents at issue involved 10X’s claimed methods of droplet-based sample preparation (patents ’024 and ’468) and methods of processing polynucleotides (patent ’530).

In 2010, Dr. Hindson and Dr. Saxonov, two of the named inventors on all three patents, were working for QuantaLife. They both signed an assignment agreement with the company stating in pertinent part that “Employee shall assign to the Company … Employee’s entire right to any IP described in the preceding subsection... whether or not patentable.” The referenced “preceding section” limited the agreement temporally to all IP “that Employee conceives, develops or creates alone or with the aid of others during the term of Employee’s employment with the Company.” (Emphasis added.) In 2011, Bio-Rad acquired QuantaLife and both doctors signed a similar agreement with Bio-Rad. In 2012, Drs. Hindson and Saxonov left Bio-Rad and formed 10X. In 2013, Drs. Hindson and Saxonov conceived of and patented a new invention generally addressing the same known issue that was the topic of their work at QuantaLife/Bio-Rad. Importantly, the new invention was based on architecture separate from the methods conceived of during their employment with QuantaLife/Bio-Rad. Shortly after 10X began selling its products, Bio-Rad released its own line of substantially similar products. Following Bio-Rad’s release, 10X filed a complaint with the Commission alleging Bio-Rad’s importation and sale of infringing products was in violation of the Tariff Act of 1930, 19 U.S.C. § 1337‎. An ALJ found that Bio-Rad “violated the statute with respect to all three patents,” rejected Bio-Rad’s defense of co-ownership, and issued a limited exclusion order. Bio-Rad appealed and the Commission affirmed. Bio-Rad appealed the Commission’s conclusions.

The Court affirmed the Commission’s conclusions on all challenged issues. It first addressed Bio-Rad’s challenges to the Commission’s infringement determinations. The Court found that substantial evidence existed to support the Commission’s findings of infringement on all three patents.

Second, the Court addressed Bio-Rad’s contention that the Commission erred in finding “that 10X’s product comes within the asserted claims of the ’530 patent and thereby satisfies the domestic-industry requirement of the Tariff Act.” Notably, “[t]he test for satisfying the ‘technical prong’ of the domestic industry requirement is essentially the same as that for infringement.” Bio-Rad argued on appeal that the commission improperly relied on several pieces of evidence in reaching its conclusion. The Court rejected this argument, finding that there was no reversible error.

Third, the Court addressed Bio-Rad’s request for reversal of the Commission’s rejection of Bio-Rad’s “indefiniteness challenge to the asserted claims of the ’530 patent.” The Court refused, explaining that Bio-Rad waived this appeal by not raising the issue in its opening brief. The Court noted that, in any event, there were no merits to Bio-Rad’s indefiniteness challenge.

Finally, the Court addressed Bio-Rad’s infringement defense of co-ownership—based on the accepted premise that a co-owner cannot infringe. Bio-Rad’s argument was twofold. First, Bio-Rad argued that while working at QuantaLife/Bio-Rad, Drs. Hindson and Saxonov had ideas that ultimately contributed to the post-employment inventions that are the patents at issue. And second, because of the assignment provisions in place at the time, Bio-Rad is a co-owner of the patents. The Commission rejected Bio-Rad’s defense, explaining 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.” The Federal circuit affirmed, explaining that the assignment provision is limited temporally and “[t]he most straightforward interpretation is that the assignment duty is limited to subject matter that itself could be protected as intellectual property before the termination of employment,” rather than general ideas in the same field. The Commission made the factual finding that Drs. Hindson’s and Saxonov’s ideas conceived of during employment with QuantaLife/Bio-Rad were “at a level of generality that [could not] support joint inventorship [of the patents at issue].” Thus, these ideas were “merely one component of ‘possible intellectual property’ … but the pertinent intellectual property [did] not exist until at least conception of that invention.” Bio-Rad argued that Drs. Hindson and Saxonov “conceived of key aspects of the claimed inventions” while working at QuantaLife/Bio-Rad. The Court rejected this argument, explaining that “[t]o accept Bio-Rad’s contention after we give the required deference to the Commission’s factual (and, in one instance, procedural) rulings would require that we find joint inventorship simply because Drs. Hindson and Saxonov, while at Bio-Rad (or QuantaLife), were working on the overall, known problem—how to tag small DNA segments in microfluidics using droplets—that was the subject of widespread work in the art. We see no sound support for such a conclusion.”

The Court affirmed.

A copy of the opinion can be found here.

By Annie White

 

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