United States: Patent Watch: Aria Diagnostics, Inc. v. Sequenom, Inc.

Last Updated: September 23 2013
Article by Lawrence M. Sung

While the facts may show that damages would be reparable, this assumption is not sufficient [for purposes of a preliminary injunction analysis]. In the face of that kind of universal assumption, patents would lose their character as an exclusive right as articulated by the Constitution and become at best a judicially imposed and monitored compulsory license.

On August 9, 2013, in Aria Diagnostics, Inc. v. Sequenom, Inc., the U.S. Court of Appeals for the Federal Circuit (Rader,* Dyk, Reyna) vacated and remanded the district court denial of a preliminary injunction enjoining Aria from making, using or selling its Harmony test that Sequenom alleged infringed U.S. Patent No. 6,258,540, which related to the identification of fetal genetic defects by analyzing maternal plasma or serum for non-nucleated free-floating fetal DNA (cffDNA). The Federal Circuit stated:

[T]he record does not support importation into the claims of a "known in advance" limitation. Accordingly, the district court erred in relying upon this construction to hold that Ariosa had raised a substantial question of noninfringement. . . . The district court also found there was a substantial question over whether the subject matter of the asserted claims was to eligible subject matter. Since the district court's decision, the Supreme Court decided Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013) (Myriad), which held that product claims directed to isolated DNA segments were not eligible subject matter, but that product claims directed to synthetic cDNA were patent eligible. Because the district court did not have the benefit of Myriad and also in light of this court's disagreement with the district court's claim construction, this court remands for the district court to examine subject matter eligibility in the first instance.

To be clear, this court offers no opinion as to whether there is or is not a substantial question regarding the subject matter eligibility of the asserted claims. This court merely concludes that in light of Myriad and the different claim construction, this court would benefit from the district court's initial and further consideration. On remand, the district court may once again consider this issue, as well as whether there is a substantial question of validity of the asserted claims under other defenses raised by Ariosa but not reached previously by the district court.

On remand, if the district court finds no substantial question of validity or infringement, it must address the traditional equitable factors for a preliminary injunction. The district court correctly held that in addition to showing the likelihood of success on the merits, Sequenom must show it likely will suffer irreparable harm, that the balance of equities tips in its favor, and that an injunction is in the public interest. Because it found substantial questions on infringement and "validity" in the form of ineligible subject matter, the district court only briefly addressed the traditional factors. The district court erred in some aspects of its brief analysis. Accordingly, this court remands with additional guidance.

Significantly, the district found that price and market erosion would occur. Under this court's precedent, "[p]rice erosion, loss of goodwill, damage to reputation, and loss of business opportunities are all valid grounds for finding irreparable harm." Nonetheless, the district court denied Sequenom's motion, giving four reasons. First, the district court reasoned that the erosion to Sequenom's price and its loss of market share were not irreparable. It reasoned that if Sequenom was proven correct that the '540 patent and the MaterniT21test would set new standards of care, then Sequenom could recover the market and receive damages to compensate for the infringement. While the facts may show that damages would be reparable, this assumption is not sufficient. In the face of that kind of universal assumption, patents would lose their character as an exclusive right as articulated by the Constitution and become at best a judicially imposed and monitored compulsory license. Second, the district court reasoned that the degree of price erosion and market loss had not been adequately shown by Sequenom's expert, Dr. Rao. More specifically, the district court characterized it as a "significant deficiency" that he had not examined the "actual market" because he did not consider the impact of another test, sold by another company, Verinata Health, Inc. (Verinata). Yet, the district court found that Verinata's tests did not compete in the actual market, but only "may eventually" do so. Further, even if Verinata were actually in the same market, the "fact that other infringers may be in the marketplace does not negate irreparable harm." Third, the district court found that a preliminary injunction would put Ariosa out of business. A record showing that the infringer will be put out of business is a factor, but does not control the balance of hardships factor. This court can easily imagine a situation where the loser on either side may have to close its doors. At this point, however, this court has seen no comparison of difficulties or losses Ariosa might experience weighed against the harms Sequenom might suffer without protection of its legal exclusive rights. For example, the district court made no findings on the harm that would accrue to Sequenom's R&D and investment in the technology, undermining work and money spent developing, validating, and commercializing any covered product. These issues also await remand. Finally, the district court reasoned that the public interest favored denial of the preliminary injunction. Sequenom marketed its tests only to women over 35 and at high risk both of having a fetus with Down's Syndrome and of losing a fetus through invasive testing, but Ariosa marketed its products to both high-and low-risk women. Ariosa argued there was "no reason" to refuse to serve the 3,550,000 women in the low risk category, instead of only the 750,000 in the high risk category. After the preliminary injunction hearing, this court took judicial notice that an expert organization had warned that cffDNA tests should not, yet, be used in low-risk women. On remand, if necessary the district court should consider this and any other evidence pertaining to the public interest anew.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.