[Ip-health] 2018: Verinata v. Ariosa – compulsory license granted to Roche over prenatal screening technologies under eBay v. MercExchange

Luis Gil Abinader luis.gil.abinader at keionline.org
Tue Mar 26 07:43:35 PDT 2019


Link: https://www.keionline.org/30163

On July 19, 2018, the U.S. District Court, Northern District of California,
denied a permanent injunction requested by Illumina, Inc, and instead ruled
that a forward looking royalty for continued non-voluntary use of the
invention, a type of compulsory license, was more appropriate. The
beneficiary of the compulsory license was Ariosa Diagnostics, Inc, a
company now owned by Roche.

The case involves U.S. patent 7,955,794, directed to methods for
simultaneously detecting multiple target nucleic acids in a sample, which
can be used for commercial diagnostic testing.

According to the patent:

"Portions of this invention were made with government support under HG02003
awarded by the National Human Genome Research Institute and CA81952 awarded
by the National Cancer Institute. The government has certain rights in the
invention."

So, ironically, while the NIH has declined to use its march-in rights to
grant compulsory licenses on patents, Roche, a very large pharmaceutical
company, has succeeded in obtaining one on an NIH-funded invention.

In denying the permanent injunction, Judge Susan Illston said:

"This Court is unconvinced by Illumina’s argument that the harm resulting
from competing against Roche is not compensable by monetary damages. The
Court finds that, as the Federal Circuit explained in ActiveVideo, in cases
such as this one where the licensees compete with the infringer, royalties
are adequate forms of compensation. See ActiveVideo, 694 F.3d at 1338."

A copy of the July 2018 order by Judge Susan Illston is available here:
https://www.keionline.org/wp-content/uploads/Verinata-v.-Ariosa.pdf This
order addresses several post-trial motions and the request for a permanent
injunction filed by co-plaintiff Illumina, which followed a verdict finding
that the ‘794 patent was valid and infringed by the non-invasive prenatal
diagnostic test currently being marketed by Ariosa/Roche as Harmony, which
is used to screen for Downs Syndrome.

Judge Illston examined whether Illumina had satisfied the four-factor test
before a court can issue a permanent injunction, as required under the U.S.
Supreme Court decision in eBay v. MercExchange. In her analysis of the
public interest factor Judge Illston determined that the public will not be
served by the issuance of a permanent injunction in this case because the
co-plaintiff Illumina does not currently practice the ’794 patent.

Suggesting the judge would have reached a different conclusion on the
public interest factor if the patent holder was practicing the invention,
the Judge cited Apple Inc. v. Samsung Elecs. Co., 809 F.3d 633, 647 (Fed.
Cir. 2015), where the Federal Circuit stated that “the public interest
nearly always weighs in favor of protecting property rights in the absence
of countervailing factors, especially when the patentee practices his
inventions.” [emphasis added]

"However, the Federal Circuit has noted that the public interest weighs in
favor of the patentee 'especially when the patentee practices his
inventions.' Apple., 809 F.3d at 647. Here, the ’794 patent is not
currently in practice. Its primary iteration was in the now discontinued
GoldenGate product. See Trial Tr. (1/8/2018) 133:21-25; Ex. I (McGrath
Depo.) at 119:17-19, 121:18-22)."

"This Court is persuaded that the public interest will not be served by the
issuance of a permanent injunction. See Novozymes A/S v. Danisco A/S, No.
10-CV-251-BBC, 2010 WL 3783682 (W.D. Wis. Sept. 24, 2010). In Novozymes,
the defendants did not practice its patent or license the patent to a third
party. Id. at *10. The court held that it would not permit a preliminary
injunction because it is 'inconsistent for plaintiffs to be arguing on one
hand that the ’723 patent represents an important new invention and then
argue on the other hand that it should make no difference if no one is
allowed to actually use it.' Id."

"Here, much like the defendants in Novozymes who did not practice or
license their patent, Illumina does not currently practice the ’794 patent.
Consequently, this Court similarly holds that granting a permanent
injunction could disserve the public interest or at the very most is
neutral."

This is one of several cases where U.S federal courts have denied a
permanent injunction despite infringement of a U.S. patented invention for
a medical technology. A list of several such cases, including summaries and
copies of the orders, is available here:
https://www.keionline.org/us-injunction-medical

Case citation: Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 329 F.
Supp. 3d 1070, 1118 (N.D. Cal. 2018), order clarified, No. 12-CV-05501-SI
(N.D. Cal. Oct. 4, 2018)


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