By John Presper
On April 29, 2021 the the U.S. Court of Appeals for the Federal Circuit issued its opinion affirming the ITC’s finding of a violation of section 337 in Certain Microfluidic Systems, Components Thereof, and Products Containing the Same (Inv. No. 337-TA-1100).

By way of background, the underlying investigation was based on a January 11, 2018 complaint filed by 10X Genomics, Inc. (“10X”) alleging violation of section 337 by Respondent Bio-Rad Laboratories, Inc. of Hercules, California (“Bio-Rad”) for the unlawful importation/sale of certain microfluidic systems, components thereof, and products containing the same that infringe one or more claims of U.S. Patent Nos. 9,644,204 (“the ’204 patent”); 9,689,024 (“the ’024 patent”); 9,695,468 (“the ’468 patent”); and 9,856,530 (“the ’530 patent”).

On July 12, 2019, ALJ Dee Lord issued a final initial determination (“ID”) finding a violation of section 337 by virtue of Bio-Rad’s indirect infringement of the ’024, the ’468, and the ’530 patents (but no violation with respect to the ’204 patent). The ID also found that Bio-Rad failed to establish invalidity of any of the asserted claims of any patent-in-suit. The ID further found that the domestic industry requirement was satisfied for each of the asserted patents. In addition, the ID found that Bio-Rad had not carried its burden with respect to various affirmative defenses, including improper inventorship and ownership of the patents-in-suit. The parties petitioned the Commission for review, after which the Commission affirmed the ID, though it modified some of the ALJ’s reasoning. The Commission then issued a limited exclusion order and cease-and-desist order against Bio-Rad.

On appeal, Bio-Rad argued that the Commission erred in finding that (1) Bio-Rad infringes the asserted claims of the ’024, ’468, and ’530 patents; (2) 10X’s domestic industry products practice the asserted claims of the ’530 patent; and (3) the asserted claims of the ’530 patent are not indefinite.

According to the opinion, the Federal Circuit found that substantial evidence supports the Commission’s determination that Bio-Rad’s accused ddSEQ™ system practices the asserted claims. For example, regarding the ’024 patent, the Federal Circuit rejected Bio-Rad’s argument that its system does not infringe on the grounds that—contrary to the claim language—stimulus is applied to oligonucleotide molecules and not a porous gel bead. The Court found that the evidence shows that in Bio-Rad’s system, the oligonucleotide molecules that include barcode sequences are contained within the gel bead, that the oligonucleotide molecules that include barcode sequences are attached through linking molecules to the gel bead, and that when an enzyme is applied to release oligonucleotides that contain barcode sequences, the “enzyme enters the entire volume of the bead” and releases those nucleotides.

Regarding the ’468 patent, Bio-Rad argued that it does not infringe the asserted claims because its system’s nucleic-acid-sample solution and reagent solution do not mix until droplets are formed, contrary to the claim language. The Court found that the Commission reasonably determined otherwise, noting that Bio-Rad’s challenge to the Commission’s finding on this point relies on a “somewhat hazy image of the Bio-Rad system that seems to show a horizontal line between the two solutions until they are past the second junction—an image that, Bio-Rad argues, establishes that the two solutions do not mix together before the second junction (where the oil is introduced to form a droplet).” But Bio-Rad did not point to any evidence in the record that explained the horizontal line in the image, and thus the Court could not say that the Commission lacked substantial evidence to find infringement.

With respect to the ’530 patent, the Court rejected Bio-Rad’s argument that its ddSEQ™ system does not infringe on the grounds that “barcoding begins immediately after a droplet is formed.” Here, the Court noted that the claims permit “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.” Bio-Rad invoked the same claim limitations to argue that 10X does not satisfy the technical prong of domestic industry with respect to the ’530 patent because in its domestic product “barcode molecules are released after droplets are formed.” However, the Court found that Bio-Rad failed to explain why the Commission was wrong to conclude that “a typical run of droplet formation, which can generate 8,000 droplets from one gel bead, lasts 6.5 minutes, suggesting that more than 1,000 droplets are generated in the last minute of the droplet-formation process,” or that “gel beads are only partially dissolved two minutes after droplet formation.”

The Court also rejected Bio-Rad’s indefiniteness argument regarding the asserted ’530 claims. First, the Court found that the Commission’s determination that Bio-Rad had forfeited its indefiniteness challenge by failing to raise it to the ALJ independently sufficed to reject such argument on appeal, particularly since Bio-Rad did not contest the Commission’s forfeiture ruling in its opening appeal brief. As to the merits, the Court found that the Commission’s (and ALJ’s) “amplification” of the initially formulated claim construction does not imply or presumptively suggest indefiniteness.

Finally, the Court rejected Bio-Rad’s argument that it co-owns the ’024, ’468, and ’530 patents based on assignment provisions in the employment contracts signed by two of the inventors (Drs. Hindson and Saxonov) who had previously worked for Bio-Rad (and its predecessor, QuantaLife, Inc.). As an initial matter, the Court noted that the Commission correctly determined that Drs. Hindson and Saxonov left their employment at Bio-Rad/QuantaLife after the latest conception date of the asserted claims. Further, although Bio-Rad argued that Drs. Hindson and Saxonov had “ideas” that contributed to the “post-employment inventions,” the Court found that Bio-Rad provided “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 postemployment patentable invention in a way that supports co-inventorship of that eventual invention.” According to the panel, “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 protectable intellectual property before the patentable invention is made. Such work is merely one component of ‘possible intellectual property.’”