On Monday, the Federal Circuit issued its opinion in Bio-Rad Laboratories, Inc. v. 10X Genomics Inc., a case we have been tracking because it attracted an amicus brief. In the opinion, the panel composed of Judges Newman, O’Malley, and Taranto unanimously affirmed a district court’s judgment of liability for infringement of a patent. The panel, however, also reversed the district court’s construction of asserted claims in two other patents and vacated the judgment of infringement of those patents. Finally, the panel also vacated the district court’s grant of a permanent injunction, but only with respect to certain product lines. Here is a summary of the opinion.
As explained in our argument preview, 10X Genomics Inc. brought this appeal arguing that Bio-Rad Laboratories, Inc. “was barred from asserting infringement under the doctrine of equivalents for two independent reasons: prosecution history estoppel and claim vitiation.” 10X asserted that Bio-Rad failed to rebut the presumption of “total surrender” and further made “a clear and binding statement to the public that [10X’s products] are excluded from the protection of the patent.” Additionally, 10X argued that Bio-Rad’s own expert admitted that 10X’s products function differently that Bio-Rad’s products. Moreover, 10X contended that “Bio-Rad’s damages theory also did not apportion the reasonable royalty to the value of the patented technology.” Finally, 10X argued that the injunction should be vacated because it “does not prevent any irreparable harm to Bio-Rad.” An amicus brief was filed in support of neither party arguing that the court should reject any injunction in the case.
Judge O’Malley wrote the opinion for the panel, which as mentioned affirmed-in-part, reversed-in-part, vacated-in-part, and remanded the case back to the district court. In the introduction, Judge O’Malley summarized the relevant facts:
Bio-Rad Laboratories, Inc. and the University of Chicago (collectively, “Bio-Rad”), accused 10X Genomics Inc. (“10X”) of infringing three patents: U.S. Patent Nos. 8,889,083 (“’083 patent”); 8,304,193 (“’193 patent”); and 8,329,407 (“’407 patent”). . . . The patents-in-suit are directed to systems and methods for forming microscopic droplets (also called “plugs”) of fluids to perform biochemical reactions. . . . Microfluidic systems utilize chips that have “microfluidic channels,” hair-width pathways through which cells and fluids flow. . . . During prosecution of the ’083 patent, the inventors amended the claims to overcome a rejection based on the prior art U.S. Patent No. 7,294,503 (“Quake”). . . . The inventors distinguished the prior art by arguing that, unlike Quake, the as-filed application for the ’083 patent attempts to prevent droplets from sticking to the walls of microchannels and requires that the “surfactant should be chemically similar to the carrier fluid and chemically different from the channel walls.” . . . . They explained that, as amended, the claims were distinct from Quake, which did not teach microchannels and carrier fluids that were chemically distinct. . . . The other two asserted patents, the ’407 and the ’193 patents, are continuations of the same parent application. . . . 10X has five accused product lines: Single Cell 3’ Gene Expression, Linked-Reads, Single Cell V(D)J, Single Cell ATAC-seq, and Single Cell CNV.
The court addressed the issues presented in the following order: (1) the validity of the ’803 patent based on alleged prosecution history estoppel and vitiation, (2) the validity of the ’407 and ’193 patents based on the district court’s construction of the claims, (3) the damages awarded, and (4) the permanent injunction.
First, the court rejected 10X’s argument that Bio-Rad was estopped from asserting the doctrine of equivalents for its ’083 patent.
10X first argued that prosecution history estoppel applied to this case because Bio-Rad had made amendments to the ’803 patent to overcome prior art. The district court agreed with Bio-Rad that prosecution history estoppel did not apply “because the amendment was only tangentially related to the accused equivalent.” On appeal, Bio-Rad contended that the amended claims were intended to “make clear that the carrier fluid and the microchannel wall should be chemically distinct,” which it argued was tangential to the alleged equivalent, “microchannel walls containing a nominal amount of fluorine that is not chemically distinct from the carrier fluid.”
The court agreed with Bio-Rad. The court explained that “[p]rosecution history estoppel, including the tangentiality inquiry, is always a case-specific analysis.” The court here found the inventors’ statements during prosecution confirm that the purpose of the amendment was to distinguish a microchannel and carrier fluid that were chemically distinct. In contrast, the court explained, the accused equivalent here concerned the function of the microchannel. Accordingly, the court found that prosecution history estoppel did not apply.
10X also argued that claim vitiation barred a finding of infringement under the doctrine of equivalents. The court again disagreed. While 10X asserted that its channels are fluorinated, the antitheses of a non-flourinated channel, the court explained that “[t]he appropriate inquiry is whether a reasonable juror could have found that a negligibly-fluorinated microchannel performs the same function, in the same way, and achieves the same result, as a non-fluorinated microchannel.”
In sum, the court affirmed the judgment that the ’083 patent was valid and infringed.
Second, the court turned to 10X’s non-infringement arguments regarding the ’407 and ’193 patents. 10X based its arguments on contention that the district court misconstrued the asserted claims of these patents.
10X argued that, contrary to the district court’s construction, the preambles of these patents’ independent claims are limited to methods of conducting reactions inside a microfluidic system. The Federal Circuit agreed with 10X. It found that the terms “reaction” and “microfluidic systems” could not both be read separately from the remainder of the preamble and still provide antecedent basis for the use of those terms in the body of the claim. The court explained that “[t]he language relied upon for antecedent basis in the preamble at issue is intertwined with the rest of the preamble.”
The court declined to decide in the first instance whether 10X’s systems would infringe under the correct construction. Thus, it vacated the district court’s judgment with respect to these patents and remanded the case to be decided in accordance with the new construction.
Third, the court affirmed the damages awarded in the case.
10X argued that when calculating damages Bio-Rad’s expert relied on licenses that were not comparable to this case and also did not correctly apportion damages. The court rejected these arguments. It deferred to the district court’s assessment of “baseline comparability,” and it found no legal error. Further, it found the evidence presented in the case sufficient to support a reasonable juror’s calculation of the damages.
Fourth, the court addressed the injunction.
10X argued that Bio-Rad failed to show irreparable harm and that neither the balancing of hardships nor public interest supported awarding the injunction.
The court began by rejecting 10X’s irreparable harm argument, finding that “10X has established a strong market lead over Bio-Rad” and that “[m]oney damages will not be able to compensate Bio-Rad for the harms stemming from 10X’s first mover advantage.”
The court, however, was persuaded by 10X’s balance of hardships argument. While the district court had found that 10X’s hardships were mitigated because it could sell its new, non-infringing products, 10X pointed out that it did not have a new design for two of its product lines. Based on this fact, the Federal Circuit ruled the district court committed error in enjoining these two products. Accordingly, the court vacated the injunction as to those two product lines, but kept in place the injunction impacting 10X’s other products.