Illumina, Inc. v. BGI Genomics Co., Ltd

Background

Illumina, Inc. and Illumina Cambridge Ltd. sued BGI Genomics Co., Ltd., BGI Americas Corp., MGI Tech. Co., Ltd., MGI Americas, Inc., and Complete Genomics Inc. The opinion collectively refers to the defendants as CGI. CGI filed an answer asserting twelve affirmative defenses and a counterclaim alleging infringement of one of CGI’s patents.

Illumina moved under Federal Rule of Civil Procedure 12(f) to strike CGI’s Third, Fourth, Sixth, Seventh, Ninth, Tenth, Eleventh, and Twelfth affirmative defenses. It also moved under Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim, to dismiss CGI’s counterclaims for induced infringement and willful infringement and the related request for damages.

Motion to Strike

CGI’s Eleventh affirmative defense alleged inequitable conduct. CGI claimed that Illumina’s attorneys and expert made false or misleading statements about several prior-art references during earlier proceedings before the Patent Trial and Appeal Board and the Federal Circuit. The alleged subjects included the meanings of “efficiency” and “yield,” the characteristics of an “Azidomethyl” group, the description of the “Boyer” reference and the behavior of the “AZT” molecule, and whether certain molecules would degrade DNA strands.

The court explained that inequitable conduct requires particularized allegations that a person involved in patent prosecution made a material misrepresentation or omission and did so with a specific intent to deceive the patent authorities. The court concluded that CGI’s allegations, viewed favorably to CGI, described attorney interpretations and arguments about prior art rather than demonstrably false factual statements. The prior-art references were available to the decision-makers and opposing parties, and the earlier decisions independently addressed the disputed issues. The court also found that CGI did not adequately identify which individuals made the alleged misrepresentations or plead facts supporting knowledge and a specific intent to deceive.

The court therefore struck CGI’s Eleventh affirmative defense of inequitable conduct without leave to amend. It also struck CGI’s Twelfth affirmative defense of unclean hands without leave to amend because it was based on the same conduct.

Illumina’s motion also challenged CGI’s Third, Fourth, Sixth, Seventh, Ninth, and Tenth affirmative defenses. The court applied the requirement that an affirmative defense include factual support rather than merely a conclusory label. It found that CGI’s Third, Sixth, Ninth, and Tenth defenses lacked adequate factual support, and it found that the Ninth and Tenth defenses were not proper affirmative defenses because they addressed Illumina’s burden to prove enhanced damages or an exceptional case.

The court granted Illumina’s motion to strike CGI’s Third, Fourth, Sixth, Seventh, Ninth, and Tenth affirmative defenses with leave to amend. The order states that any amended pleading had to be filed within 20 days of the order.

Motion to Dismiss

The court dismissed CGI’s willful-infringement counterclaim. It held that CGI had not adequately alleged that Illumina knew of the patent at the relevant time before the lawsuit. Allegations that Illumina routinely monitored intellectual-property developments were not enough, and alleged knowledge obtained after the lawsuit began was not relevant to the willful-infringement claim.

The court allowed CGI’s induced-infringement counterclaim to proceed. CGI alleged that Illumina provided customers with marketing materials, user guides, technical literature, and bioinformatics software applications that encouraged infringing use. Although the court found CGI’s allegations of pre-suit knowledge insufficient, it held that CGI could rely on alleged post-suit knowledge for induced infringement. The court found CGI’s allegation that Illumina learned of the patent when it was served with the counterclaim sufficient at the pleading stage.

Disposition

Judge William H. Orrick granted Illumina’s motion to strike CGI’s Eleventh and Twelfth affirmative defenses without leave to amend. He granted Illumina’s motion to strike CGI’s Third, Fourth, Sixth, Seventh, Ninth, and Tenth affirmative defenses with leave to amend. He granted in part and denied in part Illumina’s motion to dismiss: the willful-infringement counterclaim was dismissed, while the induced-infringement counterclaim was allowed to proceed.