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Illumina Asks Appeals Court to Reverse, Dismiss IP Infringement Ruling in Syntrix Suit

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NEW YORK (GenomeWeb) – Illumina has fleshed out its appeal of a US District Court ruling that found the San Diego vendor had infringed IP held by Syntrix Biosystems and compelled Illumina to pay Syntrix $115 million in damages based on a 6 percent royalty rate.

In a July 7 brief filed with the US Court of Appeals for the Federal Circuit, Illumina maintained that the IP claims that led to last year's US District Court ruling were improperly constructed, and again took issue with the manner in which the 6 percent royalty rate was determined, arguing that the appellate court should at minimum remand the case for a new damages trial.

In addition, Illumina disputed Syntrix's argument in an April 24 brief to the court that the US District Court's ruling that Illumina's infringement was not willful be reversed. According to Syntrix, Illumina has actually shown "objective recklessness" by continuing to sell the BeadChip products at the heart of the litigation. Illumina argued in the new brief that it is not "reckless that Illumina has 'continued to sell' the products while the current appeal on those issues is pending" and that Illumina's position on these issues is "not only reasonable, it is right."

Auburn, Wash.-based Syntrix filed suit against Illumina in the US District Court for the Western District of Washington for IP infringement in 2010, alleging that Illumina based its BeadChip microarray products on technology developed originally by Syntrix, which had provided confidential information to Illumina a decade and a half ago while the two firms were discussing a possible business relationship.

Last June, the same court ordered Illumina to pay Syntrix $115.1 million in damages for infringing US Patent No. 6,951,682, held by Syntrix, and in November, the US District Court denied Illumina's motion for a new trial. Illumina appealed the case to the US Court of Appeals for the Federal Circuit in December, though it has paid Syntrix damages while the appeal continues.

Syntrix for its part has stuck to its claims of infringement, and in its April 24 brief, the company even accused Illumina of copying the name for its Sentrix Array Matrix product from Syntrix, a charge Illumina contested in the July 7 brief, stating that Syntrix has "no evidence that Illumina copied the name (why would it?), and every Illumina witness asked about the issue testified otherwise."

Syntrix's '682 patent, entitled "Porous Coatings Bearing Ligand Arrays and Use Thereof," describes the use of a porous coating made of a three-dimensional network of particles on the substrate, through which ligands are attached. Illumina has argued that its BeadChips are based on IP that describes two-dimensional arrays with a single layer of beads that sit separately in individual wells on the substrate.

Because of the differences in the inventions, Illumina claimed in the July 7 brief that it never felt compelled to license Syntrix's IP. "Illumina decided not to license the Syntrix technology because it was already going in a different direction," the company stated. "Illumina is not alone in that regard," it said.

"None of the 10 other companies that Syntrix approached at the same time as Illumina chose to license the patent, and no one else is accused of infringing."

In terms of the 6 percent royalty rate, both Illumina and Syntrix agreed at the start of the litigation that the appropriate starting point for a potential rate was 3 percent, based on the rate set in the 1998 license between Tufts University and Illumina for the beads-in-wells patents that list Illumina co-founder and scientific advisory board chair David Walt as the inventor.

However, Syntrix managed to adjust the rate to 6 percent during the US District Court proceedings, citing Walt's Illumina stock holdings, which are valued at about $92 million, as well as a study that found universities generally accept half the royalty rate a commercial entity would demand.

Illumina countered in the July 7 brief that Walt obtained the stock because he co-founded Illumina, not in connection with the Tufts licenses, and that the study was non-peer-reviewed and "arbitrary, unreliable, and irrelevant."

Syntrix had argued in its April 24 brief that "even if it had been an abuse of discretion to admit evidence of the stock grant (which it was not), the error would be harmless because extensive independent evidence supports the jury's damages award."

Based on its issues with the way the royalty rate was constructed though, Illumina argued in the July 7 brief that even if the court affirmed its liability, "a new trial on damages is nevertheless appropriate, as is vacatur of the ongoing royalty based on the faulty damages award."

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