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ABI’s Patent Suit Against Illumina, Former IP Counsel Set to Go to Trial This Fall

Applied Biosystems’ patent lawsuit against defendants Illumina, Solexa, and former IP counsel Stephen Macevicz is going to trial this fall, following a flurry of orders from the judge in April and May triggered by several earlier motions from the parties.
“This is a classic jury trial situation,” according to the judge, who said in an order that the trial, which had previously been set for Sept. 29 by a case-management order, will consist of two phases. The first phase will deal with “all issues on the complaint,” and the jury will render a verdict, which might “also resolve any standing issues as to the counterclaim.” In the second phase, the same jury will render a verdict on Illumina’s counterclaims.
The judge separately ordered that all expert discovery will close on June 27, 14 calendar days after the deadline for filing expert reports. The deadline for filing dispositive motions will be July 17. The cutoff date for fact discovery was May 30.
The dispute centers around ownership of three US patents related to ABI’s SOLiD technology. ABI set off the legal row in late 2006 when it sued Macevicz in a California state court for allegedly stealing intellectual property belonging to the company while an ABI employee by failing to disclose a patent application he filed in his name in 1995.
Later that year, Macevicz assigned the application to his new employer, ABI-spinoff Lynx Therapeutics. In early 2005, Lynx merged with Solexa, which in turn was acquired by Illumina last year.
The patent application gave rise to three patents, all owned by Illumina: US Patent Nos. 5,750,341; 5,969,119; and 6,306,597, all entitled “DNA sequencing by parallel oligonucleotide extensions.”
In 2007 ABI moved its suit to federal court, and Solexa filed three counterclaims accusing ABI of willfully infringing all three patents. Earlier this year, the parties failed to settle the dispute before a magistrate judge (see In Sequence 4/1/2008).
’Bizarre Arrangement’
The order for the case to go to trial followed a series of legal maneuvers by ABI and Illumina. On April 3, the judge approved a stipulated protective order enabling the firms to file certain documents under seal.
Also that day, representatives of the companies met to discuss discovery disputes between them and agreed to share certain documents. The judge gave the companies two weeks to designate documents as confidential and to exchange documents they had agreed to share.

“This is a classic jury trial situation.”

On April 4, the judge denied both parties’ request for a summary judgment on the statute of limitations. Illumina had argued that the statute of limitations had run out in 2002 because the patents were granted in 1998, 1999, and 2001 (see In Sequence 3/11/2008), though ABI had countered that it only learned of the existence of the patents in early 2006, so the statute-of-limitations clock should have been started later.
In his order, the judge mentioned that “there has been too much motion practice in this case” and told the parties that they now each have one more summary judgment motion, limited to the issues of infringement and invalidity.
Also on April 4, the judge denied ABI's request the month before to split the case in two in order to separate ownership issues from infringement issues, and to conduct a bench trial as early as May.
On April 8, ABI asked the judge for permission to amend its original complaint to add two sets of allegations: a damages claim against Macevicz, and “additional grounds supporting its claim that the patents-in-suit should be declared unenforceable by Illumina due to inequitable conduct.” The deadline for making such amendments was Oct. 25, 2007, but ABI claimed that it could not add them by that deadline because of a confidential release agreement it had with Macevicz at the time.
In their confidential release document, ABI and Illumina agreed that they would not seek monetary damages from Macevicz so long as he spoke “truthfully” about the patents with the two companies as part of informal settlement talks.
However, ABI said it terminated the release in December 2007 after it learned that Macevicz had failed to disclose in these talks an indemnity agreement he had with Lynx Therapeutics, and the fact that he had negotiated with Lynx about assigning the company a patent application as early as November 2004. ABI also said Macevicz had “breached the release by relying on the fact of the release to move for dismissal” from the case in late 2007.
In its reply, filed with the court in April, Illumina and its co-defendants claimed that ABI has not shown “good cause” for amending its complaint several months after the deadline, which they said would be “compounding the complexity of this already-complex dispute.”
They also argued that the release agreement with Macevicz is still in effect, and that “nothing that AB has learned since entering into the release allows AB to terminate the release, or can justify AB's lengthy delay in seeking to amend its complaint.”
On May 1, ABI responded that the defendants “mischaracterized” the release, its own grounds for terminating it, and Macevicz’s attempt to dismiss himself from the suit.
The maneuverings came to an end in early May, when the judge denied ABI's request to change its complaint, saying that the company’s explanation why it needed additional time to file the amendments were “unconvincing.”
ABI “had ample time and opportunity to request a leave to amend much earlier in this case,” the judge wrote. “It waited too long.”
He also commented on the release agreement, saying that ABI “created this obstacle to suing [Macevicz] in the first place. Applied has nobody but itself to blame for entering into such a bizarre arrangement.”
Illumina and Applied Biosystems declined to provide further comment on the lawsuit.

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