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ABI, Illumina, Former Lawyer Fail to Settle IP-Ownership Suit; ABI Seeks to Split Case

Plaintiff Applied Biosystems and defendants Illumina, Solexa, and former ABI IP counsel Stephen Macevicz did not settle their ongoing patent dispute before a magistrate judge last month, according to a court filing.
Instead, ABI “plans to file a motion for summary judgment on infringement; and is to notify this Court of the expected hearing date as soon as possible,” according to the filing, which states that “a further settlement conference [is] to take place prior to the hearing, and after the motion for summary judgment is briefed.”
ABI originally sued Illumina, Solexa, and Macevicz in a California state court in late 2006 over ownership of three patents related to ABI’s SOLiD technology. In May 2007, it moved the suit to a federal court. ABI alleges that Macevicz, while an employee of the company, stole intellectual property belonging to ABI by failing to disclose a patent application he filed in 1995 under his own name. He later assigned the application to ABI-spinoff Lynx Therapeutics, which he joined after leaving ABI in 1995. Lynx later merged with Solexa, which became part of Illumina last year.
The application yielded three patents, US Patents Nos. 5,750,341; 5,969,119; and 6,306,597, all entitled “DNA sequencing by parallel oligonucleotide extensions,” that cover sequencing-by-ligation, the chemistry used by ABI’s new SOLiD sequencing system (see In Sequence 3/11/2008).
On March 12, ABI asked the court to split the case in two, in order to separate the ownership issue from the infringement issue, and to conduct as early as May a bench trial, rather than a jury trial, on the defendants’ standing to assert the three patents in question.
According to ABI, the strategy, called bifurcation, is appropriate in this case for a number of reasons; for example, because the question of Illumina’s standing is important for the rest of the case. “If the Court finds that Illumina does not have standing, then there is no jurisdictional basis for any further inquiry into any of the claims raised by the parties with respect to issues of patent infringement, willfulness, damages, invalidity, and unenforceablity, and because of the lack of federal court jurisdiction, any remaining claims could be remanded back to state court for resolution,” ABI said in a court filing last month.
Also, if the Court concluded that ABI owns the patents, bifurcation would “moot the expensive, and potentially unnecessary, trial” regarding the other issues, according to the document.
ABI requested a bench trial on standing to be conducted as early as May 8, and a separate trial on infringement, willfulness, damages, invalidity, and unenforceability to start on Sept. 29, the original trial start date (see In Sequence 11/27/2007).

The parties are to “discuss every outstanding discovery dispute.”

In their opposition, filed March 28, the defendants allege that ABI’s request, “framed as a motion to bifurcate the issue of ‘jurisdictional standing,’ actually seeks a bench trail on AB’s seven state-law claims, each of which involves a claim for monetary damages.” Such claims, they argue, “preclude separating the issues that must be tried [before] a jury … from the factual inquiries underlying AB’s substantive state-law claims.”
“Standing to bring patent infringement claims only requires that one held legal title to the patents-in-suit when one filed the claims,” the defendants argue, adding that Solexa has held legal title in the patents-in-suit since 1995.
The defendants also reject ABI’s requested May trial date because “it would be neither reasonable nor logistically feasible to hold a trial in May,” since ABI, they say, has so far not produced documents the defendants requested as part of the fact discovery phase.
This week, ABI filed a reply, reaffirming that the bifurcation is warranted. The court is expected to hold a hearing on the pending motion to bifurcate on April 3.
In an order last week setting the hearing date for April 3, the judge expressed impatience with both parties in the trial. “The Court is wary of learning of the alleged discovery stonewalling,” the order reads, and is “disappointed that counsel would let four months of stonewalling go by without making a motion to compel, a fact which undercuts the allegation of stonewalling.
“To put an end to all discovery issues once and for all” on the day of the bifurcation hearing, the two parties are to “discuss every outstanding discovery dispute” and produce a resolution and timetable on agreed-upon and unresolved items, the judge added.
Statute of Limitations
Meanwhile, on March 20, the court held a hearing on a motion filed by Illumina, Solexa, and Macevicz, as well as a cross motion filed by ABI, asking for a summary judgment regarding the statute of limitations. Illumina had argued in its motion that ABI’s rights to the patents are barred by the statute of limitations.
As of deadline, the judge had not issued an order on the motion and cross motion.

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