Court Issues Preliminary Injunction Against Qiagen in Illumina Sequencing IP Dispute

NEW YORK (GenomeWeb) – A federal court on Friday issued a preliminary injunction against Qiagen, halting the sale of its GeneReader next-generation sequencing instrument in the US.

Illumina had sued Qiagen for patent infringement and requested a preliminary injunction against sales of the GeneReader in June, alleging that the instrument infringes on a patent it holds related to sequencing-by-synthesis technology.

In a statement Friday, Qiagen CEO Peer Schatz said that the company is disappointed in and disagrees with the decision, but believes its "intellectual property position in next-generation sequencing is strong," and is "pursuing all legal means to get the current decision reviewed by the US Court of Appeals for the Federal Circuit as soon as possible."

A trial date for the case is scheduled for November 2017.

The patent in question is Illumina's US Patent No. 7,566,537, "Labeled Nucleotides," which describes the process of labeling the nucleotides with a fluorescent group so they can be detected as well as with a so-called "blocking group" that causes the enzyme to wait for the label to be detected before adding the next nucleotide.

In Qiagen's statement, Schatz said that the disputed claim is "related to a narrow step within the overall broad GeneReader NGS workflow," concerning only the labeling of nucleotides. As such, he said, the company plans to "accelerate the development already underway of an upgrade to the component under dispute to resume US commercialization with a full workflow of at least comparable or even better performance."

The dispute between Illumina and Qiagen traces back to patent disputes between Illumina, Columbia University, and Intelligent-Bio Systems, which Qiagen acquired. Columbia sued Illumina in 2012, arguing that it infringed on patents it licensed to IBS, and Illumina countersued. The lawsuit was put on hold, however, because the patents in question underwent an inter partes review.

In 2014, the US Patent and Trademark Office appeals board invalidated eight claims in one of Illumina's patents that was under inter partes review — US Patent No. 8,158,346 — and the Patent Trial and Appeal Board canceled eight claims in Illumina's US Patent No. 7,057,026. The PTAB also ruled certain claims in the patents that Columbia asserted against Illumina as invalid in 2014 — a ruling that was appealed, but upheld.

In the recent decision to grant Illumina's preliminary injunction, the court wrote that Illumina demonstrated that it would likely succeed in its patent dispute with Qiagen; would likely "suffer irreparable harm" if the motion was not granted; and that the injunction was in the public's interest.

US District Judge William Alsup wrote in the decision that because the '537 patent had already undergone an inter partes review, and the claims Illumina asserts against Qiagen were found valid in that review, Illumina was likely to prevail in the lawsuit.

The judge also found that Illumina would likely suffer if Qiagen's GeneReader became broadly available. Both Illumina and Qiagen have targeted the clinical sequencing market. And although Illumina is the leading sequencing technology, Qiagen has a "foothold" in the clinical market "due to its other product lines," Alsup wrote. In addition, Qiagen planned to undercut Illumina on price, enabling customers to rent a GeneReader, and pay per use, rather than purchase it outright.

"At this crucial inflection point in the development of the market for DNA sequencing equipment for clinical laboratories, Illumina would suffer irreparable harm if Qiagen were allowed to capture and define the market with pirated technology alongside its preexisting relationships and disruptive business model," Alsup wrote.

It is unclear what the impact of the decision will be on Qiagen. The company said it had not forecasted "meaningful revenue contributions" from the GeneReader in 2016, since it was at an early launch stage, and it does not expect any changes to its 2017 projections.

Vijay Kumar, managing director at Evercore ISI, wrote in a research note that Qiagen would have to modify its sequencing chemistry to use a different "blocker" to slow down the sequencing process. That would take time because the method would have to be validated, and would be "likely to push out launch timing to the middle of 2017 at the minimum," he wrote. And although Qiagen's revenue forecast will likely not change for 2017, "many viewed [the GeneReader] as a key product launch and the injunction is likely to weigh in on sentiment," Kumar added.

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