Aria Diagnostics, Inc v. Sequenom, Inc

Filing 236

USCA for the Federal Circuit Judgment re 123 Notice of Appeal to the Federal Circuit: VACATED and REMANDED. (ysS, COURT STAFF) (Filed on 9/16/2013)

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United States Court of Appeals
for the Federal Circuit
______________________

ARIA DIAGNOSTICS, INC.,
Plaintiff-Appellee,
v.
SEQUENOM, INC.,
Defendant-Appellant.
______________________
2012-1531
______________________
Appeal from the United States District Court for the
Northern District of California in No. 11-CV-6391, Judge
Susan Y. Illston.
______________________
JUDGMENT
______________________
THIS CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
VACATED AND REMANDED

ENTERED BY ORDER OF THE COURT

August 9, 2013
Date

/s/ Daniel E. O’Toole
Daniel E. O’Toole
Clerk

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United States Court of Appeals
for the Federal Circuit
______________________

ARIA DIAGNOSTICS, INC.,
Plaintiff-Appellee,
v.
SEQUENOM, INC.,
Defendant-Appellant.
______________________
2012-1531
______________________
Appeal from the United States District Court for the
Northern District of California No. 11-CV-6391, Judge
Susan Y. Illston.
______________________
Decided: August 9, 2013
______________________
DAVID I. GINDLER, Irell & Manella LLP, of Los Angeles, California, argued for plaintiff-appellee. With him on
the brief were ANDREI IANCU, AMIR NAINI, LINA F. SOMAIT
and JASON W. SULLIVAN.
MICHAEL J. MALECEK, Kaye Scholer, LLP, of Palo Alto, California, argued for defendant-appellant. With him
on the brief were STEPHEN C. HOLMES and JONATHAN M.
ROTTER.
______________________

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Before RADER, Chief Judge, DYK, and REYNA, Circuit
Judges.
RADER, Chief Judge.
Aria Diagnostics, Inc., now known as Ariosa Diagnostics, Inc. (Ariosa) sought a declaration that its Harmony
test did not infringe any claim of U.S. Patent No.
6,258,540 (the ’540 patent), owned by defendant Isis
Innovation Limited (Isis) and licensed by Isis exclusively
to Sequenom, Inc. (Sequenom).
Sequenom counterclaimed, alleging that Ariosa’s Harmony test infringes the
’540 patent. The United States District Court for the
Northern District of California denied Sequenom’s motion
for a preliminary injunction to prevent Ariosa from making, using, or selling that test. Aria Diagnostics, Inc. v.
Sequenom, Inc., 2012 WL 2599340 (N.D. Cal. July 5,
2012). Because the district court incorrectly interpreted
the asserted claims and improperly balanced factors
regarding issuance of a preliminary injunction, this court
vacates and remands.
I.
Genetically normal human beings have 23 pairs of
chromosomes. Having the normal number of chromosomes is called “euploidy.” Genetic birth defects often
occur when a person has three chromosomes rather than
the usual pair. Having an abnormal number of chromosomes is “aneuploidy.”
Aneuploidy of the threechromosome variety is called “trisomy.” Trisomy causes
three major syndromes: Down’s, Edwards, and Patau.
Down’s Syndrome is often caused by trisomy of chromosome 21.
Conventional tests for prenatal abnormalities such as
trisomy relied on invasive techniques like amniocentesis
to obtain fetal cells floating in the amniotic fluid. Once
the fetal cells were removed, the fetal DNA could be
analyzed. These invasive tests, of course, presented risks

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to the fetus and the mother. See ’540 patent col. 1, ll. 12–
17.
As an alternative to invasive techniques, scientists in
the 1990’s developed methods to determine fetal abnormalities and other fetal traits by analyzing DNA extracted from fetal cells floating in maternal blood. These
methods required detecting rare nucleated cells from the
fetus that had passed through the amniotic sac into
maternal blood, and then extracting and analyzing the
fetal DNA in those free floating fetal cells. Among other
things, these methods required separating fluids from the
cells—and then discarding the fluids, either plasma or
serum—and then separating fetal cells from the much
more common maternal cells. See id. col. 1, ll. 17–37.
Once the cells were separated, the remaining maternal
serum or plasma was commonly discarded as waste, and
the fetal DNA was extracted and analyzed. J.A. 1118.
The ’540 patent discloses methods to identify fetal genetic defects by analyzing the fluid that had commonly
been discarded as medical waste—the maternal plasma or
serum. The ’540 patent discloses that non-nucleated freefloating fetal DNA (the cffDNA) exists in maternal blood.
See ’540 patent col. 2, ll. 1–5. The specification explains
that not only does analysis of cffDNA permit more efficient determination of genetic defects (for example, trisomy of chromosome 21) but that a pregnant woman
carrying a fetus with certain genetic defects will have
more cffDNA in her blood than do women with normal
fetuses. Id. col. 3, ll. 30–43. In other words, the ’540
patent claims methods to detect fetal genetic characteristics by analyzing cffDNA obtained from a maternal blood
sample. These new tests presented fewer risks and a
more dependable rate of abnormality detection.
On December 19, 2011, Ariosa filed a declaratory
judgment action against Sequenom in the Northern
District of California. Ariosa sought clearance to use its

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Harmony test without fear of infringing the ’540 patent.
On March 8, 2012, Sequenom counterclaimed, alleging
that the Harmony test infringes the ’540 patent. On that
same day, Sequenom moved for a preliminary injunction.
On June 29, 2012, the district court heard oral argument
on Sequenom’s motion. Upon denial of that motion,
Sequenom appealed. This court has jurisdiction under 28
U.S.C. § 1292(c)(1).
II.
This court reviews facts for clear error. E.I. Du Pont
De Nemours & Co. v. MacDermid Printing Solutions,
LLC, 525 F.3d 1353, 1358 (Fed. Cir. 2008). However, to
reverse a denial of a preliminary injunction, the appellant
“must show not only that one or more of the findings
relied on by the district court was clearly erroneous, but
also that denial of the injunction amounts to an abuse of
the court’s discretion upon reversal of the erroneous
findings.” Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552,
1555 (Fed. Cir. 1994).
The parties dispute the proper standard of review for
claim construction in the context of a preliminary injunction. This court recognizes some flexibility on this point.
Compare Chamberlain Group, Inc. v. Lear Corp., 516 F.3d
1331, 1340 (Fed. Cir. 2008) (“a correct claim construction
is almost always a prerequisite for imposition of a preliminary injunction), with Int’l Cmty. Materials v. Ricoh Co.,
108 F.3d 316, 318-19 (Fed. Cir. 1997) (“We do not regard
it as our function [in preliminary injunction appeals] to
definitively construe” claims or to review claim construction “as if from final judgment”).
In this case, the court need not reach out to comment
on those alternative approaches to the question. Even
under the ostensibly more relaxed standard, the district
court erred in its claim construction. As a consequence,
the district court erred in finding a substantial question of
noninfringement.

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III.
This court first examines the meaning of the phrase
“paternally inherited nucleic acid.” Claim 1 exemplifies
the claims’ use of this phrase:
A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal
serum or plasma sample from a pregnant female,
which method comprises
amplifying a paternally inherited nucleic
acid from the serum or plasma sample
and
detecting the presence of a paternally inherited nucleic acid of fetal origin in the
sample.
’540 patent, col. 23, ll. 61–67 (emphases added).
The district court held, at least at this preliminary
juncture, that “paternally inherited nucleic acid” means
“DNA sequence known [in advance] to be received only
from the father which is not possessed by the mother.”
J.A. 13. The trial court did not use the bracketed “in
advance” phrase in its order. The parties agree, however,
that the district court’s construction requires that the
sequence be known “in advance” to have been received
only from the father and not possessed by the mother.
Under this construction, infringement can only occur after
a user knows the father’s gene sequence (for example,
through genotyping). For reasons that follow, this construction of the phrase is incorrect.
Claim construction focuses primarily on the language
of the claims. See Phillips v. AWH Corp., 415 F.3d 1303
(Fed. Cir. 2005) (en banc). At the outset, the claim language recites only the term “paternally inherited nucleic
acid.” This term does not incorporate any inherent meaning about the timing or method of detecting the paternal

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characteristic. Rather this claim term states only the
origin of that particular nucleic acid however or whenever
it may be identified. This language does not require pretesting knowledge of the father’s genetic sequence. The
phrase “paternally inherited nucleic acid of fetal origin”
connotes only nucleic acid that originates from the fetus
and is inherited from the father. Had the applicant
wanted to limit the claim to those nucleic acids known in
advance to have come from the father, it easily could have
done so, as the district court’s insertion of the “known in
advance” requirement shows. The applicant, however, did
not limit the term in the claim.
Therefore, to incorporate that requirement into the
claim, this limitation must find its source and support
elsewhere. The district court attempted to find that
support in one sentence from the specification, the examples, and isolated events in the ’540 patent’s prosecution
history. J.A. 11. Taken in context, this evidence does not
support the trial court’s interpretation, and certainly is
not clear lexicography or disavowal.
The specification does not state that “paternally inherited” means “known in advance to be paternally inherited.” Instead, the single sentence in the specification on
this topic suggests no limitation whatsoever: the “method
according to the invention can be applied to the detection
of any paternally-inherited sequences which are not
possessed by the mother.” ’540 patent, col. 2, ll. 57–60
(emphasis added). This expansive sentence reflects the
broad meaning of “paternally inherited nucleic acid” that
is found in the claims—a meaning which does not limit
them to those known in advance to have come from the
father. Properly understood, this sentence describes the
method of isolating and identifying any paternal characteristics by comparison to maternal characteristics, hardly a limitation to only paternal characteristics known in
advance.

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The district court’s construction also does not adequately account for the proper teaching of the examples in
the specification. At the outset, this court notes that the
claims would not necessarily carry this limitation even if
the patent contained only examples where the father’s
genetic sequence had been known prior to detection. As
this court has explained, it is “not enough that the only
embodiments, or all of the embodiments, contain a particular limitation to limit a claim term beyond its ordinary
meaning.” Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d
1324, 1330 (Fed. Cir. 2012). Moreover, even if a specification has only one embodiment, its claims will not be
confined to that example “unless the patentee has demonstrated a clear intention to limit the claim scope using
words or expression of manifest exclusion or restriction.”
Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 906
(Fed. Cir. 2004). Instead of a clear intention to limit the
claims to the embodiments in the examples, here the
specification states that the examples “do not in any way
limit the scope of the invention.” ’540 patent, col. 4, ll. 1314.
Further, Example 3 expressly describes ascertaining,
before testing, whether the mother is RhD negative, but
makes no mention of detecting the RhD gene in the father. See id. col. 10, ll. 33–34. In sum, Example 3 describes detecting paternally-inherited genes—the RhD
gene—but not a gene known in advance to have come
from the father. Consequently, even if the specification
did clearly limit the claims to the examples, the examples
are not limited to sequences known in advance to have
come from the father.
Similarly, the prosecution history does not support
importing this “known in advance” limitation. For prosecution history to limit claim meaning, it must be clear and
unmistakable that the patentee intended that limitation.
See Aventis, 675 F.3d at 1330. The parties focus on three
ambiguous events during prosecution.

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First, when Isis originally filed the application that
led to the ’540 patent, the claims were not limited to
“paternally inherited” sequences. Instead, they were
directed to “detecting the presence of a nucleic acid of
foetal origin in the sample . . . .” J.A. 3544.
The examiner rejected these proposed claims. J.A.
1322. Among other things, the examiner emphasized that
because the amount of cffDNA before fifteen weeks of
gestation was very low, “detection of a maternally inherited nucleic acid would . . . require undue experimentation.”
J.A. 1361; see J.A. 1322. The examiner stated, however,
that the claims would be allowable if limited to “paternally inherited nucleic acid.” J.A. 3714. Accordingly, the
patentee amended the issued claims to contain the “paternal” limitation.
This record does not clearly require that the paternally inherited sequence must have been known in advance
to have come from the father. The account of the prosecution history makes no reference to advance timing, let
alone the clear and unmistakable disavowal required by
controlling precedent.
The second event Ariosa relies upon to support the
“known in advance” limitation involves statements made
later, during prosecution of a continuation of the application that led to the ’540 patent. After the ’540 patent had
been allowed but before issuance, Isis filed a continuation
application. In that application, Isis sought claims that
were not limited to paternally inherited sequences. In
explaining to the examiner its justification for these
different claims, Isis wrote:
[T]he term ‘paternally inherited’ does not cover
cases: (a) in which the gene is maternally inherited, yet the nucleic acid is not (in total) the same in
the fetus as in the mother, and (b) in which the
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egg or sperm, i.e., by what appears to be chance or
mutation.
J.A. 1776.
This passage may show that Isis understood that “paternally inherited” excluded the subject matter in (a) and
(b). The passage, however, says nothing that clearly
requires the claims in the parent to include the “known in
advance” limitation. This passage does not approach the
clear and unequivocal statement needed before prosecution history can operate to extinguish subject matter
otherwise within the claims.
Third, in rejecting those proposed claims, the examiner stated that the specification did not enable a person of
ordinary skill to identify a trisomy of chromosome 21
caused by maternal inheritance or genetic mutation. J.A.
2287. Once again, this ambiguous reference makes no
allusion to paternal characteristics known in advance. At
most, this passage suggests concerns about enablement,
an argument raised below but not reached by the district
court. J.A. 19 n.17.
In sum, the record does not support importation into
the claims of a “known in advance” limitation. Accordingly, the district court erred in relying upon this construction to hold that Ariosa had raised a substantial question
of noninfringement.
The district court also construed the term “amplifying.” Again, claim 1 illustrates:
A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal
serum or plasma sample from a pregnant female,
which method comprises
amplifying a paternally inherited nucleic
acid from the serum or plasma sample and

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detecting the presence of a paternally inherited nucleic acid of fetal origin in the
sample.
’540 patent, col. 23, ll. 61–67 (emphases added).
The district court construed “amplifying” to mean “increasing the concentration of a paternally inherited
nucleic acid relative to the other DNA in the sample.”
J.A. 14. The district court concluded that only paternally
inherited nucleic acid must increase by reasoning that
“amplifying” modified “paternally inherited nucleic acid.”
Id. As a result, it reasoned that this was “not the same as
amplifying fetal DNA in general, or all DNA in the sample.” Id.
To the contrary, the claim language requires “amplifying” paternally inherited nucleic acid, without any mention of an effect on the quantity of other nucleic acid.
Thus, the claim as written stands infringed without
regard to whether, or not, other nucleic acid is amplified.
A party that amplifies paternally inherited nucleic acid
satisfies this claim limitation without regard to amplification beyond other nucleic acid. The claim does not state
that paternally inherited nucleic acid is “selectively” or
“only” amplified.
The remainder of the specification also undermines
the district court’s interpretation because it does not
require amplification to change the proportions of paternal or maternal nucleic acids. Rather, the specification
discloses that “enrichment” and “amplification” are distinct:
The preparation of serum or plasma from the
maternal blood sample is carried out by standard
techniques. The serum or plasma is normally then
subjected to a nucleic acid extraction process. [The
patent then lists various methods.] Serum and
plasma nucleic acid extraction methods allowing

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the purification of DNA or RNA from larger volumes of maternal sample increase the amount of
foetal nucleic acid material for analysis and thus
improve the accuracy. A sequence-based enrichment method could also be used on the maternal
serum or plasma to enrich for foetal nucleic acid
sequences.
An amplification of foetal DNA sequences in
the sample is normally carried out. Standard nucleic acid amplification systems can be used, including PCR, the ligase chain reaction, nucleic
acid sequence based amplification (NASBA),
branched DNA methods, and so on. Preferred amplification methods involve PCR.
’540 patent col. 2, ll. 27–48 (emphases added). In sum,
the specification does not support, but instead points
away from the district court’s claim construction, which
already is at odds with the plain language of the claim.
The prosecution history is also insufficient to overcome the broad language of the claims. Specifically, the
examiner stated that detecting fetal DNA before the
fifteenth week of gestation would require enriching the
fetal DNA “in some manner which ha[s] not been described.” J.A. 1676–77. The examiner could not have
been objecting to lack of support for amplification, because amplification was described through traditional
PCR and other methods. E.g., ’540 patent col. 5, ll. 6–29.
By defining “amplifying” to mean changing the proportion of paternally inherited DNA relative to other DNA
in the sample, the district court construed the term incorrectly. Accordingly, because of the district court’s erroneous constructions, this court reverses that court’s
conclusion that Ariosa had raised a substantial question
of noninfringement.

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IV.
The district court also found there was a substantial
question over whether the subject matter of the asserted
claims was to eligible subject matter. J.A. 16-19. Since
the district court’s decision, the Supreme Court decided
Association for Molecular Pathology v. Myriad Genetics,
Inc., 133 S. Ct. 2107 (2013) (Myriad), which held that
product claims directed to isolated DNA segments were
not eligible subject matter, but that product claims directed to synthetic cDNA were patent eligible. See id. at
2119-20. Because the district court did not have the
benefit of Myriad and also in light of this court’s disagreement with the district court’s claim construction, this
court remands for the district court to examine subject
matter eligibility in the first instance.
To be clear, this court offers no opinion as to whether
there is or is not a substantial question regarding the
subject matter eligibility of the asserted claims. This
court merely concludes that in light of Myriad and the
different claim construction, this court would benefit from
the district court’s initial and further consideration. On
remand, the district court may once again consider this
issue, as well as whether there is a substantial question of
validity of the asserted claims under other defenses raised
by Ariosa but not reached previously by the district court.
See J.A. 19 n.17.
V.
On remand, if the district court finds no substantial
question of validity or infringement, it must address the
traditional equitable factors for a preliminary injunction.
The district court correctly held that in addition to showing the likelihood of success on the merits, Sequenom
must show it likely will suffer irreparable harm, that the
balance of equities tips in its favor, and that an injunction
is in the public interest. J.A. 9 (citing Winter v. Natural
Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). Because it

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found substantial questions on infringement and “validity” in the form of ineligible subject matter, the district
court only briefly addressed the traditional factors. J.A.
19–20. The district court erred in some aspects of its brief
analysis. Accordingly, this court remands with additional
guidance.
Significantly, the district found that price and market
erosion would occur. Id. Under this court’s precedent,
“[p]rice erosion, loss of goodwill, damage to reputation,
and loss of business opportunities are all valid grounds for
finding irreparable harm.” Celsis in Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed. Cir. 2012). Nonetheless, the district court denied Sequenom’s motion, giving
four reasons.
First, the district court reasoned that the erosion to
Sequenom’s price and its loss of market share were not
irreparable. J.A. 20. It reasoned that if Sequenom was
proven correct that the ’540 patent and the MaterniT21
test would set new standards of care, then Sequenom
could recover the market and receive damages to compensate for the infringement. J.A. 20. While the facts may
show that damages would be reparable, this assumption
is not sufficient. In the face of that kind of universal
assumption, patents would lose their character as an
exclusive right as articulated by the Constitution and
become at best a judicially imposed and monitored compulsory license.
Second, the district court reasoned that the degree of
price erosion and market loss had not been adequately
shown by Sequenom’s expert, Dr. Rao. More specifically,
the district court characterized it as a “significant deficiency” that he had not examined the “actual market”
because he did not consider the impact of another test,
sold by another company, Verinata Health, Inc. (Verinata). J.A. 19 (emphasis in original). Yet, the district court
found that Verinata’s tests did not compete in the actual

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market, but only “may eventually” do so. J.A. 7. Further,
even if Verinata were actually in the same market, the
“fact that other infringers may be in the marketplace does
not negate irreparable harm.” Pfizer, Inc. v. Teva Pharm.
USA, Inc., 429 F.3d 1364, 1381 (Fed. Cir. 2005).
Third, the district court found that a preliminary injunction would put Ariosa out of business. J.A. 20. A
record showing that the infringer will be put out of business is a factor, Intel Corp. v. ULSI Sys. Tech., Inc., 995
F.2d 1566, 1568, 1570 (Fed. Cir. 1993) (finding no error in
district court’s determination that balance of hardships
favored accused infringer where it “would in all likelihood
be forced out of business” if enjoined), but does not control
the balance of hardships factor. Id. at 1570 (“none of the
factors is dispositive”); Bell & Howell Document Mgmt.
Prods. Co. v. Altek Sys., 132 F.3d 701, 708 (Fed. Cir. 1997)
(the fact that an accused infringer would be put out of
business “does not insulate it from the issuance of a
preliminary injunction” if other factors weigh in favor of
the relief). This court can easily imagine a situation
where the loser on either side may have to close its doors.
At this point, however, this court has seen no comparison
of difficulties or losses Ariosa might experience weighed
against the harms Sequenom might suffer without protection of its legal exclusive rights. For example, the district
court made no findings on the harm that would accrue to
Sequenom’s R&D and investment in the technology,
undermining work and money spent developing, validating, and commercializing any covered product. J.A. 6.
These issues also await remand.
Finally, the district court reasoned that the public interest favored denial of the preliminary injunction.
Sequenom marketed its tests only to women over 35 and
at high risk both of having a fetus with Down’s Syndrome
and of losing a fetus through invasive testing, J.A. 4, but
Ariosa marketed its products to both high- and low-risk
women. Ariosa argued there was “no reason” to refuse to

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serve the 3,550,000 women in the low risk category,
instead of only the 750,000 in the high risk category. J.A.
6-7. After the preliminary injunction hearing, this court
took judicial notice that an expert organization had
warned that cffDNA tests should not, yet, be used in lowrisk women. Am. Coll. of Obstetricians and Gynecologists
Comm. on Genetics, Noninvasive Prenatal Testing for
Fetal Aneuploidy, Op. No. 545 (Dec. 2012). On remand, if
necessary the district court should consider this and any
other evidence pertaining to the public interest anew.
This court has considered the other arguments presented by Ariosa, but does not find them persuasive.
Accordingly, this court reverses and remands this case to
the district court for further proceedings consistent with
this opinion.
VACATED AND REMANDED

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UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
12-1531
ARIA DIAGNOSTICS, INC.,
Plaintiff - Appellee,
v.
SEQUENOM, INC.,
Defendant - Appellant.
Appeal from the United States District Court for the Northern District of California in No. 11-CV-6391,
Judge Susan Y. Illston.
MANDATE
In accordance with the judgment of this Court, entered August 9, 2013, and pursuant to Rule 41(a) of
the Federal Rules of Appellate Procedure, the formal mandate is hereby issued.

FOR THE COURT
/s/ Daniel E. O'Toole
Daniel E. O'Toole
Clerk

cc: Clerk of Court, Northern District of California (San Francisco)
David Isaac Gindler
Stephen C. Holmes
Andrei Iancu
Michael J. Malecek
Amir Naini
Jonathan Rotter
Lina Somait
Jason William Sullivan