Verinata Health, Inc. et al v. Ariosa Diagnostics, Inc et al

Filing 263

ORDER CONSOLIDATING CASES AND DISMISSING WITHOUT PREJUDICE MOTIONS TO DISMISS #27 #28 (Illston, Susan) (Filed on 8/10/2015) Modified on 8/10/2015 (tfS, COURT STAFF). * Case consolidated with C-12-5501 SI. (Future filings shall be made in lead case C-12-5501 SI)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ILLUMINA, INC.,

Case No. 15-cv-02216-SI

Plaintiff,
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v.
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ARIOSA DIAGNOSTICS, INC., et al.,
Defendants.

ORDER CONSOLIDATING CASES
AND DISMISSING WITHOUT
PREJUDICE MOTIONS TO DISMISS
Re: Dkt. Nos. 27, 28, 29, 34, 38

United States District Court
Northern District of California

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Now before the Court are motions by defendants Ariosa Diagnostics, Inc. and Roche

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Molecular Systems, Inc. to dismiss Illumina’s first amended complaint (“FAC”) for failure to state

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a claim. The motions are currently set for argument on August 13, 2015. Docket Nos. 27, 28.

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Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without

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oral argument and hereby VACATES the hearing. For the reasons stated below, the Court

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CONSOLIDATES this action with Case No. 12-cv-5501, and STAYS the action in accordance

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with its prior order. See C. 12-cv-5501, Docket Nos. 229, 230. Ariosa’s and Roche’s motions are

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DISMISSED without prejudice to refiling upon the lifting of the stay.

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BACKGROUND

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This is a patent infringement action. Plaintiffs Illumina Inc., Verinata Health, Inc. and the

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Board of Trustees of the Leland Stanford Junior University (collectively “Illumina”) accuse

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Ariosa’s HarmonyTM Prenatal Test of infringing U.S. Patent No. 8,296,076 (“the ’076 patent”),

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U.S. Patent No. 8,318,430 (“the ’430 patent”), and U.S. Patent No. 7,955,794 (the ’794 Patent).

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Defendant Ariosa has filed a counterclaim for breach of contract.

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In May 2013, Ariosa filed petitions for inter partes review, requesting that the Patent Trial

and Appeal Board (“PTAB”) review claims 1-30 of the ’430 patent and claims 1-13 of the ’076

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patent. On October 25, 2013, the PTAB instituted inter partes review of claims 1-30 of the ’430

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Patent on obviousness grounds. On November 20, 2013, PTAB instituted inter partes review of

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claims 1-13 of the ’076 Patent on anticipation and obviousness grounds. On October 23, 2014, the

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PTAB issued two orders holding that Ariosa had failed to show that claims 1-30 of the ’430 Patent

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are unpatentable. See Ariosa Diagnostics, Petitioner, IPR2013-00276, 2014 WL 5454541(Oct. 23,

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2014); Ariosa Diagnostics, Petitioner, IPR2013-00277, 2014 WL 5454542 (Oct. 23, 2014). On

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November 19, 2014, the PTAB issued an order finding that the challenged claims of the ’076

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Patent are unpatentable. See Ariosa Diagnostics, Petitioner, IPR2013-00308, 2014 WL 6617697

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(Nov. 19, 2014). These PTAB rulings have all been appealed to the Federal Circuit. On January 8,

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United States District Court
Northern District of California

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2015, PTAB instituted inter partes review of claims 1-22 of the ’794 Patent. See Ariosa

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Diagnostics, Inc., Petitioner, IPR2014-01093, 2015 WL 153677 (Jan. 8, 2015).

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On August 7, 2014, this Court held that Ariosa was entitled to pursue its counterclaims for

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breach of contract and the covenant of good faith and fair dealing in a judicial forum,

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notwithstanding an arbitration clause in the underlying contract between the parties. C. 14-cv-

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1921, Docket No. 40. These counterclaims are of central importance to Ariosa’s defense, because

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they relate to its assertion that Illumina granted it an express or implied license to practice the ’794

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Patent. Id. at 5. On September 8, 2014, Illumina appealed this Court’s ruling to the Federal

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Circuit. C. 14-cv-1921, Docket No. 56.

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On February 2, 2015, this Court granted Ariosa’s third motion to stay pending the final

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exhaustion of the inter partes review proceedings to which the ’794 Patent is subject, the Federal

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Circuit appeals from inter partes review to which the ’430 and ’076 Patents are subject, and the

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appeal from this Court’s order finding that it has subject matter jurisdiction to hear Ariosa’s

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breach counterclaims. Docket No. 229.

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The present action was filed by Illumina on May 18, 2015. Docket No. 1. Illumina filed an

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amended complaint on June 10, 2015. Docket No. 17, FAC. The FAC alleges infringement of the

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’794 patent against both Ariosa and Roche by performing a new “microarray-based version” of the

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HarmonyTM Prenatal Test.1 Now before the Court are Ariosa’s and Roche’s motions to dismiss,

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filed on July 7, 2015. Docket Nos. 27, 28.

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DISCUSSION

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In their motions, Ariosa and Roche argue that the FAC is legally defective for failure to

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state a claim, but also procedurally defective because it constitutes an improper collateral attack on

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the Court’s stay order in C. 12-cv-5501. Specifically, defendants contend that if Illumina wishes to

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add a new infringing product – the microarray-based Harmony Test – and a new party – Roche –

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to the litigation, it must wait for the stay to be lifted and file a motion to amend its complaint.

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Defendants argue that the proper remedy is to dismiss this action in its entirety. However, in the
United States District Court
Northern District of California

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event the Court declines to dismiss this case, defendants argue that it should be consolidated and
stayed with C. 12-cv-5501.

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Illumina argues that this litigation is not a collateral attack on the Court’s stay order,

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because it could not have been reasonably expected to amend its complaint in the stayed case. It

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notes that this litigation was stayed only a few days after the new microarray-based test was put
into use, and only a few weeks after Roche’s acquisition of Ariosa became final. Accordingly, it

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had insufficient time to draft and file a motion to amend its complaint before the stay was put into
effect. Additionally, Illumina points to a contractual obligation with a non-party to this action

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which precluded it from bringing an infringement suit against the microarray-based test before

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mid-May of 2015. Illumina urges the Court to consolidate and stay this case with the currently

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stayed litigation.

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“If actions before the court involve a common question of law or fact, the court may
consolidate the action.” Fed. R. Civ. P. 42(a)(2). District courts have “broad discretion under this

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On December 2, 2014, Roche announced its acquisition of Ariosa. FAC ¶ 31. The
acquisition was completed in January of 2015, making Ariosa a wholly-owned subsidiary of
Roche. FAC ¶ 6.
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rule to consolidate cases pending in the same district.” Investors Research Co. v. U.S. Dist. Court

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for Cent. Dist. of California, 877 F.2d 777, 777 (9th Cir. 1989). “To determine whether to

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consolidate, a court weighs the interest of judicial convenience against the potential for delay,

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confusion and prejudice caused by consolidation.” Southwest Marine, Inc. v. Triple A Mach. Shop,

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Inc., 720 F. Supp. 805, 807 (N.D. Cal. 1989).

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The parties dedicate much of their briefs and many, many words to dichotomizing what is,
at bottom, a distinction without a difference. In practice, whether the Court adopts plaintiffs’ or

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defendants’ preferred course of action makes little difference to the outcome of this case; it will
confer no substantive litigation advantage, nor inflict prejudice upon either party. In any event,

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United States District Court
Northern District of California

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the Court finds that the interests of judicial economy would be best served by consolidating and

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staying this case. Accordingly, the Court CONSOLIDATES this case with C. 12-cv-5501, and

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STAYS the case in accordance with its prior order. See C. 12-cv-5501, Docket Nos. 229, 230. All
pending motions are DISMISSED without prejudice to refilling upon the lifting of the stay. This

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order resolves Docket Nos. 27, 28, 29, 34, 38.

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IT IS SO ORDERED.
Dated: August 10, 2015
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SUSAN ILLSTON
United States District Judge

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