Pacific Biosciences of California, Inc. v. Oxford Nanopore Technologies, Inc.

Filing 48

MEMORANDUM OPINION re #19 motion to dismiss. Signed by Judge Leonard P. Stark on 3/22/18. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
PACIFIC BIOSCIENCES OF CALIFORNIA,
INC.,
Plaintiff,
C.A. No. 17-1353-LPS

V.

OXFORD NANOPORE TECHNOLOGIES,
INC. ,
Defendant.
Brian E. Farnan and Michael J. Farnan, FARNAN LLP, Wilmington, DE
Edward R. Reines and Derek C. Walter, WEIL, GOTSHAL & MANGES LLP, Redwood Shores,
CA
Attorneys for Plaintiff

Maryellen Noreika and Jack B. Blumenfeld, MORRIS, NICHOLS, ARSHT & TUNNELL LLP,
Wilmington, DE
Stephen M. Hash, Puneet Kohli, and Samoneh Kadivar, BAKER BOTTS L.L.P. , Austin, TX
Attorneys for Defendant

MEMORANDUM OPINION

March 22, 2018
Wilmington, Delaware

rk

istrict Judge:

Plaintiff Pacific Biosciences of California, Inc. ("PacBio") filed suit against Defendant
Oxford Nanopore Technologies, Inc. ("Oxford") on September 25, 2017. In response to a motion
to dismiss filed by Oxford, PacBio filed its First Amended Complaint (D.I. 13) ("Complaint") on
November 30, 2017. The Complaint alleges that Oxford infringes U.S. Patent Nos. 9,678,056
and 9,738,929 (the '" 929 patent"). On December 14, 2017, Oxford moved to dismiss the
Complaint's claim for infringement of the ' 929 patent for failure to state a claim, pursuant to
Federal Rule of Civil Procedure 12(b)(6), based on Oxford ' s contention that the claims of this
patent are not directed to patent-eligible subject matter under 35 U.S.C. § 101. (D.1. 19)
Oxford ' s motion is full y briefed and the Court heard oral argument on February 27, 20 18. (See
D.I. 45 ("Tr."))
For the reasons stated below, the Court will deny Oxford's motion to dismiss.'
I.

BACKGRO UND
DNA is made up of two complementary strands of nucleotides whereby a nucleotide on

one strand is paired up with a nucleotide on the other strand. Since a certain type of nucleotide
will always pair up with only one type of nucleotide (e.g., adenine only with thymine, and

'In a related case (which has since been transferred to the undersigned Judge and
consolidated with the instant case), the Honorable Richard G. Andrews of this Court denied
Oxford's motion to dismiss a different patent being asserted against it by PacBio. (See C.A. No.
17-275 D.I. 23) Observing that a "technological w1derstanding can be significant" when
analyzing step two of the Alice/May o test (described further below), particularly when at least
one party wishes the Court to consider expert declarations, deposition testimony, and other
patents, applications, and publications, Judge Andrews stated: "Under the circumstances of this
case, and considering the technology of the patent being asserted, I do not think patentineligibility is something that I can fairl y decide on a motion to dismiss." (Id. at 2) The situation
now pending in this matter is different - for reasons including that it involves a different patent
as well as a substantially amended Complaint.

1

cytosine only with guanine), once one member of a pair of nucleotides is identified, the other in
the pair may be identified as well. (See D.I. 20 at 2; Tr. at 4)
Nanopore sequencing is a method of identifying a sequence of nucleotides on a portion of
DNA. The method generally involves putting the DNA through a small hole (or nanopore) while
passing an electric cmTent through the nano pore and - because each type of nucleotide reacts in a
particular way to an ionic current - determining the nucleotide sequence by watching how each
nucleotide reacts to the electric current. (See Compl. at 7; D.I. 24 at 4-5; Tr. at 31)
The ' 929 patent generally relates to a nanopore DNA sequencing process that engages in
redundant sequencing (i.e., analyzing both strands of DNA rather than just one strand) to
determine a nucleotide sequence of interest. By checking both strands of DNA, the ' 929 patent
implements a method of checking the sequencing information for accuracy because a nucleotide
sequence on one strand must have a specific complementary nucleotide sequence on the other
strand. Since e1Tors in the nanopore sequencing process are not uncommon, if the results from
the two strands do not properly pair up, then it is known that there was an error in the sequencing
process. Alternatively, if the results do pair up, then there is a greater level of confidence in the
results. (See Compl. at 8-9, 16-17; D.I. 24 at 4-6; Tr. at 33, 35, 58)
PacBio alleges that Oxford infringes claims 1-2, 6-8, and 10-11 of the '929 patent.
Independent claim 1 is representative of the asserted claims and reads:
A method of determining a nucleotide sequence of a region of
interest in a polynucleotide, .the method comprising:
introducing a polynucleotide comprising a region of interest to a
sequence analysis system comprising a nanopore in a membrane,
wherein the polynucleotide comprises a double-stranded portion
comprising complementary strands of the region of interest;

2

applying a voltage across the membrane;
monitoring variations in ionic current through the nanopore of the
sequence analysis system during enzyme chaperone-regulated
passage of the polynucleotide through the nanopore;
analyzing the monitored variations in ionic current to obtain
nucleotide sequence information for the polynucleotide, wherein
the nucleotide sequence information comprises redundant sequence
information for the region of interest, wherein the redundant
sequence infonnation comprises the nucleotide sequence of the
complementary strands; and
detennining a consensus sequence for the region of interest based
on the redundant sequence information.
('929 patent, cl. 1) Claims 2, 6-8, and 10-11 are dependent on independent claim 1.
Oxford moves to dismiss PacBio ' s patent infringement claims as to each of the asserted
claims of the '929 patent on the grounds that they claim ineligible subject matter. (D.I. 19)

II.

RECENT § 101 DECISIONS
The parties completed briefing on the motion on January 17, 2018 . (D.I. 20, 24, 25) The

Court of Appeals has subsequently issued multiple opinions considering challenges to
patentability pursuant to § 101.
On February 12, 2018 , PacBio submitted a Notice of Subsequent Authority (D.I. 31),
advising the Court of the Federal Circuit' s February 8 decision in Berkheimer v. HP Inc., 881
F.3d 1360, 1369 (Fed. Cir. 2018) (affirming grant of motion for judgment on pleadings while
stating, " Whether something is well-understood, routine, and conventional to a skilled artisan at
the time of the patent is a factual determination"). On February 22, 2018, PacBio submitted a
second Notice of Subsequent Authority (D.I. 36), advising the Court of the Federal Circuit' s
February 14 decision in Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121,

3

1127 (Fed. Cir. 2018) (reversing grant of 12(b)(6) motion for ineligible subject matter,
explaining that complaint "suppl[ying] numerous allegations related to the inventive concepts
present in the claimed . .. technology," including "describ[ing] the development of the patented
invention, including the problems present in the prior art," and "present[ing] specific allegations
directed to improvements and problems solved by the [] patented inventions," could survive such
motion) (internal quotation marks omitted).
The Court is also aware of other recent § 101 opinions. See, e.g., Intellectual Ventures I

LLC v. Symantec Corp., 2018 WL 1324863 (Fed. Cir. Mar. 15, 2018) (affirming this Court's
grant of summary judgment of invalidity due to lack of patentable subject matter); Exergen Corp.
v. Kaz USA, Inc., 2018 WL 1193529, at *4 (Fed. Cir. Mar. 8, 2018) ("The district court's

conclusion that these claim elements were not well-understood, routine, and conventional is a
question of fact to which we must give clear error deference. Like indefiniteness, enablement, or
obviousness, whether a claim is directed to patentable subject matter is a question of law based
on underlying facts .... [N]ot every§ 101 determination contains disputes over the underlying
facts.") (internal citations omitted); Automated Tracking Sols., LLC v. Coca-Cola Co., 2018 WL
935455 (Fed. Cir. Feb. 16, 2018) (affirming grant of judgment on pleadings that asserted patent
claims were ineligible); Zuili v. Google LLC, 2018 WL 798666 (Fed. Cir. Feb. 9, 2018)
(affirming PTAB decision that claims were directed to patent-ineligible subject matter); Move,

Inc. v. Real Estate Alliance Ltd., 2018 WL 656377 (Fed. Cir. Feb. 1, 2018) (affirming grant of
summary judgment finding patent invalid for claiming ineligible subject matter); Core Wireless

Licensing S.A.R.L. v. LG Electronics., Inc., 880 F.3d 1356 (Fed. Cir. 2018) (affirming denial of
summary judgment that claims are directed to patent ineligible subject matter); Finjan, Inc. v.

4

Blue Coat Systems, Inc., 879 F.3d 1299 (Fed. Cir. 2018) (affirming district court's conclusion
following bench trial that patent claims were directed to patent-eligible subject matter).
Even though the parties have not provided their specific analyses of all of these recent
decisions, the Court has considered each of them in reaching its decision here.

III.

LEGAL ST AND ARDS
A.

Rule 12(b )(6) Motion to Dismiss

Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires
the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis, 372
F.3d 218, 223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but
whether the claimant is entitled to offer evidence to support the claims." In re Burlington Coat

Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted).
Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded
allegations in the complaint as true, and viewing them in the light most favorable to plaintiff,
plaintiff is not entitled to relief. " Maio v. Aetna, Inc., 221 F.3d 472, 481-82 (3d Cir. 2000)
(internal quotation marks omitted).
A well-pleaded complaint must contain more than mere labels and conclusions. See

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). A plaintiff must plead facts sufficient to show that a claim has substantive plausibility.

See Johnson v. City of Shelby, 135 S. Ct. 346, 347 (2014). A complaint may not be dismissed,
however, for imperfect statements of the legal theory supporting the claim asserted. See id. at
346.
"To smvive a motion to dismiss, a civil plaintiff must allege facts that 'raise a right to

5

relief above the speculative level on the assumption that the allegations in the complaint are true
(even if doubtful in fact). "' Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (quoting
Twombly, 550 U.S. at 555). A claim is facially plausible "when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Iqbal, 556 U.S. at 678. At bottom, "[t]he complaint must state enough
facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary
element" of a plaintiffs claim. Wilkerson v. New Media Tech. Charter Sch. Inc. , 522 F .3d 315,
321 (3d Cir. 2008) (internal quotation marks omitted).
The Court is not obligated to accept as true "bald assertions," Morse v. Lower Merion
Sch. Dist. , 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "w1supported

conclusions and unwarranted inferences," Schuylkill Energy Res., Inc. v. Pa. Power & Light Co.,
113 F.3d 405,417 (3d Cir. 1997), or allegations that are "self-evidently false," Nami v. Fauver,
82 F.3d 63, 69 (3d Cir. 1996).
B.

Patentable Subject Matter

Under 35 U.S.C. § 101 , " [w]hoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful improvement thereof,
may obtain a patent therefor, subject to the conditions and requirements of this title." There are
three exceptions to§ 101 's broad patent-eligibility principles: "laws of nature, physical
phenomena, and abstract ideas." Diamond v. Chakrabarty, 447 U.S. 303 , 309 (1980). "Whether
a claim recites patent eligible subject matter is a question of law which may contain disputes over
underlying facts." Berkheimer, 881 F.3d at 1368.

In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012),
6

the Supreme Court set out a two-step "framework for distinguishing patents that claim laws of
nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications
of those concepts." Alice Corp. Pty. Ltd. v. CLS Bank Int '!, 134 S. Ct. 2347, 2355 (2014). First,
courts must determine if the claims at issue are directed to a patent-ineligible concept ("step
one"). See id. If so, the next step is to look for an '" inventive concept' - i.e., an element or
combination of elements that is sufficient to ensure that the patent in practice amounts to
significantly more than a patent upon the [ineligible concept] itself' ("step two"). Id. The two
steps are "plainly related" and "involve overlapping scrntiny of the content of the claims." Elec.
Power Grp., LLC v. Alstom S. A. , 830 F.3d 1350, 1353 (Fed. Cir. 2016).
'

At step one, "the claims are considered in their entirety to ascertain whether their
character as a whole is directed to excluded subject matter." Internet Patents Corp. v. Active
Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015) (emphasis added); see also Affinity Labs of
Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253 , 1257 (Fed. Cir. 2016) ("Affinity Labs I") (stating
first step "calls upon us to look at the ' focus of the claimed advance over the prior ait' to
determine if the claim' s 'character as a whole ' is directed to excluded subject matter").
In conducting the step one analysis, courts should not "oversimplif[y]" key inventive
concepts or "downplay" an invention' s benefits. Enfis h, LLC v. Microsoft Corp., 822 F.3d 1327,
1337-38 (Fed. Cir. 2016); see also McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299,
1313 (Fed. Cir. 2016) (" [C]omts ' must be careful to avoid oversimplifying the claims' by
looking at them generally and failing to accow1t for the specific requirements of the claims.")
(quoting In re TL! Commc 'ns LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016)).
At step two, courts must "look to both the claim as a whole and the individual claim
7

elements to determine whether the claims contain an element or combination of elements that is
sufficient to ensure that the patent in practice amounts to significantly more than a patent upon
the ineligible concept itself." McRo, 837 F.3d at 1312 (internal brackets and quotation marks
omitted). The "standard" step two inquiry includes consideration of whether claim elements
"simply recite 'well-understood, routine, conventional activit[ies]. "' Bascom Glob. Internet
Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 , 1350 (Fed. Cir. 2016) (quoting Alice, 134 S.
Ct. at 2359). "Simply appending conventional steps, specified at a high level of generality, [is]
not enough to supply an inventive concept." Alice, 134 S. Ct. at 2357 (internal quotation marks
omitted; emphasis in original).
However, "[t]he inventive concept inquiry requires more than recognizing that each claim
element, by itself, was known in the art." Bascom, 827 F.3d at 1350. In Bascom, the Federal
Circuit held that "the limitations of the claims, taken individually, recite generic computer,
network and Internet components, none of which is inventive by itself," but nonetheless
determined that an ordered combination of these limitations was patent-eligible under step two.
Id. at 1349.
The Federal Circuit recently elaborated on the step two standard, stating that "[t]he
question of whether a claim element or combination of elements is well-understood, routine and
conventional to a skilled artisan in the relevant field is a question of fact. Any fact, such as this
one, that is pertinent to the invalidity conclusion must be proven by clear and convincing
evidence." Berkheimer, 881 F.3d at 1368; see also Aatrix, 882 F.3d at 1128 ("While the ultimate
determination of eligibility under§ 101 is a question of law, like many legal questions, there can
be subsidiary fa ct questions whi ch must be resolved en rou te to the ultimate legal

8

determination."); Automated Tracking, 2018 WL 935455, at *5 ("We have held that 'whether a
claim element or combination of elements is well-understood, routine and conventional to a
skilled artisan in the relevant field is a question of fact."') (quoting Berkheimer, 881 F.3d at
1368).
"Whether a particular technology is well-understood, routine, and conventional goes
beyond what was simply known in the prior art. The mere fact that something is disclosed in a
piece of prior art, for example, does not mean it was well-understood, routine, and conventional."

Berkheimer, 881 F.3d at 1369; see also Exergen, 2018 WL 1193529, at *4 ("Something is not
well-understood, routine, and conventional merely because it is disclosed in a prior art reference.
There are many obscure references that nonetheless qualify as prior art.").
As part of the step two "inventive concept" inquiry, the Federal Circuit has looked to the
claims as well as the specification. See Affinity Labs of Texas, LLC v. Amazon.com Inc., 838
F.3d 1266, 1271 (Fed. Cir. 2016) ("Affinity Labs II") ("[N]either the claim nor the specification
reveals any concrete way of employing a customized user interface."). Still, it is not enough just
to disclose the improvement in the specification; instead, the Court's task becomes to "analyze
the asserted claims and determine whether they capture these improvements." Berkheimer, 881
F.3d at 1369 (emphasis added). In other words, " [t]o save a patent at step two, an inventive
concept must be evidellt in the claims." RecogniCorp, LLC v. Nintendo Co., Ltd. , 855 F.3d
1322, 1327 (Fed. Cir. 2017) (emphasis added); see also Alice, 134 S. Ct. at 2357 ("[W]e must
examine the elements of the claim to determine whether it contains an ' inventive concept. "')
(emphasis added); Sy nopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1149 (Fed. Cir.
2016) ("The§ 101 inquiry must focus on the language of the Asserted Claims themselves. ").

9

At both steps one and two, it is often useful for the Court to compare the claims at issue
with claims that have been considered in the now considerably large body of decisions applying
§ 101. See Amdocs (Israel)Ltd. v. Openet Telecom, Inc. , 841 F.3d 1288, 1294 (Fed. Cir. 2016).
Finally, as a procedural matter, the Federal Circuit has observed frequently that
§ 101 disputes may be amenable to resolution on motions for judgment on the pleadings, motions

to dismiss, or summary judgment. See, e.g. , Berkheimer, 881 F .3d at 1368 ("Whether a claim
recites patent eligible subject matter is a question of law which may contain disputes over
underlying facts. Patent eligibility has in many cases been resolved Oil motio1ts to dismiss or
summary judgme1tt. Nothi1tg i11 this decision should be viewed as casti11g doubt 011 the
propriety of those cases. When there is no genuine issue of material fact regarding whether the

claim element or claimed combination is well-understood, routine, conventional to a skilled
artisan in the relevant field, this issue can be decided on summary judgment as a matter of law.")
(emphasis added); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1351-52 (Fed. Cir. 2014)
(affirming grant of Rule 12(c) motion for judgment on pleadings for lack of patentable subject
matter).
IV.

DISCUSSION
Oxford asks the Court to dismiss PacBio' s claims for infringement of the ' 929 patent

because, in Oxford ' s view, the ' 929 patent is directed to patent-ineligible subject matter. In
particular, Oxford contends that the claims are directed to an abstract idea and a law of nature
and lack an inventive concept. The Court disagrees.
A.

Step One

At step one of the Alice/Mayo test, the question is whether the asserted claims are directed

10

to a patent-ineligible concept. "[ A ]11 inventions at some level embody, use, reflect, rest upon, or
apply laws of nature, natural phenomena, or abstract ideas." Mayo, 132 S. Ct. at 1293. Thus,
"an invention is not rendered ineligible for patent simply because it involves" a patent-ineligible
concept. Alice, 134 S. Ct. at 2354. "Indeed, to preclude the patenting of an invention simply
because it touches on something natural wo uld 'eviscerate patent law. "' Rapid Litig. Mgmt. Ltd.
v. CellzDirect, Inc., 827 F.3d 1042, 1050 (Fed Cir. 2016) (quoting Mayo, 132 S. Ct. at 1293).

"At step one, therefore, it is not enough to merely identify a patent-ineligible concept underlying
the claim; we must determine whether that patent-ineligible concept is what the claim is 'directed
to."' Id.
Oxford argues that the asserted claims "are simply directed to the abstract mental process
of 'comparing' two gene sequences" and "the naturally occurring correlation between
complementary DNA strands." (D.I. 20 at 2-3) Oxford contends that the asserted claims do not
satisfy the step one test because their "focus" is on "determining [a] consensus sequence by
comparing the two complementary strands." (Tr. at 15) PacBio responds that Oxford is focused
only on the last element of a multi-limitation claim and that "the claim as a whole is directed to a
concrete technique for improved nanopore sequencing that increases accuracy through the use of
novel nucleic acid templates." (D.I. 24 at 1-2) The Court agrees with PacBio.
The asserted claims provide "a novel method of manipulating polynucleotides to create
sequencing templates that can be used to generate redundant sequencing information and
improve nanopore sequencing." (D.I. 24 at 12) (citing Compl. at 16-19) The method requires
introducing the polynucleotide to a system comprising a nanopore in a membrane, whereby a
voltage is applied across the membrane, the variations in current are monitored, and the

11

information from one strand is analyzed against the information from the complementary strand
for improved accuracy. (See '929 patent, cl. 1) Oxford's contention that the claims are merely
directed to the abstract idea of comparing and the natural phenomenon of complementarity of
nucleotides ignores almost all of the conte[!t of the claim, including most of its limitations.
The cases Oxford relies on for support do not persuade the Court to conclude otherwise.

In Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 590 (2013), the
patents claimed the discovery of the location of certain genes; it was undisputed that the
invention covered nothing more than the location of nucleotides that existed in nature and that
the inventor did not create or alter any genetic information. The Supreme Court noted that had
the inventor "created an innovative method of manipulating genes, ... it could possibly have
sought a method patent." Id. at 595. Here, the asserted claims do provide a method of nanopore
sequencing and do more than simply claim a natural relationship between complementary
nucleotides.

In In re BRCAJ- and BRCA2-Based Hereditary Cancer Test Patient Litigation, 774 F.3d
755 , 763 (Fed. Cir. 2014), the claimed method simply compared BRCA sequences and
determined the natural existence of alternations, but nothing more. See also Genetic Techs. Ltd.

v. Merial L.L.C. , 818 F .3d 1369, 1375-76 (Fed. Cir. 2016) (finding discovered correlation was "a
consequence of the naturally occurring linkages in the DNA sequence," so claims failed "to
identify novel detection techniques"). The asserted claims of the ' 929 patent, by contrast, when
considered as a whole, are directed to much more than the natural correlation between the
complementary strands of DNA.
The precedential decision that considered a patent most similar to the patent-in-suit is the

12

Federal Circuit's decision in Rapid Litigation, 827 F.3d I 042. In that case, the inventors
discovered that hepatocytes (a type ofliver cell) are able to survive multiple freeze-thaw cycles
and not just one such cycle. See id. at 1045. But the inventors did not attempt to patent this
discovery. Instead, "the inventors developed [and patented] an improved process of preserving
hepatocytes." Id. (emphasis added). In analyzing this patent at step one, the Federal Circuit
concluded that "the claims [we ]re simply not directed to the ability of hepatocytes to survive
multiple freeze-thaw cycles" but, rather, were "directed to a new and useful laboratory technique
for preserving hepatocytes;" that is, the claims were directed to a method that used the inventors '
discovery to achieve "a better way of preserving hepatocytes." Id. at 1048. Although the claims
described the process by noting "the natural ability of the subject matter to undergo the process,"
this fact "does not make the claim ' directed to ' that natural ability." Id. at 1049. See also

Diamond v. Diehr, 450 U.S. 175, 187 (1981) (upholding as patentable claims that had wellknown mathematical equation as one element, as claims as a whole were directed to novel
method of using that formula); Thales Visionix Inc. v. United States, 850 F.3d 1343, 1348 (Fed ..
Cir. 2017) ("In terms of the modern day Alice test, the Diehr claims were directed to an

improvement in the rubber curing process, not a mathematical formula.") (emphasis added).
Similarly, here, while the asserted claims note the natural correlation between complementary
strands of DNA, the claimed process as a whole is directed not to that correlation but to an
improved method of nanopore sequencing.
Although the analysis is focused on the claims, the Court's understanding of the claims and its conclusion at step one - is also infonned and confirmed by the specification. See, e.g.,
' 929 patent at col. 37:10-13 ("[T]he present invention is generally directed to nucleic acid

13

sequences that employ improved template sequences to improve the accuracy of sequencing
processes."). The references incorporated into the '929 patent make clear that there was a
substantial need for improvement in the accuracy of the results from nanopore sequencing. (See,

e.g., D.I. 10-1 Ex. H (2006 JACS article) at 65) ("[T]he sequencing concept has not worked so
far because under an electrical potential DNA moves through the pore too rapidly for the
identification of individual bases.")
The Court's conclusion finds still further support in the plausible allegations contained in
PacBio's Complaint. (See, e.g., Com pl. at 16-20) At this stage of the proceedings, the Court
finds no basis to reject the well-pled allegations of the Complaint or to accept Oxford' s contrary
view that PacBio did nothing more than apply a law of nature to "other people's work." (Tr. at
13, 15)

In sum, the claimed method takes advantage of a natural phenomenon to create a new and
useful method, but, as a whole, it is not focused on or directed to that natural phenomenon. Nor
is it directed to an abstract concept.

B.

Step Two

As Oxford has not met its burden at step one, it is not necessary to reach step two .
However, the Court will briefly address it anyway.
As detailed above, at step two the Court evaluates whether the claim captures an inventive
concept beyond what was well-understood, routine, and conventional in the relevant field at the
time of the invention. With respect to the '929 patent, the relevant time is around 2008-2009,
when the patent applications to which the ' 929 patent claims priority were filed. Oxford argues
that the claim elements, both independently and as an ordered combination, contain no inventive

14

concept, because they are each disclosed in eight prior art references cited in the '929 patent' s
specification, which together provide "a timeline of the development of sequencing with a
nanopore" between 1995 and 2006. (Tr. at 6, 18-19) PacBio responds that "[t]he record,
including cited references, is very clear that nanopore sequencing [wa]s emerging in 2009." (Id.
at 32; see also, e.g., D.I. 10-1 Ex. H (2006 JACS article) at 65 (" [T]he sequencing concept has
not worked so far because under an electrical potential DNA moves through the pore too rapidly
for the identification of individual bases"); D.I. I 0-1 Ex. B (2000 Tibtech article) at 150 (noting
there are "still major hurdles to be overcome" in nanopore sequencing)) 2 At this stage of the
proceedings, on the record the Court may properly consider, the Court cannot say that Oxford has
shown by clear and convincing evidence that the claims do not capture an inventive concept.
Furthermore, PacBio alleges in its Complaint that Oxford "has asserted in parallel
litigation proceedings that nanopore sequencing was not known in the 2008-2009 timeframe
and/or that nanopore sequencing was not enabled to the skilled artisan." (Compl. at 7 ("Oxford
has asserted in the International Trade Commission that ' nanopore sequencing was not known in
2008 and is a later-developed technology.' Likewise, Oxford has asserted that in the 2008-2009
timeframe 'nanopore sequencing was not considered a viable single molecule sequencing
approach."') (quoting Oxford filings; internal citations omitted); id. at 18 ("Oxford has
acknowledged [in prosecuting its own patent applications] that the double-stranded
polynucleotide structures used in claims 1, 6-8 and 10-11 and the use of such structures to
generate redundant sequence information and consensus sequences represent inventive concepts

2

Both parties agree that the Court may consider and rely on the publications incorporated
by reference in the patent' s specification on this motion. (See Tr. at 4 7, 51)
15

that improved upon nanopore-based DNA sequencing techniques.")) The Cow-t must take as true
that Oxford made these statements (which Oxford does not deny) . And these statements render it
more difficult, if not impossible, for Oxford, at this early stage, to persuade the Court by clear
and convincing evidence that the state of the pertinent art was such that the asserted claims must
be found to be nothing more than well-understood, routine, and conventional.
Taking all reasonable inferences in PacBio ' s favor based on the well-pled factual
allegations in the Complaint, see MAZ Encryption Techs. LLC v. Blackberry Corp., 2016 WL
5661981 , at *5 (D. Del. Sept. 29, 2016) (" [T]he Court must take the specification' s statements
about the pm-ported invention to be true."), and viewing the statements in the specifications of
the patent-in-suit similarly in PacBio' s favor, the Court finds that Oxford has not met its bw-den
at step two. 3

V.

CONCLUSION
For the foregoing reasons, the Court will deny Oxford ' s motion to dismiss. An order

follows.

3

Oxford ' s contention that PacBio' s allegations are tantamount to "attorney argument,
legal conclusions, and irrelevant statements [that] cannot trump the ' 929 specification" (D.l. 25
at 7) (citing MAZ Encryption, 2016 WL 5661981 , at *5; Kaavo Inc. v. Cognizant Tech. Sols.
C01p., 2016 WL 476730, at *10 (D. Del. Feb. 5, 2016)) is inco1Tect, as the Court must take as
true the well-pled factual allegations in the Complaint. Oxford' s insistence that PacBio has not
placed Oxford' s prior statements in the proper context - that they are statements "about nanopore
sequencing universally as a process," and "the general state of nanopore sequencing," rather than
statements "specifically applicable to the elements as claimed independently or in ordered
combination" (Tr. at 30, 51) - is the type of factual dispute the Court cannot resolve on a motion
to dismiss.
16