[00:00:02] Speaker 00: All right, that case will be submitted as well. [00:00:04] Speaker 00: The last case for argument today is Illumina Inc. [00:00:07] Speaker 00: versus Keyogen. [00:00:10] Speaker 00: I don't know if I pronounced that correctly, but you can correct me when you stand up, Mr. Barron. [00:00:17] Speaker 00: Case number 162709. [00:00:22] Speaker 00: And that is an appeal from a decision [00:00:27] Speaker 00: in the Northern District of California on a motion for preliminary injunction. [00:00:38] Speaker 03: It's obvious to me your clients name these companies totally different hues. [00:00:43] Speaker 03: Yes. [00:00:44] Speaker 03: It's terrible. [00:00:45] Speaker 00: It's Chiagen is how you say it. [00:00:48] Speaker 00: Chiagen. [00:00:48] Speaker 00: Thank you. [00:00:48] Speaker 00: Thank you. [00:00:49] Speaker 00: How much time do you want for rebuttal? [00:00:51] Speaker 00: Three minutes. [00:00:51] Speaker 00: Three minutes. [00:00:52] Speaker 00: OK. [00:00:53] Speaker 04: May it please the court, my name is Rob Barron. [00:00:55] Speaker 04: I represent Chiagen. [00:00:57] Speaker 04: as the appellant, in this case where the lower court in a preliminary injunction motion granted it, which is, as this court knows, extremely rare and obviously a very powerful and damaging remedy. [00:01:13] Speaker 00: We're here. [00:01:14] Speaker 00: That's also one that we defer to the district court on. [00:01:18] Speaker 00: It's a discretionary determination, correct? [00:01:21] Speaker 04: Abusive discretion is the standard. [00:01:23] Speaker 04: But the abuse of discretion exists when there are legal errors. [00:01:26] Speaker 04: For example, if a preliminary injunction is issued because the district court judge relied on extrinsic evidence, ignoring intrinsic evidence, that's clear error. [00:01:38] Speaker 04: That's the Guttman case. [00:01:39] Speaker 04: So here. [00:01:40] Speaker 00: But we don't have that here. [00:01:42] Speaker 04: I think we do. [00:01:43] Speaker 04: Let me jump. [00:01:45] Speaker 04: So we obviously have a couple errors that we want to focus on. [00:01:47] Speaker 04: There's the enablement issues. [00:01:48] Speaker 04: There's the obviousness. [00:01:49] Speaker 04: And then obviously, irreparable harm. [00:01:51] Speaker 04: Let me start with enablement. [00:01:53] Speaker 00: The claim... Can I start with the estoppel vote? [00:01:58] Speaker 00: I want to start with the estoppel question. [00:02:01] Speaker 00: My first question is, you didn't dispute either below or here that you are in privity with the party that brought the IPR. [00:02:12] Speaker 00: Isn't that right? [00:02:13] Speaker 04: There was no litigation about that one way or the other. [00:02:20] Speaker 04: We did not, but we did not take a position below [00:02:23] Speaker 04: So we have not. [00:02:24] Speaker 04: Let me say two things. [00:02:27] Speaker 04: I'm sorry, Your Honor. [00:02:27] Speaker 00: Illumina argued you were in privity. [00:02:29] Speaker 00: You didn't respond at all. [00:02:31] Speaker 00: Here, they argued you're in privity, and you didn't respond at all. [00:02:34] Speaker 00: Do you concede that there's privity? [00:02:36] Speaker 00: I mean, this doesn't even seem to be a close call. [00:02:39] Speaker 00: We don't concede. [00:02:39] Speaker 00: There's a lot of other elements of this, but the privity thing, I want to just get off the table. [00:02:46] Speaker 04: Yeah, and I appreciate that. [00:02:47] Speaker 04: We don't concede there's privity. [00:02:50] Speaker 04: For the purpose of this argument, there's nothing that we did. [00:02:52] Speaker 04: There's no case that we presented that depends on privity. [00:02:57] Speaker 00: OK. [00:02:58] Speaker 00: So we can assume privity? [00:02:59] Speaker 04: You can assume it. [00:03:00] Speaker 04: That is not an issue that changes the result of the preliminary injunction. [00:03:04] Speaker 04: We're not conceding it for this case. [00:03:06] Speaker 04: It's just at its preliminary stages. [00:03:07] Speaker 04: But that has no impact on this. [00:03:11] Speaker 03: OK. [00:03:12] Speaker 03: Then let's move to you were going to start on enablement. [00:03:16] Speaker 03: Yes, Your Honor. [00:03:17] Speaker 03: OK. [00:03:17] Speaker 03: On pages 33 to 37 of the opening brief, [00:03:20] Speaker 03: You claim that the disputed claims are not enabled because they permit the incorporation of nucleosides. [00:03:29] Speaker 03: I'm saying that, right? [00:03:29] Speaker 03: Yes. [00:03:30] Speaker 03: You're hearing the nucleosides in nucleic acids, which is supposedly impossible. [00:03:35] Speaker 03: However, one of your experts, Mr. Brancho, has testified that it was, quote, generally known that, quote, nucleosides could be used in labeling methods such as those claimed in the 537 patent. [00:03:49] Speaker 03: That's at 5492. [00:03:51] Speaker 03: How do you reconcile your argument with your expert's testimony? [00:03:55] Speaker 04: So I think that we need to put that in context. [00:03:59] Speaker 04: And I appreciate that line. [00:04:02] Speaker 04: That line comes from a three and a half year old declaration from a related IPR on obviousness. [00:04:10] Speaker 04: It's a 110 paragraph declaration where he has one paragraph where he says, tracking the language, [00:04:18] Speaker 04: that labeling a person's skill in the art would know labeling methods for nucleosides and for nucleotides that could be such as those in the 537. [00:04:28] Speaker 04: He was never asked the question, could a nucleoside be incorporated correctly? [00:04:38] Speaker 04: Never. [00:04:40] Speaker 04: Could a nucleoside be incorporated into the 537? [00:04:42] Speaker 04: That sounds like a lot like an admission. [00:04:45] Speaker 04: First of all, it has nothing to do with the issue of enablement. [00:04:51] Speaker 04: This is on an IPR where the issue is obvious. [00:04:55] Speaker 04: And if you want to talk about admissions, I think it's important to realize that in that same case, so he was never asked the question, does a nucleoside, let me be clear here, because he also says three paragraphs before that on the page before on the record, that a nucleoside does not have a phosphate. [00:05:10] Speaker 04: He makes that clear. [00:05:11] Speaker 04: And there's no question that that's how the patent defines the difference. [00:05:15] Speaker 04: And there's no question between the experts that a phosphate is what you need for this method. [00:05:21] Speaker 04: This method doesn't work without phosphates. [00:05:25] Speaker 04: He was never asked that question, because enablement was never on the table, and he never got the question. [00:05:30] Speaker 04: Now, in an IPR, their expert was actually asked this specific question. [00:05:40] Speaker 04: Could a nucleoside be incorporated? [00:05:42] Speaker 04: His answer was no, it could not. [00:05:44] Speaker 04: cannot be incorporated by enzymatic means or even chemical means. [00:05:48] Speaker 04: So when their expert was asked a direct question, their expert, and that's a 1753. [00:05:56] Speaker 00: Well, what about the board's conclusion with respect to claim four, which, I mean the court's conclusion, where the court specifically found that claim four doesn't require nuclear sites? [00:06:09] Speaker 04: I think it's the same error. [00:06:11] Speaker 04: I think there's a theme here, which is that words matter. [00:06:15] Speaker 04: when you draft a patent, you submit it. [00:06:18] Speaker 04: And whenever they get in the way, they're glossed over in this opinion and in this case. [00:06:24] Speaker 04: Here it says, as we discussed, three times in claim one, nucleoside or nucleotide, nucleoside or nucleotide. [00:06:31] Speaker 04: And then it says in claim four, the method of claim one where the nucleotide is a deoxyribonucleotide triphosphate. [00:06:41] Speaker 04: So it doesn't say where the nucleotide [00:06:44] Speaker 04: and the nucleoside are just as the nucleotide. [00:06:49] Speaker 04: So it is a further refinement and limitation on the alternative nucleotide. [00:06:57] Speaker 04: The independent claim provides two alternative molecules, nucleotide and nucleoside. [00:07:02] Speaker 04: Claim four is dependent on the nucleotide only. [00:07:06] Speaker 03: Let's move over to the two prime limitation. [00:07:09] Speaker 03: Yes, Your Honor. [00:07:10] Speaker 03: You contend that two prime in European Greek [00:07:13] Speaker 03: doesn't enable a posita to practice the invention without undue experimentation. [00:07:20] Speaker 03: And to support that argument, you cite Mr. Metzger at 1104, 1105. [00:07:27] Speaker 03: Mr. Metzger doesn't say how much experimentation would be necessary or why it would be undue, and he doesn't identify what guidance is needed. [00:07:35] Speaker 03: How does that testimony at 1104 and 1105 support your argument? [00:07:42] Speaker 04: So first of all, in the two prime argument, what he says is, in effect, there's no guidance at all. [00:07:50] Speaker 04: And first of all, I think it's important to realize that for most of these, you have to look at it as a claim as a whole. [00:07:56] Speaker 04: So we're talking about the fact that we're trying to incorporate or attach a class of protecting groups that are 2,000. [00:08:06] Speaker 04: And now we're talking about the utility of this protecting group [00:08:11] Speaker 04: is to stop a linking process that goes through the 3 prime, which is just a reference to a location on the sugar, which is kind of the torso of the nucleotide at issue. [00:08:22] Speaker 04: So that's the process you're trying to stop. [00:08:24] Speaker 04: All of the art talks about putting a protecting group on the 3 prime. [00:08:28] Speaker 04: All of the disclosure in the patent talks about putting a protecting group. [00:08:32] Speaker 04: Well, there's almost no, ironically, and we'll get there, for this [00:08:36] Speaker 04: Given that the protecting group is the invention here, there's almost no disclosure in the specification about protecting groups at all, other than a suitable protecting group would be known to a person of skill in the art. [00:08:47] Speaker 04: We'll get to that. [00:08:48] Speaker 04: But the two prime is on a different location. [00:08:57] Speaker 04: And the only guidance they have is that it should be big, basically, or of a sufficient charge. [00:09:03] Speaker 04: One sentence with no guidance, no examples. [00:09:06] Speaker 04: But to incorporate, the person who's scaling it is also being told the protecting group should be small enough because it has to be grabbed by an enzyme called polymerase to be put into the prior nucleotide. [00:09:20] Speaker 04: So there is conflicting evidence. [00:09:24] Speaker 04: And to take whether it's the group of 2,000 different azida groups and figure out how to put that on the 2 prime, [00:09:35] Speaker 04: Or one, the xenomethyl, which is known for its being small, which is the opposite of what it would need to be for the 2 prime, that's an enablement problem. [00:09:45] Speaker 04: Moreover, our expert does say in his testimony that there's nothing in the patent that talks, there's guidance about DNA polymerase. [00:09:56] Speaker 04: There's no guidance about RNA polymerase. [00:09:58] Speaker 04: So if it's on the 2 prime, that means it's an RNA molecule as opposed to a DNA molecule. [00:10:05] Speaker 04: By definition, there's no dispute about that. [00:10:07] Speaker 04: And there's no guidance at all about what polymerase would work with an RNA in the specification. [00:10:14] Speaker 02: Counsel, moving on to irreparable harm, does the fact that you've conceded that you and friends, and I mean, that's not a finding. [00:10:25] Speaker 02: That's a concession on your part. [00:10:28] Speaker 02: How heavily, if any, should that weigh in looking at all of the before eBay facts? [00:10:35] Speaker 04: Well, two things. [00:10:37] Speaker 04: First, we did not mount a non-infringement defense. [00:10:41] Speaker 04: But to say that we conceded it or stipulated to it is, I think, overextending. [00:10:46] Speaker 04: But we don't have an infringement defense before the court. [00:10:51] Speaker 04: I think that you've put your finger on something that seemed to be going on, perhaps, with the lower court that was an eBay violation, that there was this notion. [00:11:01] Speaker 04: I mean, the eBay stands for the principle that likelihood of success [00:11:05] Speaker 04: doesn't mean irreparable injury anymore. [00:11:08] Speaker 04: And so we thought, and we continue to believe that this is a patent that has a lot of holes with it. [00:11:15] Speaker 04: This is a patent that has no enablement. [00:11:18] Speaker 04: This is a patent where the claimed invention, the special inventive step is an azido, but it's not mentioned in the specification. [00:11:25] Speaker 04: The only thing they say is suitable protecting groups would be known by a person of skill in the art, and you should look to Greenwoods, which is one of our references. [00:11:33] Speaker 02: So you can lose at the fact of dealing with the likelihood of success, but you can also lose at irreparable harm. [00:11:43] Speaker 02: I don't want to confuse it, too. [00:11:45] Speaker 02: I agree, Your Honor. [00:11:46] Speaker 02: So with respect to that you're an infringing entity, in moving forward and looking at the condition of the market, it's a nascent market. [00:12:00] Speaker 02: Would you agree? [00:12:01] Speaker 04: No, I don't agree with that, Your Honor. [00:12:03] Speaker 04: So I think that if we're going to move to reparable entry, there were, when the motion was filed. [00:12:08] Speaker 00: When your entry into the market was nascent. [00:12:11] Speaker 04: We were a new entry. [00:12:12] Speaker 04: Yes, we were a new entry. [00:12:13] Speaker 00: Right. [00:12:14] Speaker 00: I think that's obviously what Judge Rayna was talking about. [00:12:17] Speaker 04: I apologize if I misunderstood the judge. [00:12:19] Speaker 04: But I do think that the basis for my misunderstanding was in part because I think that's what Judge Alson found without any real testimony. [00:12:29] Speaker 00: No, he found that you were new into the market and that you had to do [00:12:33] Speaker 00: pricing structure that could impact the market. [00:12:35] Speaker 00: And so therefore, you could dramatically alter the market. [00:12:38] Speaker 02: And to add to that, you're infringing the IllunaPen. [00:12:44] Speaker 02: And you to the market, you had to bring in a new distribution and pricing system, and you're infringing. [00:12:51] Speaker 03: And to add to that, Mr. Arnold, your expert, agreed that the gene reader's performance is poor. [00:13:02] Speaker 03: relative to a luminous product. [00:13:05] Speaker 04: So I'd like to address each of these in turn, so if I can remember them all. [00:13:11] Speaker 04: First, on the issue of, I guess, irreparable injury, Judge O'Malley, and your point, I think that what they started out by saying is we're going to lose sales, and we're going to have a discounted price. [00:13:25] Speaker 04: There was no evidence of that. [00:13:27] Speaker 04: So the judge talked about, [00:13:29] Speaker 04: a crucial inflection point, something special about the market now. [00:13:35] Speaker 04: But the facts were that this market existed for a long time, that Illumina had been identifying this as an important market for a long time. [00:13:44] Speaker 04: And obviously also, even if we're not mounting a non-infringement defense, we're mounting a very vigorous invalidity defense. [00:13:51] Speaker 04: And that's the concern. [00:13:52] Speaker 04: I mean, one of the reasons why these courts are here are to prevent invalid, improper patents that shouldn't have been [00:13:59] Speaker 04: Directly affecting commerce. [00:14:01] Speaker 04: I mean you have an important industry you have a you have in the appellee a company that has dominated it There's been one for four years at 70% market. [00:14:10] Speaker 04: There's been one other participant in the market and at 25 30 percent market share we try to come in you've seen the confidential numbers in the briefs about [00:14:20] Speaker 04: the very slow start. [00:14:22] Speaker 02: I certainly appreciate adding vigor to the market and not stifling innovation by way of issuing preliminary injunctions. [00:14:34] Speaker 02: But my concern here is that your entry into the market at the outset was from an infringing point of view. [00:14:40] Speaker 02: You haven't mounted a defense and [00:14:44] Speaker 02: I don't know where, but it sticks in my mind that there's a concession. [00:14:49] Speaker 02: But even putting that aside, you're not fighting the fact that yours is an infringing product. [00:14:58] Speaker 02: That being the case, then shouldn't the other shoe [00:15:08] Speaker 02: She would put on the other shoe also and look at allowing an entity in your status with the circumstances that you have enter into a market with a different distribution system, severely priced, depressed pricing, and then to do it from a perspective of infringing. [00:15:32] Speaker 02: Why should we allow, why should the law permit this entity, why should we view this as being good for competition, innovation in the market? [00:15:47] Speaker 04: Well, described that way, it shouldn't be, but that's not what we think the facts are here. [00:15:51] Speaker 04: Obviously, we think it's an invalid patent. [00:15:54] Speaker 04: It is a defense, and that's a real one, and we've just needed to assert a substantial question at this stage. [00:16:00] Speaker 04: We haven't had discovery, but we think that we have various, very substantial enablement and obviousness issues. [00:16:08] Speaker 04: But beyond that, on the irreparable injury, this disruptive pricing, the record is clear. [00:16:16] Speaker 04: Illumina admitted, and the record admitted, and it's in the record that this has existed for years. [00:16:20] Speaker 04: There's nothing new about this. [00:16:23] Speaker 04: Illumina knew that this is what customers like. [00:16:25] Speaker 04: They've done it themselves. [00:16:26] Speaker 04: The competitor, the second in the market, Thermo Fisher, [00:16:30] Speaker 04: has done this for years, that's in the record. [00:16:32] Speaker 04: There's nothing new about it. [00:16:35] Speaker 04: To the extent that our sequencer is actually more expensive than many of their sequencers because it's different. [00:16:43] Speaker 04: Ours is a complete workflow. [00:16:45] Speaker 04: The reason why it's even attractive, it's a different system. [00:16:49] Speaker 04: This is DNA sequencing, so it takes it from the sample, it prepares the sample, it analyzes it, and then it does sequencing and then gives you [00:16:58] Speaker 04: analysis through bioinformatics. [00:17:00] Speaker 04: The Illumina sequencers are mostly just kind of a middle step there. [00:17:04] Speaker 04: So that was the appeal of this system. [00:17:07] Speaker 04: But to the extent that you're referring to, there was a period of try and buy where we were offering them for a lower price or even say you pay if you like it. [00:17:20] Speaker 04: If we hadn't been enjoined and they liked it, then they would have paid us. [00:17:23] Speaker 04: I mean, we got enjoined. [00:17:25] Speaker 04: That's very typical. [00:17:26] Speaker 04: You're a new market entrant. [00:17:28] Speaker 04: And you say, well, try it for a little bit and see what you like. [00:17:31] Speaker 04: And if you don't like it, you'll give it back. [00:17:33] Speaker 04: But if you do, then you'll pay for it, obviously. [00:17:36] Speaker 04: We're just giving them away. [00:17:37] Speaker 04: That's not a very good business. [00:17:38] Speaker 04: So that was never the business model, trust me. [00:17:43] Speaker 04: So I think that that's a very important point, is that this disruptive price. [00:17:47] Speaker 03: That's lawyer argument that I'll trust you on then. [00:17:50] Speaker 03: On which part? [00:17:51] Speaker 03: No, I wouldn't. [00:17:51] Speaker 03: That you're not giving it away for free as your business model. [00:17:56] Speaker 04: You're right your honor, but we the record but I also trust the record I might add that when it shows that your client tried a lot to come up with non infringing methods and couldn't and decided to just go ahead and Well, I wouldn't characterize it that way and in fact although not part of although I think actually mr. Reines inserted into the record since the injunction there's actually a [00:18:23] Speaker 04: been an announcement that there's a design around. [00:18:25] Speaker 04: So it's not like this was impossible. [00:18:29] Speaker 04: The company, and I don't think the testimony was that. [00:18:31] Speaker 04: I think the testimony was. [00:18:32] Speaker 02: That's how I read it. [00:18:34] Speaker 04: Well, because it was a snippet. [00:18:35] Speaker 04: I think it's when the case was filed, you started looking to alternatives. [00:18:41] Speaker 04: Do you have one? [00:18:41] Speaker 04: It says, not at this time. [00:18:43] Speaker 04: That was August for a case filed in June. [00:18:47] Speaker 04: September is the announcement of the injunction. [00:18:49] Speaker 04: And in November, we say we have [00:18:52] Speaker 02: uh... designer this is one of the most of this matter uh... when this matter and junctions to stop her if you don't have succeeded in in preventing the existing uh... accused product entry in the marketplace and then you have quickly uh... designed around it then should we all just go forward it's a good question it's an important question glad it's come up now [00:19:21] Speaker 04: The reason why is, one, the ruling was wrong, and it's restrained our own economic liberty to make choice and to enter into the market. [00:19:32] Speaker 04: I mean, the fact is, we don't think there was a proof of irreparable injury. [00:19:37] Speaker 04: But moreover, we haven't actually launched it yet. [00:19:42] Speaker 04: We've given it to a couple of customers. [00:19:43] Speaker 04: I think the announcement is that it should be launched commercially in the United States [00:19:48] Speaker 04: end of the first quarter. [00:19:50] Speaker 04: So you're looking at seven or eight months of time out of the market. [00:19:57] Speaker 02: So the preliminary injunction has chilled yourselves. [00:20:01] Speaker 02: Yeah. [00:20:01] Speaker 04: I mean, there's a reason why the court made Illumina post a bond and a substantial bond. [00:20:06] Speaker 04: I mean, it's damaging. [00:20:07] Speaker 03: So you're really hoping that we rule by the end of the first quarter. [00:20:11] Speaker 04: I'm hoping that you rule in our favor. [00:20:13] Speaker 00: OK, we're way over time, so we'll give you two minutes for rebuttal. [00:20:17] Speaker 00: Thank you, Your Honor. [00:20:18] Speaker 00: And Mr. Reinus will give you four extra minutes if you need it. [00:20:22] Speaker 01: Thank you, Your Honor. [00:20:23] Speaker 01: Let me address the question of where we are procedurally and this issue of going forward and how hard they are. [00:20:31] Speaker 01: One thing that's completely absent from their appeal brief opening or reply is any complaint of damage as a result of the preliminary injunction holding the status quo. [00:20:44] Speaker 01: It's just a waived issue. [00:20:46] Speaker 01: We said it was waived in our opposition brief. [00:20:48] Speaker 01: In their reply, they were meticulous about never saying that it was harmed. [00:20:53] Speaker 01: Why? [00:20:54] Speaker 01: Because they're not only saying that they have a replacement chemistry. [00:20:58] Speaker 01: They're saying it's better. [00:21:01] Speaker 01: And they can't tell the markets, the financial markets, that they've got a better thing and that they spurred them to innovation, the finding that they were infringing and so forth. [00:21:12] Speaker 01: And then, on the other hand, come to the court [00:21:14] Speaker 01: and argue this is a grievous injury, or any injury. [00:21:18] Speaker 01: So his opening line was that this is a damaging injunction. [00:21:22] Speaker 01: He's not entitled to make that argument procedurally. [00:21:26] Speaker 02: With all sincerity, I think you have a problem with damages too. [00:21:30] Speaker 02: I mean, you own 80% of the market. [00:21:35] Speaker 02: You're fearing a competitor that's coming in and offering the product at half the price. [00:21:41] Speaker 02: You've been a player in the market. [00:21:42] Speaker 02: You dominate it. [00:21:44] Speaker 02: Okay, let me address... And I don't see any evidence of price erosion, loss of market share, not anything that's significant. [00:21:56] Speaker 01: Well, let me address that. [00:21:57] Speaker 01: So this is the question of what the market is. [00:22:00] Speaker 01: And there's been some conflation of that. [00:22:02] Speaker 01: I mean, your questions, as always, are fair, but I think there's a complication... Well, that's your reputational argument, isn't it? [00:22:11] Speaker 01: Well, there's the reputational thing, but I think there's a market. [00:22:15] Speaker 01: So when the quotations come to you about quantity of the market that Illumina has and its dominance and all that, that's referring to DNA sequencing broadly. [00:22:24] Speaker 01: A little page of history is important here, which is, and it's on the record, is that typically they were sold to these genome centers that buy [00:22:35] Speaker 01: hundreds of DNA sequencers or research universities. [00:22:38] Speaker 01: That's who the market is for DNA sequencers historically. [00:22:41] Speaker 01: This panel, I know, hears a lot of these type of cases. [00:22:43] Speaker 01: This is what's going on. [00:22:44] Speaker 01: What's happened in the last few years, and you've heard about it, and you'll hear more, is that people are learning how to apply DNA sequencing to personalized medical care, which means it's a completely different market. [00:22:57] Speaker 01: It's going to the Cleveland Clinic or Reed Hospital and saying, you know, you should have [00:23:04] Speaker 01: your little appliance, that you can do sequencing in your hospital. [00:23:08] Speaker 02: Why should we stifle the development of that market by sustaining an injunction on a new entrant into the marketplace? [00:23:19] Speaker 01: Well, I mean, I don't think there's any evidence you are, and I don't think that they're entitled to argue it. [00:23:24] Speaker 02: Well, it's not that we are. [00:23:26] Speaker 02: I mean, you are. [00:23:27] Speaker 02: You're the one that's supposed to present the evidence why we should have the injunction. [00:23:32] Speaker 01: The court below found that the balance of the harms favored us. [00:23:35] Speaker 01: It's not appealed. [00:23:36] Speaker 00: But, Your Honor, let me make... And they didn't argue that there was somehow some public interest in having more opportunities. [00:23:41] Speaker 01: They didn't. [00:23:42] Speaker 01: He found the public... So let me just explain this market. [00:23:46] Speaker 01: So their argument isn't that we dominate this market. [00:23:49] Speaker 01: Their argument is there's others in the market, so why are we complaining? [00:23:53] Speaker 01: Their argument is there's the ion torrent. [00:23:56] Speaker 01: There's these other systems. [00:23:57] Speaker 01: Why are they picking on us? [00:23:59] Speaker 01: And the reason we're picking on us is that industry analysts have found their system to be imitative. [00:24:05] Speaker 01: That's the word that was used not by us, by a third party, and it's not been contested. [00:24:10] Speaker 01: So we're going to these hospitals. [00:24:12] Speaker 01: They own the hospital labs as customers. [00:24:15] Speaker 01: That's their business. [00:24:16] Speaker 01: They're doing something else and selling them things to how you get blood, whatever. [00:24:19] Speaker 01: So they already have the relationships at all the hospitals. [00:24:22] Speaker 01: We don't. [00:24:23] Speaker 01: We're at a disadvantage market-wise from them. [00:24:26] Speaker 01: They come into their existing customers and say, we've got a great new little box that you can do DNA sequencing. [00:24:33] Speaker 01: And here it is. [00:24:35] Speaker 01: We'll give it to you. [00:24:37] Speaker 01: Disruptive? [00:24:37] Speaker 01: How is that not disruptive? [00:24:38] Speaker 01: We'll give it to you. [00:24:39] Speaker 01: If you like it, you keep it. [00:24:40] Speaker 01: If you don't, you don't. [00:24:42] Speaker 01: He said there's no evidence of discounting. [00:24:44] Speaker 01: A1884, 50% discounting. [00:24:48] Speaker 01: We'll give it to you on the cheap. [00:24:51] Speaker 01: Now the problem is that these are not the regular users of- That's a different market model. [00:24:55] Speaker 01: That's a completely different market. [00:24:57] Speaker 01: It's an emerging market. [00:24:58] Speaker 01: I don't know why my friend, who's a quite a good lawyer, is arguing that this isn't an emerging new market. [00:25:04] Speaker 02: You open the New York Times and you know that personalized medicine and doing these- Well, assuming it is, but I'm still struck with these thoughts that if [00:25:19] Speaker 02: If we're faced with a new market with emerging technologies, should we be more careful with injunctions at that point? [00:25:28] Speaker 01: You should be more careful to protect the property rights owner in the emerging markets. [00:25:33] Speaker 01: That's what the case law says. [00:25:35] Speaker 02: Well, look at it differently. [00:25:37] Speaker 02: Shouldn't we be more careful with sustaining preliminary injunctions or any permanent injunctions [00:25:44] Speaker 02: with the view that it may stifle the development of that market. [00:25:48] Speaker 02: Who's to say that the entry of this particular company into this new marketplace won't expand and sustain competitiveness [00:25:59] Speaker 02: as well as maybe drive other innovation. [00:26:02] Speaker 01: That argument applies to any injunction. [00:26:04] Speaker 01: And we've met the factors for an injunction. [00:26:05] Speaker 01: I don't think that the district court was careful, extremely experienced, extremely bright. [00:26:09] Speaker 02: Does it apply in any different way by the fact that this is an emerging market? [00:26:14] Speaker 01: The established law, Your Honor, is that it's more important and more likely to be irreparable harm in an emerging market. [00:26:21] Speaker 01: That's just the law. [00:26:22] Speaker 03: Did I really hear you say that, Mr. Reince, that the district court is extremely bright? [00:26:29] Speaker 03: give Judge Alsop a call? [00:26:30] Speaker 01: Yeah. [00:26:31] Speaker 01: Well, he is. [00:26:32] Speaker 01: I think it's a given. [00:26:33] Speaker 01: It's a matter of his opinion, but it's my opinion. [00:26:38] Speaker 00: Well, I didn't say it was opinion. [00:26:39] Speaker 00: I said it's a given. [00:26:40] Speaker 00: Oh, it's a given. [00:26:41] Speaker 00: I think even your opponent will give you that Judge Alsop is very bright. [00:26:45] Speaker 01: Yeah. [00:26:45] Speaker 01: Well, thank you. [00:26:47] Speaker 00: He's shaking his head, yes. [00:26:51] Speaker 01: But you're on to the facts of this situation. [00:26:53] Speaker 01: I understand your concern about the importance of this court in keeping the eye on the ball of innovation. [00:26:58] Speaker 01: I get it. [00:26:59] Speaker 01: They have an imitative product. [00:27:02] Speaker 01: They knew they were infringing. [00:27:03] Speaker 01: They knew it. [00:27:04] Speaker 01: They tried to change the chemistry from 2012 to 2015. [00:27:06] Speaker 01: They had a prior product that they abandoned that was infringing. [00:27:10] Speaker 01: They're recidivists. [00:27:11] Speaker 01: They come back, they've been changing the chemical formulations, they say that publicly, then they have to come to market because of internal pressures apparently, and they go forward with this as they're losing the IPR before this court and they took their best crack in validity. [00:27:25] Speaker 01: That's outrageous, but let's hold aside. [00:27:28] Speaker 01: What about innovation? [00:27:30] Speaker 01: First of all, their argument is that there are others in the market, why are you picking on us? [00:27:34] Speaker 01: So it's not like [00:27:35] Speaker 01: We're dominant in that market. [00:27:36] Speaker 01: We're getting established. [00:27:38] Speaker 02: But more to the point. [00:27:39] Speaker 02: I think that was in response to my statement about how dominant you are in the market. [00:27:44] Speaker 01: But we're not dominant in this market. [00:27:45] Speaker 01: And their argument isn't that we're dominant in this. [00:27:48] Speaker 00: This is not a situation, as I understand it, where they made the argument that it's a two-person market. [00:27:55] Speaker 00: And that in the absence of this competition, that the health care system in the United States is going to be at a loss. [00:28:03] Speaker 01: It's the opposite. [00:28:04] Speaker 01: They're saying, why are you picking on us? [00:28:06] Speaker 01: There's others. [00:28:06] Speaker 01: You can't show harm. [00:28:07] Speaker 03: Where's the record evidence that we can look at establishing that this is a new? [00:28:13] Speaker 03: I know there was some discussion about these machines. [00:28:19] Speaker 01: It's the then-owned declaration. [00:28:23] Speaker 01: who's a senior executive of our company. [00:28:24] Speaker 01: And he wrote a careful declaration that relies on documentation from public literature and, importantly, governmental reports on the emergence of personalized medicine. [00:28:35] Speaker 01: And that's at A, 1052 through 1070. [00:28:41] Speaker 03: I remember looking and thinking, well, it's almost like a mini-factory in effect. [00:28:46] Speaker 01: Yeah, I mean, it's just taking the idea of sequencing and making it not the province of huge, massive labs that are specialized, but bringing it to the hospital and the doctor's office. [00:28:55] Speaker 01: But I do want to say on this issue of innovation, they have come out and said they have a superior chemistry that's their own. [00:29:07] Speaker 01: That's the patent system working. [00:29:08] Speaker 01: Don't be an imitator. [00:29:12] Speaker 01: Do your own thing. [00:29:13] Speaker 01: They got, I'm sure the CEO said, [00:29:17] Speaker 01: What's happening? [00:29:17] Speaker 01: We spent a lot of money on this. [00:29:19] Speaker 01: We need to have a crash program, and we've got to get it out now. [00:29:22] Speaker 01: And they get it out, and they announce to the financial markets and everyone, they assure them that they've got a better chemistry now so that we made their product better if you accept their comments at face value. [00:29:34] Speaker 01: So innovation's fine. [00:29:37] Speaker 00: Do you want to address any of the validity arguments that you've addressed? [00:29:40] Speaker 01: I'm very happy to. [00:29:42] Speaker 01: I guess starting with the nucleosides argument. [00:29:47] Speaker 01: There's the admission that Judge Wallach pointed out which is point blank and it's just there. [00:29:55] Speaker 01: There's the fact that their own expert in his own patent application used the same nucleotide or nucleoside formulation in indistinguishable circumstances. [00:30:07] Speaker 01: Don't listen to anything that's said contrary to that. [00:30:09] Speaker 01: It's indistinguishable circumstances. [00:30:11] Speaker 01: Now the argument is [00:30:13] Speaker 01: What they put their whole point is that in our patent, we somehow disclaim that our nucleoside could ever be incorporated because it can never be associated with phosphorus. [00:30:26] Speaker 01: That makes no sense. [00:30:27] Speaker 01: The patent says nucleotide or nucleoside, and then it says when we talk about nucleotide, we're also talking about nucleoside. [00:30:34] Speaker 01: Then it uses the both terms with a hyphen to make clear that they're both applicable. [00:30:38] Speaker 01: Then it says nucleosides can be incorporated. [00:30:42] Speaker 01: And perhaps most of all, what they rely on is the definition, essentially an own lexicographer form of it. [00:30:48] Speaker 01: I don't think they've styled it that way, tactical or other reasons. [00:30:53] Speaker 01: And that says nucleoside includes nucleoside analogs, which have side chains or other reactive groups that let it attach to other molecules. [00:31:04] Speaker 01: And there's just no reason to say why that wouldn't include the phosphates that are [00:31:10] Speaker 01: part of how the system describes that it's worked. [00:31:13] Speaker 01: On top of that, there are alternatives where you wouldn't necessarily use the phosphates. [00:31:18] Speaker 01: There's an AZT process, which is an A1840 and 41. [00:31:23] Speaker 01: And then there's chemical. [00:31:24] Speaker 01: So there's multiple others. [00:31:26] Speaker 01: But even if that was all untrue, and it's not, and even the patent's begging you to say that it includes nucleosides, and you don't believe it, for whatever your reason, even though it's generally accepted in the art, a fact finding they don't deny. [00:31:38] Speaker 01: In the art, it's generally accepted nucleosides can be incorporated. [00:31:42] Speaker 01: They don't deny that. [00:31:43] Speaker 01: Their argument is this lexicographer thing. [00:31:46] Speaker 01: They still have to win on their Claim 4 argument, which to me, Claim 4 says where the nucleotide that's used in the method is. [00:31:58] Speaker 01: And then it states specifically that it's a deoxyribonucleotide. [00:32:08] Speaker 01: And I think the argument is, well, that claim covers the specific use of deoxyribonucleotide trisphosphate and then all nucleosides. [00:32:17] Speaker 01: Could you imagine if I came before this court and said that that dependent claim to a specific nucleotide covered all nucleosides? [00:32:25] Speaker 01: It would be a tough day. [00:32:27] Speaker 01: So they have to win both those arguments and they have to have a finding that the district court got all that wrong as a matter of its discretionary exercise in view of all the other issues. [00:32:37] Speaker 01: I think at the end of the day, what I want to say is, when they brought their motion to expedite this appeal, they represented to the court that the injunction would be long-term damage. [00:32:49] Speaker 01: They said some things, which I think, certainly in hindsight, were irresponsible. [00:32:53] Speaker 01: They said it would be long-term damage, that it would have ramifications forever and all this. [00:33:00] Speaker 01: They got the expedited appeal, and right after that, announced [00:33:06] Speaker 01: that they have this better chemistry. [00:33:10] Speaker 01: And then the appeal doesn't mention any harm to them whatsoever because they're being meticulous about not saying any harm for all host of reasons. [00:33:19] Speaker 01: That's a bit of an abuse of the appellate process. [00:33:22] Speaker 01: But hold that aside for a second. [00:33:24] Speaker 01: My point about making this is there's an injunction right now that's not hurting anyone. [00:33:29] Speaker 01: They've got their plan. [00:33:30] Speaker 01: They're committed to it. [00:33:32] Speaker 01: They say that it's better. [00:33:33] Speaker 01: They can't possibly go back to the market and say, now we're going to go back because we got a remand. [00:33:40] Speaker 03: It holds the status quo. [00:33:45] Speaker 01: They said that they don't claim any harm from the result of this injunction. [00:33:56] Speaker 01: It holds the status quo. [00:33:58] Speaker 01: If there are any questions regarding whether they can thread the needle on obviousness through their failures before or somehow one of these enablement claims becomes something, then that can be reviewed by this court on a full record at the end of the time in a normal way you do it. [00:34:17] Speaker 01: They don't have an allegation in this appeal that maintaining the status quo is harmful to them. [00:34:22] Speaker 01: So what would even be the point? [00:34:26] Speaker 01: other than they could score some PR points. [00:34:29] Speaker 01: And certainly Judge Alsop's careful opinions don't deserve that. [00:34:33] Speaker 00: Well, in fairness, if the injunction never should have been entered, I'm sure there's a bond that's pending, and they would be able to show that there was some damage from the failure to be in the market sooner. [00:34:43] Speaker 01: They're the ones that are arguing that they barely made any inroads into the market. [00:34:49] Speaker 01: So I think Judge Alsop covers that in his stay request. [00:34:52] Speaker 01: It's like, wait, you're the one saying you're barely making any inroads into the market. [00:34:56] Speaker 01: How can you now say? [00:34:57] Speaker 01: So that's the problem with that. [00:34:58] Speaker 01: Look, I'm not shying away from the record and defending each of these points now. [00:35:01] Speaker 01: I'm just saying in terms of the quality of the presentation being made on the merits, it's not good. [00:35:07] Speaker 01: And Judge Ossoff's findings that there wasn't a likelihood and they were weak showings is dead on. [00:35:14] Speaker 01: But if it were ever to mature to something better, there'd be a record. [00:35:17] Speaker 01: They'd be able to prove it. [00:35:18] Speaker 01: On this record, where they don't even complain damage or challenge balance of harms or challenge the public interest, [00:35:24] Speaker 01: By the way, the public interest point, and then I'll sit down. [00:35:26] Speaker 01: The public interest point was that we presented and Judge Alsop accepted, because it's a good one, is they're going to these smaller institutions, selling them essentially their first DNA sequencer. [00:35:39] Speaker 01: I don't know every time, but it's new. [00:35:41] Speaker 01: And then selling them something that they acknowledge works relatively poorly that looks like ours in an imitative perspective. [00:35:51] Speaker 01: What happens if there's ultimately an injunction or there's ultimately a file of infringement when these smaller entities are using scarce funds? [00:35:58] Speaker 01: And they don't challenge that finding on this appeal. [00:36:02] Speaker 01: Thank you very much. [00:36:03] Speaker 00: Thank you. [00:36:04] Speaker 00: Two minutes. [00:36:06] Speaker 04: Thank you, Your Honor. [00:36:07] Speaker 04: There's a lot there that I want to try to correct. [00:36:10] Speaker 04: First, we absolutely do refute the performance issue. [00:36:13] Speaker 04: All we said was it's not as robust in kind of statistics [00:36:16] Speaker 04: 0 to 60 and 4 second kind of statistics for sequencing. [00:36:19] Speaker 00: Yeah, but it's right that you don't challenge the public interest finding on appeal. [00:36:24] Speaker 04: The public interest we didn't bother with on appeal. [00:36:27] Speaker 00: Right. [00:36:28] Speaker 00: So whether you bothered with it or not, it's not before us, right? [00:36:31] Speaker 04: The performance issue, though, was cited for a reputable injury that had justified the injunction. [00:36:37] Speaker 04: Right. [00:36:37] Speaker 04: And it has no basis in there. [00:36:39] Speaker 04: There was no evidence of that. [00:36:41] Speaker 04: Mr. Reines tried to get an executive to admit that your [00:36:45] Speaker 04: your machine doesn't work right. [00:36:47] Speaker 04: He said, no, it works exactly as we're telling everyone it will. [00:36:49] Speaker 04: It doesn't need to do all the things that you do. [00:36:52] Speaker 04: It does what the clinical labs need. [00:36:55] Speaker 04: And by the way, the notion that this is an emerging market is wrong. [00:36:59] Speaker 04: In 2012, they identified this as an important market, and they got FDA approval so they could go to this market. [00:37:06] Speaker 04: So it's not a new market. [00:37:07] Speaker 04: It's growing, sure, but everything grows. [00:37:10] Speaker 04: And we're out of it. [00:37:11] Speaker 02: Right now, the harm is that there are... Could it be that the existing market is mature, but it stands at the threshold of this emerging market, the new... With CRISPR coming on and all this other type of DNA technology, these products are going to have a radical new use. [00:37:30] Speaker 04: But if you're going to enjoin someone, put them out of the market with the trial just a year away and very quantifiable damages, put an expert on it. [00:37:39] Speaker 04: Put in economic. [00:37:41] Speaker 00: But you specifically have not appealed the balance of harms. [00:37:46] Speaker 00: So there's no issue before us about potential harm to your client. [00:37:53] Speaker 00: You haven't appealed balance of harms. [00:37:54] Speaker 00: You haven't appealed public interest. [00:37:56] Speaker 00: You've only appealed irreparable harm. [00:37:58] Speaker 00: In fact, it was notable that the reply doesn't even address it. [00:38:02] Speaker 04: We appeal the judgment or the injunction. [00:38:06] Speaker 04: We did not get into argument. [00:38:08] Speaker 04: on those two factors. [00:38:10] Speaker 00: All right, so we have to assume that those factors are fine. [00:38:12] Speaker 04: Yeah, that's fine. [00:38:12] Speaker 04: But what I'm saying is, and that is the balance of harm issue about our interest, that's all it is. [00:38:19] Speaker 04: It doesn't take away from the issue of irreparable harm or likely a success. [00:38:27] Speaker 04: And he says that's what should happen at the end of the process. [00:38:29] Speaker 04: The end of the process should be, it's a pretty extraordinary remedy. [00:38:33] Speaker 04: Let us try the case. [00:38:34] Speaker 04: Let us have the full record. [00:38:35] Speaker 04: And then if we're right on a full record, [00:38:37] Speaker 04: then we can talk. [00:38:39] Speaker 03: You started your two minutes by saying that you don't concede the quality argument on the alleged poor performance of the gene reader. [00:38:52] Speaker 03: But I'm looking at 1873 of the record, where your expert says, we feel we're significantly behind on many of those and so on. [00:39:03] Speaker 03: And it sure looks to me like he is conceding. [00:39:06] Speaker 03: No, so what the question was about statistics and what QIAGEN has said, like how many... Well, the question was, does QIAGEN anticipate being able to get, you know, the chemistry worked out so as to have, you know, serious improvement in read length, accuracy and output? [00:39:26] Speaker 04: So for, and the comment was on read length. [00:39:29] Speaker 04: So QIAGEN devised a closed system, a linear system is [00:39:34] Speaker 04: is more, has a longer read length. [00:39:37] Speaker 04: So you can just put a sample in and it will tell you the whole genome. [00:39:41] Speaker 04: Ours doesn't have that power, so we say, look, here's the cancer gene of interest. [00:39:46] Speaker 04: Here's a panel of the cancer genes of interest. [00:39:48] Speaker 04: You don't need that power for what we're doing. [00:39:50] Speaker 04: And what our attraction is, is a whole workflow that's easier to use and has everything in one. [00:39:57] Speaker 04: So we don't say it's not going to work. [00:39:59] Speaker 04: I think that's very important. [00:40:00] Speaker 00: All right, you're way over your time. [00:40:01] Speaker 00: Thank you. [00:40:02] Speaker 00: You got that answer out. [00:40:03] Speaker 00: OK. [00:40:04] Speaker 00: All right. [00:40:05] Speaker 00: The court is adjourned. [00:40:08] Speaker 02: All rise. [00:40:11] Speaker 02: The honorable court is adjourned until tomorrow morning at 7 o'clock AM.