Complete Genomics, Inc. v. Illumina, Inc., Case No. 21-cv-00217-WHO, (N.D. Cal., March 30, 2021)

Bob Connolly  Law Office of Robert Connolly

In this action, Complete Genomics, Inc, (CGI”) alleged that Illumina improperly asserted three patents against it in the related action Illumina v. BGI Genomics Co., No. 3:20-cv-01465-WHO (N.D. Cal., filed Feb. 27, 2020) (“Infringement Action”) in an “unlawful, anticompetitive manner.”  CGI’s first primary allegation of anticompetitive conduct in this action relies on the assertion that two of the patens asserted in Illumina’s Infringement action against CGI are invalid and were improperly obtained by Illumina through a fraud on the Patent Office–often called a Walker Process fraud claim.  Complete Genomics, Inc. v. Illumina, Inc., Case No. 21-cv-00217-WHO, (N.D. Cal., March 30, 2021) (“CGI Stay”) at *2-3.

CGI’s second primary allegation of anticompetitive conduct is that Illumina’s assertion of U.S. Patent No. 10,480,025 (“the ’025 patent”) against its CoolMPS technology in the Infringement Action is objectively and subjectively baseless and constitutes sham litigation because “it is objectively apparent to one of ordinary skill in the art that CoolMPS’s antibody with a fluorescent molecule and the [’025 patent’s] claimed detectable label attached to the base of a nucleotide via a cleavable linker are substantially different.” Id. at *3-4.

Based on these allegations, CGI brought claims for monopolization and attempted monopolization under Section 2 of the Sherman Act, as well as unfair competition claims under California Business & Professions Code § 17200.

Illumina moved to stay CGI’s action arguing the claims are derivative of the issues already pending in the Infringement action which is much further long.   Illumina argues there is no prejudice to CGI because its claims are dependent on a favorable outcome in the Infringement Action.  CGI Stay at *4.

Legal Standard

In assessing whether a stay is appropriate in a particular action courts generally consider the following factors: “[1] the possible damage which may result from the granting of a stay, [2] the hardship or inequity which a party may suffer in being required to go forward, and [3] the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). CGI Stay at *4.

Judge Orrick’s Analysis

Judge Orrick fund that a stay of this action was appropriate pending resolution of the Infringement Action based on judicial economy, prejudice to Illumina and lack of prejudice to CGI.

I. JUDICIAL ECONOMY

The Court noted that CGI’s claims are based on two basic theories, both to which are subject to the Infringement action.  “If these issues are resolved in Illumina’s favor in the Infringement Action, CGI’s antitrust claims would likely be mooted or unviable. A mixed resolution of these issues, or a decision in CGI’s favor, could narrow or focus the remaining issues for the antitrust litigation.”  The Court agreed with and cited several cases where judicial efficiency merited staying antitrust claims pending the resolution of related patent claims. See Chip-Mender, Inc. v. Sherwin-Williams Co., No. C 05-3465 PJH, 2006 WL 13058 (N.D. Cal. Jan. 3, 2006) (staying antitrust claims and noting that resolution of patent issues might “dispose of the antitrust counterclaims altogether); ASM Am., Inc. v. Genus, Inc., No. 01-2190 EDL, 2002 WL 24444, at *6 (N.D. Cal. Jan. 9, 2002) (“It is common practice in federal court to stay antitrust counterclaims until after the trial” of related patent claims). CGI Stay at * 5.

CGI asserted that a stay would be improper because the Seventh Amendment right to a jury trial requires that its legal Walker Process claim in the antitrust action be determined before its inequitable conduct defense in the Infringement Action.  While CGI cited a number of cases in support, Judge Orrick noted “These cases all address circumstances where both equitable and legal claims were pending in the same action, which is a distinction from the circumstances here, where the claims are pending in separate actions filed a year apart.”  The Court cited the Supreme Court: The Supreme Court has held that the resolution of an equitable claim may have preclusive effect on a subsequent legal claim brought in a separate action and that such an outcome does not violate the Seventh Amendment. See Parklane Hosiery v. Shore, 439 U.S. 322, 337 (1979); B & B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138, 150 (2015) (“As to the Seventh Amendment, for instance, the Court has already held that the right to a jury trial does not negate the issue-preclusive effect of a judgment, even if that judgment was entered by a juryless tribunal.”). CGI Stay at *6

The Court rejected CGI’s arguments in support of a stay finding “The Infringement Action is considerably more advanced, there are no discovery efficiencies to be gained by moving forward in tandem, and resolution of the Infringement Action may substantially narrow or moot the claims in this action.” Id. at *8.

II. Prejudice to Illumina if Case Proceeds

The Court noted that the cost of defending a suit, even an expensive antitrust suit, is not on its own prejudicial but agreed with Illumina “that proceeding with the antitrust action now could force the parties to engage in expensive, time-consuming, and potentially pointless antitrust discovery.”  Id. at *9.

III. Prejudice to CGI If Case Is Stayed

CGI argued that a stay would prolong Illumina’s antitrust conduct.  But the Court countered that it is the Court’s preliminary injunction in the Infringement Action that prevents CGI from selling CoolMPS in the US market, and resolution of that action, which is much farther along procedurally, will address the coemption issue.  Id. at 8-9. CGI also complained about possible loss of evidence as a result of the stay, but the Court found this complaint too general. Id. at *9-10.

Based on the above legal standard and the Court’s findings, Illumina’s motion to stay was granted pending resolution of the related Infringement action.