On July 18, 2013, Complete Genomics, Inc., which is a wholly-owned subsidiary of BGI-Shenzhen (“BGI”), announced that it entered into a settlement agreement with Illumina, Inc. under which Illumina will dismiss with prejudice both lawsuits it had brought against Complete: Illumina, Inc. and Solexa, Inc. v. Complete Genomics, Inc., Case No. 10-cv-05542 EDL (N.D. Cal.); and Illumina, Inc. and Illumina Cambridge Ltd. v. Complete Genomics, Inc., Case No. 12-cv-01465 BEN BGS (S.D. Cal). The agreement is reciprocal, so Complete will likewise dismiss with prejudice all counterclaims against Illumina.
No payment is being made by either party to the other, which is not particularly unusual. What makes this story interesting is that the parties also announced that no licenses are being granted by either party to the other. Typically, in patent litigation, you will see either a payment going in one direction or some kind of cross-license. Thus, it would seem that the parties simply decided that they would each be better off simply giving up on the case and moving in separate directions.
It is a bit unusual to see both parties walk away empty-handed, but with the cost of patent litigation and the reality that patent litigation stalls forward movement with respect to research and development, perhaps it is not shocking.
Still, typically, when looking at patent settlement agreements, one will find a cross-license at the center of the dispute, particularly between operating companies. Press announcements of such agreements invariably say: “Under the agreements, which include a patent portfolio cross-license, the parties will work together to….” Cross-licensing, however, is not an option when a non-practicing entity is involved as the plaintiff because the non-practicing entity, by definition, is not engaging in any activity, so there is no threat of infringement.
In addition to the settlement of this case with no payments and no licenses, there is another interesting wrinkle. Case No. 10-cv-05542 was originally filed in the United States Federal District Court for the District of Delaware. Illumina, Inc. (“Illumina”) and Solexa, Inc. (“Solexa”) originally initiated the present action against Complete Genomics alleging both direct and indirect infringement of U.S. Patent Nos. 6,306,597 (the “‘597 patent”), 7,232,656 (the “‘656 patent”), and 7,598,035 (the “‘035 patent”), which generally relate to genome sequencing and analysis for human DNA. Complete Genomics also brought counterclaims against Illumina and Solexa seeking declaratory judgments regarding both the invalidity and non-infringement of the aforementioned patents, as well as counterclaims for violation of the Sherman Act and another alleging inequitable conduct by Illumina in allegedly committing fraud on the Patent Office during reexamination of the ‘597 patent due to its inadequate disclosure of material documents arising from litigation relating to the ‘597 patent.
So how did this case get started in Delaware and then wind up in California?
Illumina is incorporated in Delaware with its principal place of business in San Diego, California. On February 8, 2010, Solexa merged into Illumina, but prior to the merger, Solexa was incorporated in Delaware with its principal place of business in Hayward, California. Complete Genomics is also incorporated in Delaware with its principal place of business in Mountain View, California. Still, Complete Genomics wanted to have the case transferred to California, and by order dated November 9, 2010, Judge Robert F. Kelly granted the motion to transfer, concluding: “Other than the parties’ incorporation, Delaware has a limited connection to this action. In contrast, the Northern District of California has a substantial connection to this litigation, and is clearly more convenient than Delaware.” Thus, the case was transferred to the Northern District of California.
Motions to Transfer are not commonly granted, but over the last several years have become relatively easier achieve. Of course, “relatively” easier is still relative in the strongest sense of the term.
Tags: litigation, Patent Litigation
You share in the PLI Practice Center community, so we just ask that you keep things civil. Leave out the personal attacks. Do not use profanity, ethnic or racial slurs, or take shots at anyone's sexual orientation or religion. If you can't be nice, we reserve the right to remove your material and ban users who violate our Terms of Service.