Bio-Rad Laboratories, Inc. et al. v. 10X Genomics, Inc. (D. Mass. 19-cv-12533).

In this long-running, multi-district dispute, Bio-Rad accused 10X Genomics of infringing a number of patents, and 10X filed counterclaims alleging antitrust violations based on Bio-Rad’s patent enforcement practices.  10X says that Bio-Rad is improperly exploiting its market power in two types of genetic analysis and in the market for genetic droplet research technology.  Judge Young has denied in part and granted in part Bio-Rad’s motion to dismiss these counterclaims pursuant to Rule 12(b)(6). 

10X asserted that Bio-Rad had acquired several companies holding patents in ddPCR technology that allows for more accurate and sensitive gene sequencing, and that Bio-Rad controls more than 90% of the market in this technology, allegations which are assumed to be true for the purposes of analyzing the motion to dismiss.  10X asserts that it and Bio-Rad together make up the majority of the Droplet Single-Cell Product market, which dominates single-cell NGS sample preparation.  Finally, 10X says that Bio-Rad will be a monopolist in the Droplet Genetic Anaysis Technology market that covers broadly all droplet-based genetic analysis, if Bio-Rad’s claims are construed as broadly as Bio-Rad asserts.  With respect to all three categories, 10X asserts that Bio-Rad’s acquisition of RainDance Technologies, Inc. in 2017 led to near-monopoly market power both by eliminating a competitor (Bio-Rad eliminated RainDance’s competing product lines upon completion of the acquisition) and by consolidating patents in the technology areas.  10X also asserts that Bio-Rad is trying to drive 10X out of the market through aggressive patent litigation, including through the assertion of the patents acquired from RainDance and refusal to license at reasonable rates.  All of the antitrust counterclaims were brought under Sections 7 of the Clayton Act, 15 U.S.C. 18 (which bans the acquisition of sock in a company when the effect may be substantially to lessen competition or to tend to create a monopoly) or Section 2 of the Sherman Act, 15 U.S.C. 2 (making it illegal to monopolize or attempt to monopolize any part of trade or commerce among the several states).  To properly state such a claim, 10X is required to assert both the possession of monopoly power in a relevant market and the willful acquisition or maintenance of that power, as distinguished from growth or development as a consequence of a superior product, business acumen, or historical accident.

Judge Young first denied Bio-Rad’s bid to bar the counterclaims as compulsory claims that should have been brought in the parties’ on-going litigation in the Northern District of California.  He noted that the Supreme Court has determined that antitrust counterclaims in a patent infringement case are permissive rather than compulsory, and that the District of Massachusetts continues to view patent misuse claims to be permissive (despite having determined that antitrust claims based on the assertion of invalid patents were compulsory).  Judge Young then applied the Noerr-Pennington doctrine, which protects activity relating to petitioning the government from antitrust liability, applied to enforcement of patents through litigation.  Two exceptions exist to this doctrine – the assertion of patents obtained through fraud and assertion of patents as a sham – is objectively baseless – to cover impermissible anticompetitive conduct.  He noted that so long as the litigation is not baseless, this doctrine shields litigation even if it is brought with the intent to harm a competitor.  Judge Young declined to bar 10X’s requested remedy of divesiture by Bio-Rad of the RainDance patents under the laches doctrine, opting to adhere to the Ninth Circuit’s determination that laches should not apply until at least four years had passed since the cause of action accrued, based on the statute of limitations found in the Clayton Act.  He further determined that 10X had properly pled the technical elements for the market definitions, while noting that they “barely cross the required threshold of specificity.”

With respect to the DSCP market, Judge Young noted that market power traceable to a previous merger can serve as the basis for a violation, but that RainDance was never a major competitor in the DSCP market and thus the acquisition was not the source of any market power that Bio-Rad may now have.  He further faulted 10X’s claim because 10X asserted that Bio-Rad had only entered the NGS Sample Prep market after acquiring RainDance, noting the unlikelihood that the acquisition of patents to enter a market was unlikely to form a violation of the Clayton Act.  He also pointed to 10X’s assertion that 10X, not Bio-Rad, held the most market share in the DSCP market at the time the counterclaim was filed; while 10X asserts that the two parties dominate that market, the pleadings suggest that Bio-Rad does not hold a monopoly share and provide no way to determine what percentage of the market Bio-Rad actually controls.  Absent a showing of market power, the acquisition of competitors or patents cannot serve as a Clayton Act violation.  Further, while 10X asserted that Bio-Rad charged supracompetitive prices, it provided no specificity to allow this allegation to be evaluated.  Judge Young determined that the bald allegation of supracompetitive pricing constituted a legal, rather than factual assertion, and moreover that 10X had made no connection between any such overpricing and Bio-Rad’s acquisition of RainDance, likely because (as noted) RainDance was not in the market at the time of the acquisition.  Judge Young concluded that the antitrust claims should be dismissed with respect o the DSCP market. 

The outcome was different for the Droplet Genetic Analysis Technology market, with Bio-Rad’s requested dismissal being denied.  RainDance had competed in this market prior to the acquisition, and 10X alleged that the acquisition removed a potential competitor and left Bio-Rad with a dominant market share, and had immediately raised royalty prices upon obtaining the additional patents, indicative of newly-acquired market power.  Judge Young determined that 10X’s antitrust claims based on the assertion of patents in litigation, noting that patent litigation is not forbidden by antitrust law, because 10X would have been subject to litigation regardless of who owned the patents, as evidenced by the fact that prior to the acquisition, RainDance had asserted some of the patents against 10X.  Nevertheless, the Clayton Act count with respect to this market was allowed to proceed.

With respect to the ddPCR market, Judge Young noted that 10X’s allegations that Bio-Rad had increased its market share above 90% through the RainDance merger formed a classic example of conduct negatively impacting competition through monopolization behavior.  Accordingly, this count was upheld.

With respect to the Sherman Act counts, allegations that a dominant competitor acquires a patent (or patents) covering a substantial share of the same market can constitute monopolization, provided the claimant can show a specific intent to destroy competition and a predicate illegal act.  10X could not make this showing.  Most of 10X’s theories of how it was harmed were not the result of anticompetitive action, and the series of patent litigation cases filed by Bio-Rad are protected by the Noerr-Pennington doctrine from antitrust scrutiny.    Judge Young denied Bio-Rad’s motion with respect to the ddPCR market, given the already-dominant position Bio-Rad held prior to the RainDance acquisition, but granted the motion with respect to the other markets.

D. Mass. Presentation on Resumption of Jury Trials

The District of Massachusetts has announced a Zoom presentation on September 16th at 4:00, at which Chief Judge Saylor will provide an update on the resumption of jury trials during the COVID pandemic.  The session will include a question and answer period.  It is my understanding from comments from other judges in the district that at least two courtrooms have been equipped with plexiglass screens and other equipment to better enable proper distancing while in the courtroom – I expect we will learn more about this.  You can register for the presentation here.

Vigilone v. 15 Beacon Street Corp. et al. (D. Mass. 19-cv-12486).

Keith Vigilone sued 15 Beacon Street Corp., Beacon Street LLC, and Paul Roiff, the president of the corporation and manager of the LLC, accusing them of misusing a copyrighted photograph of the Prudential Building with “GO PATS” emblazoned in the building lights and reflected off of the Charles River.  Vigilone asserted that the defendants used the photograph on the website for XV Beacon Hotel.  Judge Stearns has now granted Vigilone’s motion to amend the complaint to add Luxe Social Media and its manager, Tiffany Dowd, who the defendants had engaged to manage their social media.  While the time for amending the complaint by right had passed, meaning that “good cause” standard applied to the motion to amend, Judge Stearns noted that Vigilone only found out about Luxe’s role through discovery, and did not unduly delay upon so discovering, demonstrating good cause.

Mediating Online – Best Practices Program.

The Massachusetts Chapter of the Federal Bar Association is hosting a Zoom program titled “Mediating Online – Best Practices for Virtual Mediations” on Wednesday, September 2, from 12:30 to 1:30.  Magistrate Judge Bein and retired Superior Court Judge Hinkle (now with JAMS) are presenting,  Anyone interested in participating (I am so doing) can register at https://forms.mad.uscourts.gov/VirtualMediations.html

Bassett v. Jensen et al. (18-cv-10576).

Martha’s Vineyard homeowner and artist Leah Bassett sued a number of individuals and businesses in connection with an individual who was employed with one of the businesses filming pornographic videos at Bassett’s home, which he had leased for a multi-month period of time.  As part of her claim, Bassett asserted copyright infringement based on a variety of her arts and crafts that had been used to decorate the home appearing in numerous videos and promotional still shots.  Earlier this summer, Judge Saris dealt with the bulk of the parties’ respective summary judgment motions, dismissing some of the state law claims as lacking factual or legal basis and others on statute of limitations grounds.  On the copyright claim, Judge Saris determined that the collections that Bassett registered met the low bar of originality for works titled as drawings, paintings, photographs, wall hangings, collages and pottery.  She determined that stencils on tabletops qualified for copyright protection so long as they were designed by Bassett, but that slipcovers and pillows do not qualify, because the fabric were not designed by Bassett and the shapes were selected for their functional purposes, not aesthetic.  Judge Saris decided that Defendants’ fair use defense does not apply.  She rejected the argument that the use was “incidental,” noting that this exception would swallow copyright law, at least with regard to set decorations, and allow for wholesale appropriation for movies and television.  She instead characterized the nature of the use as commercial, which weighs against fair use.  She further found that at least some of the copyrighted works appeared in full in the films, weighing against fair use.  While acknowledging that the effect on the potential market weighs in favor of fair use, in that Bassett had never intended to sell the works, Judge Saris determined that, balancing these factors, Defendants were not entitled to summary judgment of fair use. 

Judge Saris held off on ruling on the dueling motions regarding infringement.  Defendants argued that the use of the works in the films was de minimis.  Judge Saris adopted the framework set forth in Ringgold v. Black Entm’t Television, Inc., a Second Circuit case that dealt with visual works appearing in films, which identified the “observability of the copied work – the length of time the copied work is observable in the film and factors such as lighting, focus, camera angles, and prominence, in determining whether the use was de minimis and thus non-infringing.  Judge Saris determined that the evidence presented by both sides lacked sufficient information to analyze the issue under the Ringgold analysis, and deferred a final determination on copyright infringement.  She ordered Bassett to provide an analysis describing which works appear in which films, how long the works appear, and the level of detail that the works appear, along with representative screenshots.

Bassett made the required filing, and Judge Saris has now granted summary judgment of infringement to Bassett.  The supplementary filing showed that at least one work was clearly visible for at least 30 seconds (either continuously or in aggregate), and often for several full minutes, in each of the ten accused films.  

A jury trial on copyright damages and on the remaining state law claims is scheduled for February 2021.  With luck, the Covid crisis will have subsided and this schedule will be met.  

CardioNet, LLC et al. v. InfoBionic, Inc. (D. Mass. 15-cv-11803).

Judge Talwani denied without prejudice InfoBionic’s motion for leave to file its motion for attorney’s fees and accompanying exhibits under seal.  The motion asserted that the attorney’s fees documents included both parties’ confidential information and noted that CardioNet was not opposing the motion.  Judge Talwani noted that there is a presumptive right of public access to judicial documents, and that only the most compelling reasons can justify denying this access.  Accordingly, and on a document-by-document basis, a party seeking impoundment must make a particular factual demonstration of potential harm that would result through disclosure.  Judge Talwani found InfoBionic’s statements too conclusory to provide the factual backing needed to justify impoundment.  She required InfoBionic to refile with factual information on its confidential information and to flag CardioNet’s confidential information, with CardioNet to file a response providing a factual basis for sealing its confidential information, should the parties wish to refile.  She further noted that she did not envision agreeing to impound entire documents, and suggested the parties propose redactions instead.  Finally, she noted that attorney billing records are commonly filed on open court dockets, suggesting that she would not agree to impound the records.

Palomar Technologies, Inc. v. MRSI Systems, LLC (18-cv-10236).

Palomar had asserted that MRSI infringed its 6,776,327 patent, which was directed to high-accuracy automated placement methods in which a workpiece is moved from a first position to an intermediate position, where the pathway to attach the first workpiece to a second workpiece is recalculated, improving the accuracy of the placement.  In May, MRSI was granted summary judgment that the patent claimed unpatentable abstract ideas, and entered judgment for MRSI.  Judge Saylor noted that, while the patent itself provides a description of systems and procedures to carry out the invention, the claims do not mention (and therefore do not cover) the robotics, computers or software that actually moves the component workpieces from one location to another.  He characterized the claims, boiled down, as claiming generally the notion that moving a part closer to a second part before installation makes it easier to obtain accuracy in the final placement of the part.  He analogized this to golf – it is very difficult to accurately put a small ball in a distant small hole, but by taking shots (drive, chip, etc.) that move the ball closer to the hole, the degree of difficulty is substantially reduced.  He further determined that the claims did not contain the necessary sufficiently inventive concept to save their eligibility under Alice.  He noted that the actual physical components used to carry out the method were described int eh specification as known and conventional.

Judge Saylor has now granted in part MRSI’s motion for costs and denied its motion for attorney’s fees.  He noted that, while there is a presumption favoring cost recovery for prevailing parties, an award of costs is at the discretion of the district court.  The types of costs that may be awarded are limited by 28 U.S.C. §1920 to fees of the clerk and marshall, fees for printed or electronically recorded transcripts necessarily obtained for use in the case; fees for printing and witnesses, and fees for exemplification and costs of making copies of materials where the copies were necessarily obtained for use in the case.  Judge Saylor awarded MRSI $29,120.97 of the $119,670.05 MRSI had sought.  He disallowed pro hac vice costs for seven attorneys, determining that Palomar should not be charged with MRSI’s decision to use out-of-state counsel.  He limited costs for private process servers to the fee that a marshall would have charged.  He disallowed additional costs for the expedition of hearing transcripts where no special circumstances were identified justifying such an award.  Costs related to videotaping of depositions were disallowed, as were all costs relating to depositions of MRSI’s own employees and expert witnesses.  While deposition transcript costs where the transcripts were neither entered into evidence nor relied upon in dispositive motion are generally not allowed, he did grant costs on the remaining transcripts, noting that these would almost certainly have been entered into evidence had the case gone to trial, and MRSI should not be punished for having prevailed on Alice grounds at summary judgment.  Finally, he disallowed considerable printing costs as not sufficiently justified in the motion for costs.

With respect to attorney’s fees, Judge Saylor determined that the case was not exceptional within the meaning of 35 U.S.C. § 285.  MRSI asserted that Palomar should have known that the patent was invalid pursuant to Alice, which had been decided at the time the complaint was filed.  Judge Saylor noted that MRSI’s early motion to dismiss on the same grounds had been denied (without prejudice), with the Court noting that the motion could not be decided without first undergoing claim construction, meaning that Palomar’s litigation position was not objectively unreasonable at the outset of the suit.  Judge Saylor further noted that even post-Markman, the patent was presumed to be valid and that the Alice framework is not so developed to render the outcome obvious.  Judge Saylor also declined to find Palomar’s litigation conduct unreasonable or exceptional.  While agreeing that Palomar’s manner of litigation – withholding of relevant discovery, gamesmanship in preparing witnesses for deposition, and abusive motion practice – he determined that, considering the totality of circumstances, the case was not exceptional.  He noted that MRSI itself contributed to the time and cost of the litigation through its handling of the case, including filing a largely fruitless IPR and forcing a three-day bench trial over staying the case for the IPR, and filing summary judgment motions on many other issues that ultimately did not impact the outcome of the case.

JUUL Labs, Inc. v. Murshed (D. N.H. 20-cv-00868).

Vape maker JUUL sued Salam Murshed, accusing him of infringing the JUUL® trademark, counterfeiting, and unfair competition under the Lanham Act and under New Hampshire state law.  Murshed is said to own and operate the Salem Vape & Smoke Shop and the Smokers Choice II shop in Concord; each of these businesses are owned by corporations that Murshed owns and that are not in good standing with the State of New Hampshire.  JUUL holds federal registrations on a basic word mark and a styled mark for “JUUL” as well as a word mark for “JUULpods.”  JUUL asserts that Murshed sells counterfeit goods made outside of JUUL’s control and using unknown substances, and that Murshed also imports for sale in the United States products that are expressly identified on the packaging as authorized for sale only outside of the United States, with labeling that is not compliant with U.S. law.  Both businesses ignored cease and desist letters and continued to sell the accused goods.  Among other things, JUUL seeks an award of up to $2 million per mark for willful counterfeiting under 15 U.S.C. 1117(c).

Lickerish, Ltd. V. Uncoached Corp. (D. Mass. 20-cv-11505).

Lickerish is a London-based photo syndication company, and is the exclusive licensee of photographer Dimitry Loiseau.  Lickerish says that Uncoached, which does business as “TVOvermind.com,” has displayed one of Loiseau’s photographs without license.  TVOvermind is a pop culture site that publishes articles on television shows, movies, comics and the like, and features articles like “10 Things You Didn’t Know About [insert celebrity name here].”  A portion of the photograph alleged to have been wrongfully used, a fashion photo of actress Emmanuelle Vaugier, appears at the top of an article entitled “Whatever Happened to Emmanuelle Vaugier?” that was published in July 2018.  I note that the article can still be accessed, but a different photograph of Vaugier now appears at the top.  Lickerish asserts that TVOvermind’s infringement was willful because TVOvermind is a “serial infringer responsible for infringement on a massive scale.”  The complaint does not make any factual allegations regarding the actual asserted photograph, however, in making the willfulness claim.  Judge Stearns has the case.

Prime Hookah, Inc. v. MK Distributors Inc. et al. (D. Mass. 20-cv-10231).

Prime Hookah sued several distributors of hookah-related products, accusing them of importing and selling products bearing Prime Hookah’s DUD trademark.  The case was originally filed in New Jersey, and included trademark infringement and dilution claims as well as unfair competition claims under state and federal law.  The case was transferred to Massachusetts in early 2020, at which point the Defendants moved to dismiss for failure to state a claim.  Judge Saylor granted in part and denied in part that motion.  He noted that the complaint was poorly drafted with primarily conclusory allegations, and while it asserted that the Defendants sold DUD-labelled products, it did not allege that these products were not genuine DUD (i.e., Prime Hookah-produced) products.  The reference to the websites of the Defendants provided no further information, as one was disabled and a second did not display products, and no screenshots of the sites were attached to the complaint.  He reluctantly, and “with considerable misgivings,” however, determined that the infringement claims managed to “scrape over the low bar necessary to survive a motion to dismiss.”  He dismissed the dilution count, as the complaint did not sufficiently allege facts that would support the DUD mark being famous.  He also dismissed the count for importation of goods bearing infringing names or marks as inadequately pled, again pointing to the lack of specific, non-conclusory factual allegations.  Finally, the counts against specific individuals were dismissed for failing to allege that they personally took steps in the alleged infringements.

Judge Saylor has now denied Prime Hookah’s motion for a preliminary injunction.  He indicates his belief that Prime could have marshalled sufficient evidence to demonstrate a likelihood of success on the merits, but for whatever reason failed to do so.  He noted that the Defendants’ suggestion that the registration is invalid for fraud on the PTO was not implausible, even if at present they had not proven that Prime knew about a prior registration for the same mark by another company in the Netherlands.  He found that likelihood of confusion had not been demonstrated because Prime had introduced little evidence of what the allegedly infringing marks look like.  Prime’s registration is to a stylized version with the mark “DUD” in fanciful font, surrounded by a circle and with a flame arising from the “U” in DUD.  Yet Prime gave no description of what the marks on the accused products look like, and provided photos of unrelated products or unauthenticated photographs.  The sole exception is the testimony on a single individual that one of the defendants sold a single product at a trade show that bore a similar mark.  Further, Judge Saylor determined that the DUD mark is not particularly strong, having been registered only in January 2018 and having had no evidence of Prime’s renown in the industry or efforts made to promote and protect the mark.  Judge Saylor determined that, while there is certainly a chance that Prime will prevail, at this stage it has failed to demonstrate a substantial likelihood of success on the merits.  Accordingly, the motion for a permanent injunction was denied.