Order Granting and Denying In Part Plaintiffs' Motion To Strike, Verinata Health, Inc. v. Sequenom, Inc., (Case No. c 12-00865-SI) (Judge Susan Illston)

The adage "Rules are meant to be broken..." is a risky one to test in court, particularly when it comes to the Northern District's Patent Local Rule disclosures. Courts may exclude infringement and invalidity theories the parties fail to adequately disclose under these rules.

Take, for example, Judge Illston's recent decision in Verinata Health, Inc. v. Sequenom, Inc., (Case No. c 12-00865-SI).  On August 20, 2014, Judge Illston granted and denied in part plaintiffs Verinata Health, Inc.'s and Board of Trustees of the Leland Stanford Junior University's (together "Verinata") motion to strike portions of defendants Sequenom Inc. and Sequenom Center for Molecular Medicine, LLC's (together "Sequenom") invalidity expert report.  At issue were several allegedly new invalidity theories Sequenom's expert (Dr. Metzker's) included in his report but Sequenom had not included in its invalidity contentions pursuant to Paten Local Rule 3.3.

Verinata sued Sequenom in 2012, alleging its "Harmony Prenatal Test" infringed claims of U.S. Patent No. 7,888,017; U.S. Patent No. 8,008,018; and U.S. Patent No. 8,195,415.  Sequenom's Harmony Prenatal Tests is a non-invasive DNA test used to detect the risk of certain chromosomal conditions, such as Down syndrome.  In September 2012, Sequence served Verinata with its invalidity contentions.  Sequenom moved to amend its invalidity contentions in February 2014.  Judge Illston, however, denied the motion because Sequenom failed to establish diligence in seeking the amendment.

In June 2014, nearly two years after serving its invalidity contentions and after the close of discovery, Sequenom served Dr. Metzker's invalidity expert report.   Sequenom's expert cited work by Dr. Yuan Gao in connection with work that Sequenom argued constituted 35 U.S.C. Section 102(g) (invention made by another) prior art.  However, though Sequenom had identified a Section 102(g) theory in its invalidity contentions, it failed to identify Dr. Gao in connection with that particular invalidity contention.  Dr. Metzker's report also included invalidity theories based on several alleged prior art references that Sequenom had identified in different contexts in its invalidity contentions.  Specifically, Sequenom's expert relied upon these references to allege new obviousness combinations not identified in its contentions.  Verinata filed a motion to strike alleging Dr. Metzker's report contained several new invalidity theories in violation of Patent Local Rule 3-3.

Judge Illston took exception to Dr. Metzker's reliance on Dr. Gao's activities in connection with Sequenom's Section 102(g) invalidity theory.  Reiterating the Patent Local Rules' goal of "full and timely discovery" to provide "all parties adequate notice and information with which to litigate their case," Judge Illston struck all references to Dr. Gao and his activities from Dr. Metzker's report.  Judge Illston held the fact that Sequenom never sought to amend its invalidity contentions to identify Dr. Gao and failed to identify Dr. Gao as a potential witness until eight days before the close of fact discovery against Sequenom.  Judge Illston found that Patent Local Rule 3-3(a)'s requirement of a disclosure of "the identities of the person(s) or entities involved in and the circumstances surrounding the making of the invention before the patent application" required full disclosure of all alleged Section 102(g) inventors.

Judge Illston also rejected Sequenom's argument that its invalidity contentions were sufficient because Sequenom given Verinata documents during discovery that identified Dr. Gao that Verinata could have used to obtain more details during discovery about Dr. Gao's activities:

Sequenom's argument seeks to render to Court's Patent Local Rules governing invalidity contentions a nullity.  If a party could avoid Patent Local Rule 3-3's disclosure requirements by simply pointing to documents that have been produced in discovery, then there would be no need for formal invalidity contentions ... By not identifying Dr. Gao in its invalidity contentions, Sequenom failed to provide adequate notice of its invalidity theory, regardless of what discovery Sequenom provided to Verinata.

Judge Illston relied on this reasoning to strike other references from Dr. Metzker's expert report that Sequenom failed to disclose in its invalidity contentions.

Judge Illston's decision was not a complete victory for Verinata.  Verinata, for example, had moved to strike from Dr. Metzker's report certain obviousness combinations based on a "Seo" reference.  According to Verinata, Sequenom had failed to properly list the Seo reference as part of its obviousness combinations in its invalidity contentions.  Judge Illston denied Verinata's motion to strike the Seo reference even though she acknowledged that Sequenom had improperly listed the Seo reference in its invalidity contentions:

The Court recognizes that Sequenom should have expressly stated in its contentions what obvious combinations it was asserting.  See Patent Local rule 3-3(c).  However, if the claim charts caused Verinata to suffer any confusion as to what particular obviousness combinations were being asserted, then the proper recourse would have been for Verinata to compel Sequenom to amend its invalidity contentions, not for Verinata to wait until expert discovery and then move to strike the expert report.

Judge Illston, moreover, declined to strike completely from Dr. Metzker's expert report references Sequenom had identified in its invalidity contentions for one purpose but Dr. Metzker used for a different purpose in his report.  Instead, she limited Dr. Metzker's use of such references as foundational and background material rather as substantive references to argue invalidity.

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