Federal Circuit denies arbitration in Illumina v Ariosa patent case

The US Court of Appeals for the Federal Circuit yesterday affirmed a district court’s order to deny arbitration in a patent infringement case between Illumina and Ariosa Diagnostics.

Medical devices company Illumina had appealed against the court order denying Illumina’s motion to compel arbitration, after both parties had entered into a supply agreement in which they had agreed that certain disputes would be subject to compulsory arbitration.

In 2014, Illumina sued Ariosa for patent infringement at the US District Court for the Northern District of California, after which Ariosa counterclaimed for breach of contract. Ariosa argued that under the terms of the supply agreement, it had a licence to the patent.

Verinata Health, which was bought by Illumina in 2013, had also sued Ariosa for patent infringement in 2012, but those claims did not form part of this appeal.

Illumina’s attempt to compel arbitration failed as the district court, followed by the Federal Circuit, concluded that Ariosa’s counterclaims were not subject to arbitration.

The Federal Circuit said: “The nucleus of Ariosa’s counterclaims is the patent infringement lawsuit filed by Illumina. Illumina cannot hijack the counterclaims and make them its own for purposes of compelling arbitration.”

The case centres on US patent number 7,995,794, belonging to Illumina, which covers DNA assay optimisation techniques.

The patent was filed back in 2002 and issued in 2011. In late 2009, Ariosa planned to develop a non-invasive prenatal diagnostic test for the detection of fetal aneuploidies. The tool, called the Harmony Prenatal Test, was launched in 2012.

In January 2012, the companies entered into a three-year supply agreement, under which Illumina had agreed to exclusively supply specific tools to Ariosa.

The Federal circuit said in the ruling: “The district court was correct not to sever the contract counterclaims. We do not reach the issue of whether Illumina waives its argument that Ariosa’s licence defence is subject to the arbitration clause of the agreement.”

It added: “Even so, Illumina fails to articulate how to separate as discrete the patent infringement issues involved in the contract counterclaims.”