Verinata Health, Inc. v. Ariosa Diagnostics, Inc.

Illumina’s 794 patent, covering DNA assay optimization techniques, issued in 2011. In 2010-2011, Ariosa provided Illumina, as a prospective investor, with information on its efforts to develop a noninvasive prenatal diagnostic test. Seven months after the 794 patent issued, Illumina agreed to supply consumables, hardware, and software to Ariosa for three years, providing Ariosa with a non-exclusive license to Illumina’s “Core IP Rights in Goods,” specifically excluding “Secondary IP Rights … that pertain to the Goods (and use thereof) only with regard to particular field(s) or application(s), and are not common to the Goods in all applications and fields.” The agreement’s arbitration clause excluded “disputes relating to issues of scope, infringement, validity and/or enforceability of any Intellectual Property Rights.” Illumina never indicated that Ariosa needed to license the 794 patent . Ariosa launched the Harmony Prenatal Test, using materials supplied by Illumina. Verinata and Stanford sued, alleging that the Test infringed other patents. Illumina later acquired Verinata and accused Ariosa of breaching the supply agreement by failing to license Secondary Rights. Ariosa filed counterclaims, asserting invalidity and non-infringement; breach of contract; and breach of the covenant of good faith and fair dealing. The district court concluded that the counterclaims were not subject to compulsory arbitration. The Federal Circuit affirmed. The counterclaims depend on the scope determination of licensed intellectual property rights, which is expressly exempt from arbitration. View "Verinata Health, Inc. v. Ariosa Diagnostics, Inc." on Justia Law