Bio-Rad Labs. v. 10X Genomics was decided on August 3, 2020, on appeal from the District of Delaware. The jury found that Plaintiff Bio-Rad’s three asserted patents were valid and willfully infringed, and “awarded damages in the amount of $23,930,716.” Post-trial, the district court denied Defendant 10X’s motion for JMOL, “rejecting 10X’s arguments that (1) the accused products do not infringe; (2) 10X’s infringement was not willful; (3) the asserted claims are invalid; and (4) Bio-Rad had failed to present a legally sufficient damages case.” The district court also granted Bio-Rad’s motion for a permanent injunction. 10X appealed.
The Federal Circuit affirmed infringement as to one patent, affirmed the entirety of the damages award, reversed the claim construction as to two of the patent, reversed infringement as to those two patents, and vacated the injunction, but only with respect to certain products.
Despite vacating the district court’s judgment of infringement of two of the patents-in-suit, the Federal Circuit proceeded to damages because it affirmed the judgment of infringement as to one patent”—which covers all six accused product lines.” The Federal Circuit affirmed the damages award.
“10X argues that the damages award should be vacated because Bio-Rad’s expert relied on licenses that were not comparable to the hypothetical negotiation.” The district court did not abuse its discretion in allowing the jury to consider testimony regarding the three licenses at issue. The district court found that Bio-Rad “failed to present sufficient evidence of the technological comparability of” one of the licenses. “But it nonetheless denied 10X’s motion for JMOL because the other two licenses provided sufficient support for [Bio-Rad’s expert’s] reasonable royalty opinions.” The Federal Circuit “has often excluded licenses that are technologically or economically non-comparable.” The Federal Circuit “has also held, however, that the issue of comparability is often one of sufficiency of the evidence, not admissibility.” Here, the district court concluded that Bio-Rad’s expert “had met a showing of baseline comparability and that the “degree of comparability is a factual issue best addressed through cross examination.”
10X is not entitled to a new trial despite that “the district court ultimately concluded that Bio-Rad had not presented sufficient evidence of comparability of” one of the licenses. 10X did “not challenge the jury instructions regarding the calculation of a reasonable royalty, which properly instructed the jury to account for any differences between the licenses.” Moreover, the record “shows that 10X’s Daubert motion regarding [Bio-Rad’s expert’s] opinions was directed to his overall testimony, not to the exclusion of any one agreement.” “10X also did not move the court during trial to exclude the specific agreement.” 10X’s arguments “conflate the question of admissibility with the question of degree of comparability of the licenses.” The district court did not abuse its discretion in admitting the expert’s testimony, “even if the district court ultimately determined that Bio-Rad did not provide substantial evidence of technological comparability of one of the three licenses.”
The jury’s damages award is supported by substantial evidence. 10X also argued that no reasonable juror could find the three licenses comparable to the claimed invention. Instead, 10X contends that another license, “the University of Chicago License,” is the most comparable license because it concerns the patents-in-suit. Bio-Rad’s expert “opined that this license, from a university to a licensor in the nascent period of the [relevant] technology, is not comparable to the hypothetical negotiation between two competitors in the context of a more developed field.” “He also explained that it was a non-competitive and exclusive license, further distinguishing it from the hypothetical negotiation.” The jury was free to accept this testimony. Regarding two of the three agreements relied on by Bio-Rad, Bio-Rad’s technical expert and corporate witness testified that the patents in those agreement covered the same subject matter as the asserted patents. Here, Bio-Rad’s damages expert “evaluated the various licenses at issue and applied the Georgia-Pacific factors.” “He testified that it made sense to adopt a 15% reasonable royalty rate where the parties to the hypothetical negotiation are direct competitors.” “He also provided specific reasons why the University of Chicago license [and its 1-3% royalty rate]… was not comparable.”
10X challenged Bio-Rad’s expert testimony “because of his alleged failure to apportion damages between the patented and unpatented features of the accused products.” “When the accused technology does not make up the whole of the accused product, apportionment is required.” “The ultimate combination of royalty base and royalty rate must reflect the value attributable to the infringing features of the product, and no more.” However, “there is no blanket rule of quantitative apportionment in every comparable license case.”
Here, Bio-Rad’s damages expert “concluded that no quantitative adjustment of the royalty rate in the three agreements was required.” “He explained that his methodology involved looking at comparable license agreements between competitors for similar technologies and assessing whether the importance of that technology to the particular license was similar to the hypothetical negotiation.” “He also acknowledged that he relied on the reports, testimony, and conclusions of other witnesses to understand that the licenses were technologically comparable, and that the proportion of licensed/unlicensed features was comparable to the present case.” Thus, under the Bio-Rad’s expert’s reasoning reasoning, “no adjustment of the 15% royalty rate in the comparable licenses was required.” This “analysis could reasonably be found to incorporate the required apportionment.” The Federal Circuit thus affirmed the royalty award.
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A plaintiff seeking a permanent injunction must show “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”
The district court found that Bio-Rad satisfied all four factors. “On appeal, 10X argues that Bio-Rad failed to justify its request for a permanent injunction because it did not show irreparable harm, and because neither the balance of hardships nor the public interest support an injunction.”
“The district court found that 10X and Bio-Rad are direct competitors, and Bio-Rad would suffer irreparable competitive harm absent an injunction.” “It is undeniable that Bio-Rad has suffered harm from 10X’s first mover advantage and sticky customer relationships.” “The district court found that Bio-Rad is being forced to compete with 10X’s products that incorporate the infringing technology.” “Based on its willful infringement—a finding 10X does not challenge on appeal—10X has established a strong market lead over Bio-Rad.” “The court also found that, based on 10X’s first mover advantage, Bio-Rad had to increase its marketing costs.”
The district court erred in balancing the hardships. “The district court found that the balance of hardships weighed in favor of injunctive relief or, at minimum, was neutral.” The Federal Circuit “acknowledge[d] that Bio-Rad, although a much larger company, will suffer considerable hardship absent an injunction because it has invested almost half a billion dollars to develop its products, including acquisitions and tens of millions of dollars a year on research and development.” “But at the same time, 10X, a much smaller company, depends entirely on the sales of the enjoined products for its revenue.” “Although the district court concluded that the hardship to 10X is mitigated because it can sell its non-infringing alternatives, the district court failed to consider the lack of non-infringing products for two out of the five product lines.” In the absence of non-infringing alternatives for two product lines, the Federal Circuit “conclude[d] it was an abuse of discretion for the district court to enjoin sales of these two product lines.”
In furtherance of the public interest, the district court “carved out an exception for infringing products that were sold or in use before the effective date of the injunction.” “For these products, 10X can also continue to supply consumables, and support, service, repair, and replace them under warranty.” “This exception is conditional on 10X paying a 15% royalty on the net revenue 10X receives… until the expiration of the patents-in-suit.” “The touchstone of the public interest factor is whether an injunction, both in scope and effect, strikes a workable balance between protecting the patentee’s rights and protecting the public from the injunction’s adverse effects.” The district court did not abuse its discretion.
The Federal Circuit thus “conclude[d] that the district court did not abuse its discretion in granting Bio-Rad an injunction, except as to the” two product lines for which 10X had not designed non-infringing alternatives. Accordingly, the Federal Circuit “vacate[d] the injunction as to those two product lines only, but conclude[d] that the injunction should remain in place as to the other enjoined product lines.”