Last week, the Federal Circuit affirmed imposition of an exclusion order under 19 U.S.C. § 1337 (Section 337 of the Tariff Act of 1930) by the Federal Trade Commission against 10X Genomyx (an intervenor in this appeal) over importation of patented microfluidic chips, in Bio-Rad Laboratories, Inc. v. International Trade Commission.  (10X Genomyx obtained a similar exclusion order against Bio-Rad in a case appealed last month; see "Bio-Rad Laboratories, Inc. v. Int'l. Trade Comm".)

In this action, Bio-Rad filed a complaint against 10X Genomyx alleging that importation of certain microfluidics chips infringed claims of U.S. Patent Nos. 9,500,664, 9,636,682, and 9,649,635.  Representative claims set forth in the opinion are these:

The '664 patent:

1.  A system for forming a plurality of sample-containing droplets suspended in a back- ground fluid, comprising:
    a substrate having a bottom surface and a top surface;
    a sample well, a background fluid well, and a droplet well each having an upper region protruding from the top surface of the substrate;
    a network of channels formed in the bottom sur- face of the substrate and fluidically interconnecting the sample well, the background fluid well, and the droplet well; and
    a droplet generation region defined by the network of channels and configured to generate sample-containing droplets suspended in the background fluid;
    wherein the droplet generation region is de- fined by the intersection of a first channel, a second channel, and a third channel;
    wherein the first channel is configured to transport sample-containing fluid from the sample well to the droplet generation region, the second channel is configured to transport background fluid from the background fluid well to the droplet generation region, and the third channel is configured to transport sample-containing droplets from the droplet generation region to the droplet well; and
    wherein the substrate and the upper region of each well are injection molded as a single piece.

The '682 patent:

14.  A system for generating droplets, comprising:
    a device including a row of sample wells each configured to receive sample-containing fluid, a row of continuous-phase wells each configured to receive continuous-phase fluid, and a row of droplet wells, the device also including a corresponding channel network for each sample well, the channel network including a droplet-generation region and fluidically connecting the sample well to one of the continuous-phase wells and one of the droplet wells;
    a holder for the device;
    a gasket configured to be attached directly to the holder, such that the gasket extends over each sample well, each continuous-phase well, and each droplet well; and
    an instrument configured to
        (a) receive an assembly including the device, the holder, and the gasket,
        (b) engage the gasket with a manifold, and
        (c) apply positive pressure and/or negative pressure to the device via the manifold, such that sample-containing fluid flows from each sample well to the corresponding droplet-generation region, continuous-phase fluid flows from each continuous-phase well to the corresponding droplet-generation region, and sample-containing droplets flow from each droplet-generation region to the corresponding droplet well.

The '635 patent:

1.  A system to form and concentrate an emulsion, comprising:
    a device including a sample well configured to receive sample-containing fluid, a continuous-phase well configured to receive continuous-phase fluid, and a droplet well, the device also including a channel network having a first channel, a second channel, and third channel that meet one another in a droplet-generation region; and
    an instrument configured to operatively receive the device and to create
        (a)    a first pressure differential to drive sample- containing fluid from the sample well to the droplet-generation region via the first channel, continuous-phase fluid from the continuous-phase well to the droplet-generation region via the second channel, and sample-containing droplets from the droplet-generation region to the droplet well via the third channel, such that the droplet well collects an emulsion including sample- containing droplets disposed in continuous-phase fluid, and
        (b)    a second pressure differential to decrease a volume fraction of continuous-phase fluid in the emulsion, after the emulsion has been collected in the droplet well, by selectively driving continuous-phase fluid, relative to sample-containing droplets, from the droplet, from the droplet well via the third.

(wherein the text in italics and boldface is the claim term at issue).

The technology at issue was related to microfluidics chips for performing bioanalytic assays using small amounts of sample contained in microdroplets, defined in the opinion as "a contiguous amount of one type of fluid that is encapsulated within a different fluid," wherein "the inner fluid is aqueous or water-based, while the outer fluid is oil" in typical embodiments.  Generally, the sample is contained in the aqueous inner fluid.  An advantage of this arrangement was that each sample could be subject to chemical reactions in its own droplet (a "mini-test tube" according to the '664 patent) and that a larger number of chemical reactions can be performed in parallel.  Such reactions are performed on microchips as claimed in the patents-at-issue (the opinion noting that such microchips were known in the art at the priority dates of these patents).

As set forth in the opinion, the named inventors of the asserted patents previously worked for a company (QuantaLife, Inc.) that was thereafter acquired by Bio-Rad.  These inventors had agreed in their employment contracts with QuantaLife to promptly assign to the company their rights to the provisional applications that matured into the three patents-in-suit, which they assigned to Bio-Rad after the acquisition.  These inventors later left Bio-Rad and formed 10X Genomics, where they developed the technology asserted by Bio-Rad to infringe the patents-in-suit.  Two embodiments of these chips were at issue in this case:

• GEM Chips, having "input wells for three different materials—gel beads, sample, and oil—and one output well to collect droplets.  The microfluidic channels on the GEM Chips intersect each other such that the gel bead and sample fluid are mixed at a first intersection, the resulting mixture enters into a microfluidic channel referred to as a 'singulation channel,' and the mixture then mixes with the oil at a second intersection."

• Chip GB, which 10X Genomyx utilizes "to generate droplets that are used to make the gel beads that are packaged with the GEM Chips and sold to customers.  The Chip GB contains one input well that holds an aqueous monomer solution, a second input well that holds oil, and channels from each of the wells that intersect each other to allow for the formation of droplets that are collected in a droplet well.  Over time, the monomers within each droplet polymerize, and the droplet becomes a gel bead."

Responsive to Bio-Rad's complaint, an Administrative Law Judge (ALJ) granted summary determination that the doctrine of assignor estoppel precluded 10X Genomyx from challenging the validity of the asserted patents.  The ALJ then construed the claims with regard to the term "droplet-generation region" to mean "the intersection of (1) a sample-containing dispersed phase fluid inlet channel, (2) a continuous phase fluid inlet channel, and (3) a droplet outlet channel."  The parties agreed that the term "sample" meant "a compound, composition, and/or mixture of interest, from any suitable source(s)."

Under this construction, the ALJ determined that 10X Genomyx's GEM Chips infringed the three patents, but that while the GB Chips infringed the claims of the '682 and '635 patents they did not infringe asserted claims 1 and 14 of the '664 patent because the monomer solution used with those chips was not a "sample" under the agreed-upon construction.  The Commission reviewed the ALJ's findings and adopted them, that the GEM chips infringed the three asserted patents (either literal, induced, or contributory infringement) but that the GB chips did not literally infringe the '644 patent.  The parties appealed each of the adverse determinations against them.

The Federal Circuit affirmed, in an opinion by Judge Lourie, joined by Judges Newman and Dyk.  With regard to Bio-Rad's appeal, the panel addressed two assertions that the ALJ erred.  The first was that because the GB chips did not involve a sample they did not have structures corresponding to "a 'sample well,' a sample channel, sample-containing droplets, or the claimed 'droplet generation region.'"  Second, Bio-Rad argued that due to the structural nature of the elements of the claims (wells and channels), infringement could not depend on what was in those wells and channels.  The "sample" limitation was assessed based on the parties' agreed-upon definition (which was taken from the '664 specification), and the Federal Circuit found no error in the ALJ relying on witness testimony that what was encapsulated in 10X Genomyx's GB Chip was not a sample under the agreed-upon definition but rather was "an input for a reagent production process" (emphasis in opinion).  This determination was also consistent with distinctions made in the '664 specification regarding the differences between a sample ("something that the customer cares about and wants to analyze") and a reagent ("which 'are of no interest'").  And this interpretation was also consistent with exemplified samples ("blood and plasma, and research samples such as culturued [sic] cells or bacteria") and reagents, defined as ""a compount [sic], set of compounds, and/or composition that is combined with a sample in order to perform a particular test(s) on the sample")(emphasis in opinion).  Bio-Rad's challenge was on these definitions, which they argued imported unsupported additional limitations into the claim term and were based on faulty conclusions (such as the monomer being "of no interest" under circumstances where "10X care-fully designed the monomer solution with particular concentrations of ingredients to serve as a gel bead precursor solution").  The Court agreed with the Commission and 10X Genomyx that Bio-Rad's arguments in this regard were directed to the Commission's factual determinations, and that under the Administrative Procedures Act the Commission's factual determinations were entitled to deference and "substantial evidence" review (which Bio-Rad did not satisfactorily challenge).  In this regard, the opinion states that "[t]he compelling factor here is the distinction between 'samples' and 'reagents'" as set forth (and relied upon by the Commission) in the '644 patent specification.  And, in particular, the panel did not find that consideration of the term "of interest" in construing the meaning of the claims and applying that construction to 10X Genomyx's GB chips imported any untoward subjectivity to the analysis.

Turning to Bio-Rad's second argument, the Federal Circuit considered this argument to "fail[]" for several substantive and procedural reasons.  The opinion states that it is "not clear" that Bio-Rad made this argument before the Commission, and accordingly should be precluded from presenting it on appeal in the first instance, citing Interactive Gift Express, Inc. v. CompuServe Inc., 256 F.3d 1323, 1346 (Fed. Cir. 2001).  Even if this procedural hurdle had been overcome, the panel asserted Bio-Rad would not prevail because its argument rested on "rewriting the claims in an oversimplified form and removing all limitations that differentiate the recited structures from each other."  The opinion illustrates this defect in Bio-Rad's argument by comparing the description of what is claimed in their brief with the actual claims, saying that the former "is not remotely close to what the claim says" it is.  "Inventors are masters of their claims, and the words they use to describe and claim their invention are decisive and binding," said the Court, and in the panel's view the '664 inventors did not claim their invention as broadly as it would need to have been claimed for Bio-Rad to prevail in its infringement argument here.  It was the inventors' decision "to characterize the wells and channels based on the material contained within them," according to the Court, and this choice cannot be "escaped" by recourse to the principle that "apparatus claims cover what a device is, not what a device does."  See Hewlett-Packard Co. v. Bausch & Lomb, Inc., 909 F.2d 1464, 1468 (Fed. Cir. 1990) (emphasis in original opinion).

10X Genomyx's appeal challenged the Commission's determination that its GEM chips infringed the asserted claims of the three patents-in-suit.  The first of two challenges by 10X Genomyx was based on whether their GEM chips contained the "droplet-generating region" required by the claims.  10X Genomyx's other challenge was directed to whether the evidence supported the Commission's determination regarding indirect infringement.  The challenge regarding whether GEM chips comprised the "droplet-generating region" was on claim construction, where 10X Genomyx asserted this alternative construction of the term:

[T]he intersection of the sample input channel that receives the dispersed phase fluid from the sample well, the oil input channel that receives the continuous-phase or background fluid from the oil well, and the droplet outlet channel that outputs to the droplet well, at which droplets are generated.

Bio-Rad (and the Commission) countered that 10X Genomyx had waived this argument three times:  "first, by failing to propose it in the parties' Joint Claim Construction Chart; second, by failing to seek review by the Commission of the ALJ's waiver finding; and third, by failing in its principal brief to ask this court to overturn the ALJ's waiver finding."  The Court was not convinced, citing instances in the record (including that the construction proposed here was identical to 10X Genomyx's initial construction asserted before the ALJ and maintained before the Commission), and that this consistent assertion of its construction did not constitute waiver that would preclude 10X Genomyx from making its alternative claim construction argument on appeal.

Nevertheless, on the merits, the panel found that the ALJ had correctly construed the term, based on the plain meaning of the claims and the specifications of the patents-in-suit.  The Court held that 10X Genomyx's proposed alternative construction would impermissibly impose requirements on the claimed invention not supported by the intrinsic evidence.  The Court also rejected 10X Genomyx's argument that the ALJ erred by applying the doctrine of assignor estoppel to preclude it from challenging construction based on the prior art, for the simple reason that the Court found evidence in the record that the ALJ had permitted these art-based challenges and that they had failed (which is not the same thing).  The opinion states that the ALJ had properly construed the claims using the intrinsic evidence under Phillips v. AWH Corp., 415 F.3d 1303, 1312–15 (Fed. Cir. 2005) (en banc), and the fact that prior art considerations did not make their way into the Commission's opinion (which the Court termed "less relevant arguments") did not indicate error.

With regard to the Commission's finding of indirect infringement, the Federal Circuit recognized 10X Genomyx's argument to be a factual one (was there enough evidence presented to support the determination?) that is entitled to the substantial evidence standard of review.  The facts at issue revolved around whether 10X Genomyx had knowledge of the patents (on contrast with the priority applications, where such knowledge was not in doubt).  In finding that the Commission's determination was supported by substantial evidence, the opinion states that "10X's various arguments attempt to distract from the reality of this case: named inventors of the asserted patents sold their company and patent rights to Bio-Rad, worked for Bio-Rad for a short time, left Bio-Rad to start a new company, and launched new products that have been determined to infringe the patents they assigned to Bio-Rad."  In addition, the opinion states that 10X Genomyx's arguments "largely attack the ALJ's credibility determinations and weighing of the evidence" (which fails the substantial evidence challenge), particularly with regard to the ALJ's credibility determinations of the witnesses (including the named inventors).  And regarding the existence of non-infringing uses relevant to the Commission's contributory infringement determination, the Court rejected 10X Genomyx's assertion of "hypothetical" systems (which 10X Genomyx asserted were relevant due to the statutory language that an accused product be "suitable" for non-infringing use) as being contrary to precedent (for which the panel sets forth examples including Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1330–31 (Fed. Cir. 2010), and Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1363 (Fed. Cir. 2006).  In sum, because "[i]t is not within [the Court's] purview to reweigh the evidence or to question the ALJ's credibility determinations" the Court affirmed the Commission's infringement determinations against 10X Genomyx.

Over the past six weeks, 10X Genomyx has obtained an exclusion order against Bio-Rad's importation of certain of their microfluidic chips over 10X Genomyx's patents and Bio-Rad in this case has obtained an exclusion order against 10X Genomyx's importation of certain of their microfluidic chips over Bio-Rad's patents.  The relationship and history between the companies argues against settlement, but under these circumstances settlement seems a sensible solution for both parties (depending of course on the relative market share and competitive positions of the parties excluded goods).

Bio-Rad Laboratories, Inc. v. International Trade Comm. (Fed. Cir. 2021)
Panel: Circuit Judges Newman, Lourie, and Dyk
Opinion by Circuit Judge Lourie