Case 1:20-cv-00125-GBW Document 634 Filed 06/26/23 Page 1 of 27 PageID #: 61269
`Case 1:20-cv-00125-GBW Document 634 Filed 06/26/23 Page 1 of 27 PagelD #: 61269
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`NATERA,INC.,
`
`Plaintiff,
`
`V.
`
`ARCHERDX, INC., ARCHERDX, LLC and
`INVITAE CORP.,
`
`Defendants.
`
`meeeeeeeeeeeeeLe
`
`C.A. No. 20-125 (GBW)
`(CONSOLIDATED)
`
`JURY TRIAL DEMANDED
`
`REDACTED - PUBLIC VERSION
`
`PLAINTIFF’S OPENING BRIEF IN SUPPORT OF
`
`MOTION FOR PERMANENT INJUNCTION
`
`McDERMOTT WILL & EMERY LLP
`
`Morris, NICHOLS, ARSHT & TUNNELL LLP
`
`Jack B. Blumenfeld (#1014)
`Derek J. Fahnestock (#4705)
`Anthony D. Raucci (#5948)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899-1347
`(302) 658-9200
`jblumenfeld@monrrisnichols.com
`dfahnestock@morrisnichols.com
`araucci@morrisnichols.com
`
`Attorneysfor Natera, Inc.
`
`Wiliam G. Gaede,IIT
`Jodi L. Benassi
`415 Mission Street, Suite 5600
`San Francisco, CA 94105
`(628) 218-3800
`
`Bhanu K. Sadasivan
`Cecilia Choy
`650 Live Oak Avenue,Suite 300
`Menlo Park, CA 94025-4885
`(650) 815-7400
`
`Sarah Chapin Columbia
`200 ClarendonStreet, Floor 58
`Boston, MA 02116-5021
`(617) 535-4000
`
`Mandy H. Kim
`18565 Jamboree Road, Suite 250
`Irvine, CA 92612
`(650) 815-7400
`
`Original filing date; June 15, 2023
`Redacted filing date: June 26, 2023
`
`

`

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`TABLE OF CONTENTS
`
`I.
`
`I.
`
`INTRODUCTION AND SUMMARYOF ARGUMENT 1... eceeseesecseeerresereerraerrnees -l-
`
`NATURE AND STAGE OF THE PROCEEDINGS ........ccecssseseerenseseenersesraeereneeseenaees -l-
`
`
`
`TH,=«—§-ARGUMENT 0.0... cceececseseerseceseersarrsneessesersressresceaerseceseersaressesesaseseresenesseaerassnsesesaresnes -2-
`
`A.
`
`AN INJUNCTION SHOULD ISSUE BECAUSE NATERA WILL
`CONTINUE TO SUFFER IRREPARABLE HARM IF
`DEFENDANTS’ INFRINGEMENT DOES NOTCEASE...eee eeeBt
`
`1,
`
`2.
`
`3.
`
`4,
`
`NATERA WILL CONTINUE TO BE IRREPARABLY
`HARMED FROM LOSINGITS FIRST-MOVER
`ADVANTAGES0... ceseseeseeeseseenseseceesressesneese ssa saecnssaesseesessasrenarsaenaees -3-
`
`PCM’S INFRINGEMENT WILL CONTINUE TO CAUSE
`LOST MARKET SHARE, LOST MARKET
`OPPORTUNITIES, PRICE EROSION AND HARM TO
`NATERA’S BUSINESS MODEL THATIS
`TRREPARABLE......cecceccseesersesneerrserrsesnscerseressnsssesensresnssrnsersssressenseesges -7-
`
`INFRINGEMENT BY PCM WILL CONTINUE TO
`HARM THE REPUTATION AND SUBSTANTIAL
`GOODWILL OF BOTH NATERA AND SIGNATERA |... cere -ll-
`
`CLEAR NEXUS EXISTS BETWEEN PCM’S
`INFRINGEMENT AND HARM TO NATERA ..... see eeeeeeeneeneereeeees -ll-
`
`MONETARY REMEDIES WILL NOT ADEQUATELY
`COMPENSATE NATERA....... cc eiceeseecneesecseeeeeeesecsecnessesneesesnavseenasseenaernesgesneey -13-
`
`THE BALANCE OF HARDSHIPS FAVORS NATERA.......ceseeerserrtererterereet LS =
`
`A PERMANENT INJUNCTION SERVES THE PUBLIC
`INTEREST |... ce ceeeessesserseceessecneesessavseeneesecneenassaesaernsssesseesssnaseenaeseenaerna gentry - 18 -
`
`B,
`
`C,
`
`D.
`
`TV.
`
`CONCLUSIONWe ceeeceeceeneesscnsereensecsersessecssvsessaeesnassaeaecnassesssvsessaeenenassaeesernasaes - 20 -
`
`

`

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`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`AmgenInc. v. F. Hoffman-La RocheLtd.,
`581 F. Supp. 2d 160 (D. Mass 2008)... cecsesscseecssesseeressesseesecsessrensvsecsaeerevaeseeeaecseverensesaseas 19
`
`AmgenIne. v. Sanofi,
`872 F.3d 1367 (Fed Cir, 2017)... ccceesesssseesecssssecsesecsseersssesseesecsessecssesessaeeessassaeeasssasereneesaseas 19
`
`Apple Inc. v. Samsung Elecs. Co.,
`695 F.3d 1370 (Fed. Cir, 2012)... cc ecsesscesscesscsserssecseverssrsssresaeesessneesaresasesesesecsaeceaeeneenesereneres 12
`
`Apple Inc. v. Samsung Elecs. Co., Ltd.,
`809 F.3d 633 (Fed. Cir. 2015)... ccceeessessesecrsssesseesssssvsessesssssesssssssssessssssseessesstseeseedy 12, 18
`
`ArcherDX, LLC vy. Qiagen Sciences, LLC,
`No. 18-LOLO-MIN....... ccc cecscccesesesssssceeceevevcessenscessvevereseesssesevevsevesesesenserecesesnesesensereseteenernsgnes 6, 13
`
`Bio-Rad Labs., Inc. v. 10X Genomics, Inc.,
`No, 15-152-RGA, 2019 WL 3322322 (D. Del. July 24, 2019) oe eeeseesseeneesseerenerseeeee 2,12
`
`Bio-Technology Gen. Corp. v. Genentech, Inc.,
`80 F.3d 1553 (Fed. Cir, 1996)... ecccceseescesecsseeecscesecsaveressesscesecsevsecssvsecsaeeesassaeesecaeserenevseeeas 10
`
`Broadcom Corp. v. Emulex Corp.,
`732 F.3d 1325 (Fed. Cir. 2013)... ccccccsessecscesessssecscseevssesscsesevseecscsesevsesesscssserseesssssseraees2,7
`
`Celsis In Vitro, Inc. vy. CellzDirect, Inc.,
`664 F.3d 922 (Fed. Cir. 2012)... ccccssecscesscesscesecssecssvenseeesssceserensessevsatesseesssessesaeeass 8, 11, 15, 19
`
`Douglas Dynamics, LLC vy. Buyers Prods. Co.,
`717 F.3d 1336 (Fed. Cir, 2013)... cc ccescessesseesecsesseessesecsseeesssesseesecsessessevsessaeereaseaeeaees3,11, 15
`
`E.I. DuPont de Nemours and Co. v. Unifrax I LLC,
`No. 14-1250-RGA, 2017 WL 4004419 (D. Del. Sept. 12, 2017)... ceseseessrrenerseeessrenerseeesees2
`
`eBay Inc. v. MercExchange, L.L.C.,
`547 U.S. 388 (2006)... csesccesecsecsseeeversssresecensesatesaresecsecssecsaeceevensseressrenaesnarsatesasesssesessaeregs 3, 16
`
`Edwards Lifesciences AG v. CoreValue, Inc.,
`699 F.3d 1305 (Fed. Cir. 2012)... ccc cceessessssersecssecssscesseessessssecseeesessersvcaecesssesaeesseessaeenseesenenes2
`
`Edwards Lifesciences AG v. CoreValve, Inc.,
`CV 08-91 (GMS), 2014 WL 1493187 (D. Del. Apr. 15, 2014)... eeeeneesseeseeeseeerseeaeees9
`
`

`

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`
`Evonik Degussa Gmbh vy. Materia, Inc.,
`No. 09-636-NLH/JS, 2017 WL 3434156 (D. Del. Aug. 10, 2017) occ csesseeseessersereneesereneees2
`
`Foods, LLC v Hamilton Beach Brands, Ine.,
`No. 16-41-CFC, 2020 WL 4015481 (D. Del. July 16, 2020) oe eeseeseesteesteeseseereeedy OD
`
`Howes v. Med. Components, Inc.,
`741 F. Supp. 528 (E.D. Pa. 1990) oo... ceccsessesssessecescescesecsaecaecrsvensseeesseenassssesseesssesssessseaseneeQO
`
`i4i Ltd. P’ship v. Microsoft, Corp.,
`598 F.3d 831 (Fed. Cir, 2010)... ceeessseressecssesseesresseesscssecsserssseressrssresssssessesersereeel oy 16
`
`Illumina, Ine. v. Qiagen, N.V.,
`207 F. Supp. 3d 1081 (N.D. Cal. 2016)... eceeeeeseesseesecsesecssesecsaecrssessseesersessesnevsessaeersnesaee 8
`
`Invista N.A. S.A.R.L. v. M & G USA Corp.,
`35 F, Supp. 3d 583 (D. Del. 2014)... ce eeecseeentesseesercnecsneesaresasesecesecaecsaecresnsseresseeneesneesareaees 3
`
`Liqwd, Inc. v. L’Oreal USA, Inc.,
`No. 17-14-JFB-SRF, D.I. 1073 (D. Del. Aug. 16, 2019)... ccc cceecceesseteceeteteceeteeeceeteeeeeees2
`
`Presidio Components, Inc. y. Am. Tech. Ceramics Corp.,
`702 F.3d 1351 (Fed. Cir, 2012)... ce escessecnsesscsseeressesseesecsevsressesessaeerssassaeesessesereneesaseas 2,7, 10
`
`Sanofi-Synthelabo vy. Apotex, Inc.,
`470 F.3d 1368 (Fed. Cir, 2006)........ccccecccececeeesecesecenecesseesseesseeesscessnecesecaaecenecesseesseeeseeennenenes 15
`
`Schneider (Europe) AG v. SciMedLife Sys., Inc.,
`852 F. Supp. 813 (D. Minn. 1994), aff'd, 60 F.3d 839 (Fed. Cir. 1995) wee eesesseeeeneeeeceee 19
`
`Vanda Pharms. Inc. v. Roxane Labs., Inc.,
`203 F. Supp. 3d 412 (D. Del. 2016)... sseseserssveeerscvsessersersevsrsssvsessaerrsasseeserssserenareessaee3,11
`
`Windsurfing Intern’l, Inc. v. AMF, Inc.,
`782 F.2d 995 (Fed. Cir, 1986)... cee cecceecseecseesseessecsscssecssecssecesssrssseesessesssessseeseeesssesersaeregs 16
`
`Wonderland Switzerland AG v Evenflo Company, Inc.,
`No. 20-727-JPM,D.I. 281 (D. Del. Jume 7, 2023)... ceesessesseeectsssesseesecseveressesseaecnsseesneensees2
`
`Statutes
`
`35 U.S.C. S27 1(C)CL) ceceeceessceseesseesseesseeseeesseesecsecsssersersstersersstersecsssessessessesessassessesassessesasarsseasersnersl
`
`

`

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`I.
`
`INTRODUCTION AND SUMMARYOF ARGUMENT
`
`Natera seeks a narrow injunction under 35 U.S.C. § 284 targeting only further infringement
`
`by one ofthe five adjudicated products, PCM, based on the unique andirreparable harm that PCM
`
`inflicts on Natera.’ The rationales favoring injunction are compelling: With the infringing
`
`technologyat its core, PCM targets the personalized cancer monitoring market, which Natera has
`
`spent hundreds of millions of dollars to build and grow through its own pioneering test Signatera.
`
`Continued infringement by PCM will cause further irreparable harm to Natera including loss of
`
`first-mover advantage, loss of future market share and commercial and research opportunities, and
`
`reputational harm. Monetary damagesare inadequate to compensate Natera, particularly because
`
`the market is still nascent and there are no benchmarks to quantify such harm. The balance of
`
`hardships is strongly in favor of Natera: Any hardship to Defendants is self-inflicted|
`eee
`
`Signatera is a key growth driver for Natera. An injunction will not disserve the public. The public
`
`has a strong interest in enforcing patent rights. Moreover, Signatera has better performance than
`
`PCM,Natera has capacity to supply the entire market, and no existing patient will be impacted.
`
`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
`
`On May 15, 2023, the jury rendered a verdict that (1) Defendants directly infringed claims
`
`1,6, and 8 of U.S. Patent No. 10,557,172 and Claims 1, 3, 4, 6, and 7 of U.S. Patent No. 10,731,220
`
`by use of the accused products PCM,Stratafide and LiquidPlex, and Claims | and 19 of U.S.
`
`Patent No. 10,597, 708 by use of the accused products PCM, Stratafide, VariantPlex and
`
`FusionPlex (collectively, the ‘“Asserted Claims”); (2) use of PCM wasnotsubject to the FDA safe
`
`' The evidence admitted in the May 2023jury trial (testimony and exhibits) is of record. In further
`support of its motion, Natera relies on the Declaration of Solomon Moshkevich, Declaration of
`Anup Malani, Ph.D. and Declaration of John Quackenbush, Ph.D. All exhibits cited in the brief
`are to the Declaration of Bhanu K. Sadasivan,filed herewith.
`
`

`

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`harbor under 35 U.S.C. §271(e)(1); and (3) none of the Asserted Claims are invalid as anticipated,
`
`obvious, for lack ofwritten description, indefiniteness, failure to claim whatthe inventors regarded
`
`as their invention, or for improper inventorship. D.I. 609. The Court has scheduled a one-day
`
`benchtrial on the only remaining defense of prosecution laches on June 22, 2023. D.I. 618. Per
`
`the Court’s Order (D.I. 618), Natera respectfully submits this memorandum in support ofits
`
`motion for permanent injunction.
`
`Hil.
`
`ARGUMENT
`
`The “right to maintain exclusivity” is “a hallmark and crucial guarantee of patent rights
`
`deriving from the Constitutionitself].]” Apple Inc. v. Samsung Elecs. Co., Ltd., 809 F.3d 633, 642
`
`(Fed. Cir. 2015). “The courts have a long history of remedying trespass on property rights—
`
`including patent rights—by removingthe trespasser.” Broadcom Corp. v. Emulex Corp., 732 F.3d
`
`1325, 1338 (Fed. Cir. 2013); Presidio Components, Inc.
`
`vy. Am. Tech. Ceramics Corp., 702 F.3d
`
`1351, 1362 (Fed. Cir. 2012) (“the axiomatic remedy for trespass on property rights is removal of
`
`the trespasser”),
`
`“Absent adverse equitable considerations, the winner of a judgmentofvalidity
`
`and infringement may normally expect
`
`to regain the exclusivity that was lost with the
`
`infringement.” Edwards Lifesciences AG vy. CoreValue, Inc., 699 F.3d 1305, 1314 (Fed. Cir.
`
`2012).Courts in this district have permanently enjoined infringing competitors and this Court
`
`should do so here. See, e.g., Wonderland Switzerland AG v Evenflo Company, Inc., No. 20-727-
`
`JPM, D.I. 281 (D. Del. June 7, 2023) (Ex. 62);f'real Foods, LLC v Hamilton Beach Brands, Inc.,
`
`No. 16-41-CFC, 2020 WL 4015481, at *4 (D. Del. July 16, 2020); Bio-Rad Labs., Inc. v. 10X
`
`Genomics, Inc., No, 15-152-RGA, 2019 WL 3322322, at *1-*4 (D. Del. July 24, 2019); Ligwd,
`
`Inc. v. L’Oreal USA, Inc., No. 17-14-JFB-SRF, D.I. 1073 (D. Del. Aug. 16, 2019)(Ex. 63); ELI.
`
`DuPont de Nemours and Co. v. Unifrax I LLC, No. 14-1250-RGA, 2017 WL 4004419, at *4-*6
`
`(D. Del. Sept. 12, 2017); Evonik Degussa Gmbh vy. Materia, Inc., No. 09-636-NLH/JS, 2017 WL
`
`-2-
`
`

`

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`3434156, at *2-*4 (D. Del. Aug. 10, 2017); Vanda Pharms. Inc. v. Roxane Labs., Inc., 203 F.
`
`Supp. 3d 412, 436 (D. Del. 2016); Invista N.A. S.A.R.L. v. M & G USA Corp., 35 F. Supp. 3d 583,
`
`611 (D. Del. 2014).
`
`To obtain a permanent injunction, Natera must demonstrate by a preponderance of the
`
`evidence that: (1) “it has suffered an irreparable injury;” (2) “remedies available at law, such as
`
`monetary damages, are inadequate to compensate for that injury;” (3) “considering the balance of
`
`hardships between the plaintiff and defendant, a remedy in equity is warranted;” and (4) “public
`
`interest would not be disserved by [entry of] a permanentinjunction.” eBay Inc. v. MercExchange,
`
`L.L.C., 547 U.S. 388, 391 (2006). Each of the four factors has beensatisfied in this case.
`
`A.
`
`An Injunction Should Issue Because Natera Will Continue to Suffer Irreparable
`Harm If Defendants’ Infringement Does Not Cease
`
`1.
`
`Natera Will Continue to be Irreparably Harmed from Losingits First-
`Mover Advantages
`
`Natera will lose its first-mover advantages if PCM is not enjoined. Douglas Dynamics,
`
`LLC y. Buyers Prods. Co., 717 F.3d 1336, 1344 (Fed. Cir. 2013) (“Irreparable injury encompasses
`
`different types of losses that are often difficult to quantify”). Natera, as the first mover, developed
`
`the pivotal technology, educated stakeholders on the viability of a personalized cancer monitoring
`
`market, wasthe first entrant in the marketplace, and demonstrated the value of this market. Ex. 1,
`
`Malani Rpt § 157-166. Natera continues to nurture and invest in the market, including by
`
`performingstudies on the effectiveness of personalized cancer monitoring for different indications.
`
`If PCM is not enjoined, Natera will continue to lose its first mover advantages.
`
`Natera has invested considerable time and resources into developing the personalized
`
`cancer monitoring market and Signatera. “Signatera is our-- is our flagship cancer product.It is
`
`novel and weare the first movers.” Ex. 6, 61:4-19. See also Ex. 2, Trial Tr. 199:6-13 (“we've
`
`spent hundreds of millions of dollars developing this technology, and a large portion of the teams’
`
`-3-
`
`

`

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`lives doing the clinicaltrials and developing these concepts and building the market and educating
`
`the market. And for somebodyelse to just comein ourcoattails is not okay.”); id. at 234:11-235:3;
`
`Ex. 19, at 4 (“Natera’s Signatera assay is the first commercial assay in the $15B liquid biopsy
`
`recurrence monitoring assay” market).
`
`Natera not only developed the pivotal
`
`technology, but also lobbied and convinced
`
`physicians, researchers and regulatory authorities on the feasibility of this new personalized cancer
`
`monitoring technology through extensive studies. Ex. 2, Trial Tr. 237: 4-12 (“We've had about
`
`40 publications in top journals published on Signatera, and the number of people who have
`
`referenced Signaterain their publications is about 400 different publications, so this is really been
`
`a pivotal technology. And weare doing .
`
`.
`
`. hundreds of thousandsoftests now in oncology”);id.
`
`at 238:3-6 (“It takes a lot of time to get these [insurance] guidelines .. . you have got to doa[lot
`
`of] clinical trials but we have been the forerunner in to get these guidelines to support [our]
`
`technology.”);
`
`id at 235:4-237:3; 237:14-238:13; 238:9-239:6.2 Defendants’ PCM product
`
`directly competes with Signatera and capitalizes on the market and associated regulatory
`
`framework developed by Natera. Ex. 2, Trial Tr. 240:10-25.PO
`| Ex. 12 (Archer’s internal email:Be
`
`a P
`
`CM threatens Natera’s first-mover advantages. The personalized cancer monitoring
`
`market is not an established market, but a nascent market with “sticky”relationships where gaining
`
`a project not only dislodges the competitor, but the winner is rewarded with a virtuous cycle of
`
`more benefits. Ex. 1, Malani Rpt 4111-127. And if the winner were to withdraw from the project,
`
`° For its innovative work, Natera has received several awards, including a Medtech Breakthrough
`award for Signatera. Ex. 2, Trial Tr. 239:7-25.,
`
`-4-
`
`

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`as Defendants did from the AstraZeneca project (Ex. 5, Trial Tr. 1021:22-1022:15),
`
`that
`
`opportunity is permanently lost. And in a burgeoning market, as here, the withdrawal may stunt
`
`the market’s developmentto the detriment of Natera and the public.
`
`The personalized cancer monitoring market includes a biopharmaceutical segment and a
`
`clinical segment, Ex. 1, Malani Rpt {] 36-37, and Natera’s irreparable harm extends to both
`
`segments.
`
`In the biopharmaceutical segment, Natera lost Signatera business to Defendants as a
`
`result of the infringing PCM, including projects/contracts from AstraZeneca and Bristol-Myers
`
`Squibb, as the jury verdict recognizes.’ Ex.3, Trial Tr. 591:14-25; 592:20-593:17; 595:19-596:19.
`
`Defendants continue to follow the path that Natera paved in the clinical market of
`
`conducting personalized monitoring testing in a centralized CLIA laboratory. Natera launched
`
`Signatera as a CLIA Laboratory Developed Test (LDT)in 2019, Ex. 17, at 12, and obtained its
`
`first insurance coverage determination in 2020. Ex. 2, Trial Tr. 238:9-13. Pp
`1)
`ee
`ee
`ee. Natera’s ground-breaking reimbursement
`
`coverage for Signatera in the clinical market madeit easier for Defendants to obtain reimbursement
`
`coverage, Ex,21
`eee
`es
`
`> The jury’s award of lost profits demonstrates the irreparable harm already suffered by Natera.
`D.I. 609 (Jury verdict), at 10; seef'real Foods, No. 16-41-CFC, 2020 WL 4015481, at *4 (D. Del.
`July 16, 2020) (“a finding of lost profits demonstrates that a plaintiff was deprived of market share
`and business opportunities in addition to lost profits.”).
`
`-5-
`
`

`

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`Defendants launched PCM/LDTin 2022 (Ex. 45) employing a centralized CLIA laboratory
`
`and touts PCM’s market prospects. Ex. 22, 11 (Invitae’s CEO in 2023stating: “we look at our big
`
`bet that we’re making in MRD, we’re putting human andfinancial capital behind, continuing to
`
`get clinical validation of our product, getting acceptance and adoption and then driving revenue
`
`recognition through reimbursement.”):; see also Exs. 67-69; Malani Decl., 4916-17.
`
`There is no doubt Defendantsare and will be directly competing with Natera using Natera’s
`
`patented technology to take away Natera’s hard-earned achievements in the biopharmaceutical and
`
`clinical markets. As Natera’s co-founder Dr. Rabinowitz explained:
`
`“when you know that a particular technology approach works, it’s very easy to
`replicate that. And Archer moved very quickly, I believe, after they saw our 2017
`publication .
`.
`.
`to replicate what we had done, and they did that using our
`technology.
`.
`.
`. And we’ve spent an enormous amount of time and significant
`portions of our lives developing this technology refining the technology,gettingit
`working and then building the market and then getting the reumbursement, which
`is an enormouslift, and they just [rode] in ourcoattails.”
`
`Ex. 2, Trial Tr. 240:10-25.
`
`Natera’s expert opinesthe lossof first-mover advantages as unquantifiable. Ex. 1, Malani
`
`Rpt §§ 157-166. Defendants’ expert highlighted in the analogous situation in the ArcherDXv.
`
`Qiagenlitigation* the importance andvalueoffirst mover advantages to PCM overthe prospective
`
`Qiagen product, identifying them ashii Ex. 14, at 122. The intangible
`
`and unquantifiable loss of first mover advantage in this emerging market alone supports a finding
`
`of irreparable injury.
`
`* In ArcherDX, LLC v. Qiagen Sciences, LLC, No. 18-1019-MN (also in the district ofDelaware).
`
`Defendants’ expert stated that ArcherDX ‘ x
`
`at
`i
`s 1s similar to the situation here wit
`quickly behind Natera with infringing products.
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`ila
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`2.
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`PCM’s Infringement will Continue to Cause Lost Market Share, Lost
`Market Opportunities, Price Erosion and Harm to Natera’s Business
`Modelthatis Irreparable
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`Signatera and PCM compete directly (Ex. 2, Trial Tr. 240:10-12; Ex. 4, Trial Tr. 661:13-
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`14) andare the only products in the personalized cancer monitoring market covered by insurance.
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`Moshkevich Decl., 4 2. Defendants have and will gain market share at the expense of Natera,e.g.,
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`as discussed above, on the pharma contracts to AstraZeneca and BMS. See, e.g., Ex. 4, Trial Tr.
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`668:2-3 (“Signatera would be the only viable competitor and product for those lost contracts”).
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`This fact alone counsels a finding of irreparable harm. Broadcom Corp. v. Emulex Corp., 732 F.3d
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`1325, 1338 (Fed. Cir. 2013) (“The district court determined that Broadcom and Emulex were
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`competitors and that Broadcom lost market share while Emulex gained it—thus Broadcom
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`established irreparable harm.”); Presidio Components, 702 F.3d at 1363 (“Direct competition in
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`the same marketis certainly one factor suggesting strongly the potential for irreparable harm’’).
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`During their 2023 First Quarter Earnings Call, Defendants identified several future plans
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`for PCM,each of which would causeirreparable harm to Natera. Ex. 69; Malani Decl., {| 16-17.
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`These plans include: (1) Invitae’s “preparation for a commercial launch beyondourcurrent fee-
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`for-service revenue” (Ex. 69 at 12), which would take away Natera’s market share and
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`opportunities; (2) Invitae’s efforts to “drive PCM’s adoption” and “gain reimbursement support
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`from payers”(id. at 5), which in addition to taking away Natera’s market share and opportunities,
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`would also result in price erosion; (3) “generat[e] additional evidence in areas outside of lung in
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`colorectal and breast and ovarian” cancerand in parallel “having conversations with Medicare as
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`well as private payers”(id. at 13), which would take away Natera’s first mover advantages, harm
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`Natera’s leadership reputation, dislodge Natera from these indications and lose the attendant
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`virtual cycle of benefits; and (4) Invitae’s “healthy pipeline of projects coming in and new clients
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`coming on board” (id. at 16), which is precisely the type of irreparable harm inflicted by an
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`-7-
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`infringing competitor that should be enjoined. The personalized cancer monitoring marketis at a
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`“crucial inflection point in the developmentof the market” and Defendants should not be permitted
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`to “capture and define the market with pirated technology.” J//umina, Inc. v. Qiagen, N.V., 207 F.
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`Supp. 3d 1081, 1093 (N.D. Cal. 2016). See also Ex. 1, Malani Rpt J] 167-179; Celsis In Vitro,
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`Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed. Cir. 2012) (“Price erosion, loss of goodwill,
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`damage to reputation, and loss of business opportunities are all valid grounds for finding
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`ureparable harm.”’).
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`The harm arising from lost business and lost market share is not limited to the specific
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`revenues associated with the lost opportunities themselves. For example, loss of pharmaceutical
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`deals aimed at developing a companion diagnostic test not only deprives Natera of the specific
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`revenues and profits associated with the project, but also the exponentially greater revenues from
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`subsequentsales of the companion diagnostic test by Natera. Ex. 1, Malani Rpt J] 167-172. As
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`Natera’s head of oncologytestified, “the amount of business on the table from a long-term
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`perspective of losing that deal, just a single deal, is -- is multiple times larger than the value just
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`associated with performing that project.” Ex. 6, 217:4-219:2. The harmto Natera fromlosing the
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`deals cannot be fully quantified. Ex. 1, Malani Rpt §§ 171-172.
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`Defendants agreed that such harm is irreparable in their lawsuit against Qiagen where the
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`imeparable injuries, ne a, were{or
`a. Defendants’ expert explained:
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`Ex. 14 at 00115-116 (emphasis added).
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`Defendants’ actions may also irreparably harm Natera by constraining the market for
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`personalized cancer monitoring. These include: (i) usurping Natera’s business opportunity with
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`AstraZeneca and then ultimately abandoning the AstraZeneca clinical trials
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`(Ex. 5, Trial Tr.
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`1021:22-1022:15); (41) PCM’s underperformance (with lowersensitivity and specificity) (Ex. 4,
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`Trial Tr. 625:23-627:1); and (i111) PCM’s longer turn-around-time (TAT) of 6-7 weeks to deliver
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`the initial test result (Ex. 20), compared to the 3-4 weeks required for Signatera. Ex. 43. These
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`negative events and facts may delay and constrain the adoption of personalized cancer monitoring
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`tests, ultimately resulting in harm to cancer patients and Natera.
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`PCM’s entry into the clinical marketplace also fundamentally changes the competitive
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`landscape and threatens to erode prices. Malani Decl., §] 14-15; Ex. 1, Malani Rpt 99 177-179.
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`Defendants’ entry into the marketplace will lead to lower prices. Malani Decl., 4] 14-15. Further,
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`Defendants, although currently priced higher than Natera in pharma contracts, have a track-record
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`of providing “low-cost” tests (Ex. 28, Ex. 29) and shown their willingness toPo
`16. .CHER01456571
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`i.). Price erosion aloneis sufficient to establish irreparable harm. See
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`Edwards Lifesciences AG v. CoreValve, Inc., CV 08-91 (GMS), 2014 WL 1493187, at *6 (D. Del.
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`Apr. 15, 2014).
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`Defendants’ ongoing infringementstrikes at the very heart of Natera’s innovation-driven
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`business model. Patent protection is fundamental to Natera’s heavy investment in R&D and
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`innovation. Ex. 2, Trial Tr. 199:1-13 (Natera’s founder and inventor: “the purpose offiling a
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`patent ... is that when people know that something is doable, it’s very easy for them to copyit
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`and to follow quickly. .. And for somebodyelse to just comein ourcoattails is not okay. That’s
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`the whole reason that you havepatents, that’s the situation that patents are exactly there to avoid.”).
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`Natera’s business success dependsin part on its ability to leverage its patents. See, e.g., Ex. 2,
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`Trial Tr. 241:20-24 (“This IP is incredibly valuable in certain situations in diagnostics and so we
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`can’t have everybody using this technology. That’s the whole point of getting a patent before you
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`publish somethingis so that everybody else can’t just copy you.”); Ex. 17, 17 (Natera’s “success
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`and ability to compete dependin part on securing and preserving enforceable patent .. . rights”).
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`In fact, Natera has never licensed competitors to sell tests that directly compete with
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`Signatera. Ex. 4, Trial Tr. 630:11-14. Such unwillingness weighs in favor of a finding of
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`irreparable harm. See Presidio Components, 702 F.3d at 1363-64.
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`Lastly, PCM’s continued infringement will undermine Natera’s ongoing research and
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`development efforts. Bio-Technology Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1566 (Fed.
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`Cir. 1996) (irreparable harm when patentee is “required to reduce its research and development
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`activities”). Natera currently invests an unusually high 35% ofits annual revenue in R&D efforts
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`to develop both existing and new products to address unmet health care needs. Ex. 2, Trial Tr.
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`242:3-8. The irreparable harms will necessarily impact in an unknowable amount investmentin
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`R&D. A reduction in R&D investment caused by Defendants’
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`infringement will have a
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`detrimental and unquantifiable impact on innovation,the lifeblood of Natera.
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`Likewise, lost pharma contracts will deprive Natera of significant R&D opportunities,
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`including accessto rare and limited patient samples and preciousclinical data. Such opportunities
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`allow Natera (or Defendants) to improve their underlying technology to address current and new
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`disease paradigms,
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`to make potentially fundamental new scientific discoveries and to secure
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`-10-
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`reimbursementfor new disease indications. Natera has “lost the opportunity to work on...[these]
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`important follow-on scientific questions.” Ex. 3, Trial Tr. 592:1-20. These R&D impacts are
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`irreparable. See Vanda Pharms., Inc. v. Roxane Labs., Inc. 203 F. Supp. 3d 412, 436 (D. Del.
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`2016) (irreparable harm from foregone R&Dofother drugs).
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`3.
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`Infringement by PCM will Continue to Harm the Reputation and
`Substantial Goodwill of Both Natera and Signatera
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`Harm to reputation has long been recognized as an irreparable. See Douglas Dynamics,
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`717 F.3d at 1344; Celsis, 664 F.3d at 930. Natera suffered reputational harm and lost customer
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`goodwill from losing the TracerX study and other projects to Defendants’ infringing PCM. Ex.3,
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`Trial Tr. 592:3-9 (losing TracerX study “was quite public” and after being published on the cover
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`of Nature “when people found out cancer research in UK and professor [Swanton] were going
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`with different
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`technology everybody started asking questions why that happened is there
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`something wrong with Natera.”) (emphasis added); Ex. 1, Malani Rpt §| 175-176. Harm to
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`reputation and goodwill cannot be quantitated. Defendants agree. Ex. 11, at 15, 27-28 aa
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`(emphasis added).
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`Natera is viewed as the leader in the personalized cancer
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`recurrence monitoring
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`marketplace and Defendants’ infringement has impacted Natera’s reputation. Ex. 3, Trial Tr.
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`592:3-9; Ex. 18, at NAT-AR-00702357 (“The idea of monitoring residual disease was pioneered
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`by ... Natera.”). These reputational and goodwill harms are not quantifiable. See, e.g., Ex. 1,
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`Malani Rpt 4 175-176, 183.
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`4.
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`Clear Nexus Exists between PCM’sinfringement and Harm to Natera
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`To prove irreparable harm, the party seeking injunction must also show “that a sufficiently
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`-ll-
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`strong causal nexusrelates the alleged harmto the alleged infringement.” Apple Inc. v. Samsung
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`Elecs. Co., 695 F.3d 1370, 1374 (Fed. Cir. 2012). The infringing features do not need to be the
`eee
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`“exclusive or predominant reason”to purchasethe infringing products, but there must be
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`“some
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`connection’ between the patented features and the demandfor[the accused] products.” Apple Inc.,
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`809 F.3d at 642. The patented features do not “need to drive demand, but just that they impact
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`consumers’ decisions to purchase the accused devices.” Bio-Rad Labs., 2019 WL 3322322, at *2-
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`*3 (quoting Apple, 809 F.3d at 642).
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`There is a clear connection between PCM’s infringement and Natera’s irreparable harm.
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`Theinfringed patents cover PCM’s core two-step, nested PCR process necessary to run PCM. Ex.
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`3, Trial Tr. 552:5-22 (PCM uses a “workflow, which Archerrefers to as AMP”andthe asserted
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`“patents map directly to the process”). Natera’s patented technologyis the foundation of PCM.
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`A showingthat the patented technology is foundationalto the infringing product establishes the
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`required “some connection.” Bio-Rad Labs., 2019 WL 3322322 at *3. That Natera’s patented
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`technologylies at the heart of PCM wasrepeatedly confirmed during the jury trial.
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`Q. And does Archer derive any benefit from practicing the asserted patents?
`A. So Archer themselves, you know,really believes in --that these products allow
`them to be able to run an assay that can detect rare events in ce